[Federal Register Volume 75, Number 224 (Monday, November 22, 2010)]
[Proposed Rules]
[Pages 71047-71061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29152]


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DEPARTMENT OF THE TREASURY

31 CFR Part 29

RIN 1505-AC02


Federal Benefit Payments Under Certain District of Columbia 
Retirement Plans

AGENCY: Departmental Offices, Treasury.

ACTION: Proposed rule.

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SUMMARY: The Department of the Treasury proposes to amend our 
regulations which were promulgated pursuant to the Balanced Budget Act 
of 1997, as amended (the Act). Pursuant to the Act, with certain 
exceptions, Treasury has responsibility for payment of benefits based 
on service accrued as of June 30, 1997, under the retirement plans for 
District of Columbia teachers, police officers, and firefighters. 
Benefits for service after that date, and certain other benefits, are 
funded by the District of Columbia. The rule that we published in 2000 
as part of the final regulations to implement the provisions of the 
Act, establishes the methodology for determining the split between the 
Federal and District obligations. The effective date of the regulation 
was delayed pending completion of Treasury's new automated retirement 
system, ``System to Administer Retirement'' (STAR), which replaced the 
District's legacy automated retirement system. While the new system has 
been completed, the proposed amended regulation will establish 
additional rules and provide additional examples of benefit calculation 
scenarios, the need for which was identified during systems 
development. The amendments to the regulation will have minimal 
financial impact and are introduced to simplify calculations and 
maintain consistency with the general principles established in the 
original regulations.

DATES: Comment Due Date: January 21, 2011.

ADDRESSES: Treasury invites interested members of the public to submit 
comments on this proposed rule. Comments may be submitted to Treasury 
by any of the following methods: Submit electronic comments through the 
federal government e-rulemaking portal, www.regulations.gov or by e-
mail to [email protected] or send paper comments to Paul 
Cicchetti, Department of the Treasury, Office of DC Pensions, 
Metropolitan Square Building, Room 6G503, 1500 Pennsylvania Avenue, 
NW., Washington, DC 20220.
    In general, the Treasury will post all comments to http://www.regulations.gov without change, including any business or personal 
information provided such as names, addresses, e-mail addresses, or 
telephone numbers. Treasury will also make such comments available for 
public inspection and copying in the Treasury's Library, Room 1428, 
Main Department Building, 1500 Pennsylvania Avenue, NW., Washington, DC 
20220, on official business days between the hours of 10 a.m. and 5 
p.m. Eastern Time. You can make an appointment to inspect comments by 
telephoning (202) 622-0990. All comments, including attachments and 
other supporting materials received, are part of the public record and 
subject to public disclosure. You should submit only information that 
you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Paul Cicchetti, (202) 622-1859, 
Department of the Treasury, Office of D.C. Pensions, Metropolitan 
Square Building, Room 6G503, 1500 Pennsylvania Avenue, NW., Washington, 
DC 20220.

SUPPLEMENTARY INFORMATION:

Background

    On December 12, 2000, the Department of the Treasury (the 
Department or Treasury) published (at 65 FR 77500) final regulations to

[[Page 71048]]

implement Title XI of the Balanced Budget Act of 1997, Public Law 105-
33, 111 Stat. 251, 712-731, 756-759, as amended (the Act). The Act 
transferred certain unfunded pension liabilities from the District of 
Columbia (the District) government to the Federal Government. Pursuant 
to the Act, with certain exceptions, Treasury is responsible for 
payment of benefits based on service accrued as of June 30, 1997, the 
date defined in the Act as the ``freeze date''. Under the Act, the 
Department calculates its obligations based on the terms of the 
retirement plans for District of Columbia teachers, police officers, 
and firefighters in effect as of June 29, 1997, referred to as the 
``District Retirement Program.'' Benefits for service after June 30, 
1997, and other benefits, e.g., certain disability benefits, remain a 
District responsibility. These proposed regulations address the 
Department's responsibility for retirement benefits in those situations 
where the benefit responsibility is shared between Treasury and the 
District. All benefit payments that are the responsibility of the 
Department under the Act are referred to as Federal Benefit Payments. 
Any remaining benefit payments to which an individual is entitled under 
the District's retirement plans are the responsibility of the District 
and are referred to as ``District benefit payments.'' Annuities which 
consist of Federal Benefit Payments and District benefit payments are 
referred to as ``split benefits.''
    The Act also established the District of Columbia Judicial 
Retirement and Survivors Annuity Fund, administered by Treasury's 
Office of DC Pensions (ODCP). Because the DC judges' benefits are now 
entirely a federal responsibility, the proposed split benefit 
regulations, discussed below, do not apply to the judges' benefit 
calculations.
    Treasury is proposing amendments to subpart C. Subpart C contains 
the methodology for determining Federal Benefit Payments in situations 
where a teacher, police officer, or firefighter has service with the 
District of Columbia both before and after June 30, 1997, i.e., split 
benefits. Subpart C was originally published as part of the final 
regulations to implement the provisions of the Act on December 12, 
2000, 65 FR 77500, 77503. As noted above, the effective date of subpart 
C was delayed, pending completion of the new automated system.
    On March 29, 2001, 66 FR 17222, the Department announced that it 
was ``postponing indefinitely'' the effective date of subpart C of the 
regulations because ``Treasury decided to acquire an upgraded version 
of the replacement system software. This decision, coupled with the 
need to accommodate integration of the replacement system with systems 
implementation schedules of the government of the District of Columbia, 
protracted the implementation schedule for Treasury's replacement 
system.'' 66 FR 17222.
    Treasury's ODCP, the District's Office of Payroll Services (OPRS), 
and the District of Columbia Retirement Board (DCRB) collaborated on 
the development of the replacement system, known as ``System to 
Administer Retirement'' (STAR). STAR is an automated pension/payroll 
system which supports the end-to-end business processes for retirement. 
STAR, which replaced the District's legacy system, calculates 
retirement and survivor benefits for the District's teachers, police 
officers and firefighters, regardless of whether their service accrued 
before or after the ``freeze date'' for Federal Benefit Payments.
    From the earliest stages of this effort, Treasury worked with the 
District to arrive at key decisions for STAR development. Pursuant to 
Section 11041 of the Act, the District continues as the benefits 
administrator during the interim administration period, which is 
ongoing. Originally, OPRS performed the benefits administration 
function. DCRB assumed responsibility for benefits administration for 
both District benefit payments and Federal Benefit Payments on 
September 26, 2005. As benefits administrator, OPRS, and now DCRB, 
participated with Treasury to: Develop a proposed system that met the 
programs' needs; develop the approach for addressing and resolving 
issues; make decisions about development; test the system being 
developed; review the status of projects; evaluate readiness and 
approve plans for implementation.
    As Treasury explained in the preamble to the original proposed 
regulations in 1999, 64 FR at 69435, unless an exception applies under 
the Act, the general rule for the calculation of Federal Benefit 
Payments states that in all cases ``in which some service becomes 
creditable on or before June 30, 1997 and some service becomes 
creditable after June 30, 1997, Federal Benefit Payments are computed 
under the rules of the applicable plan as though: (1) The employee were 
eligible to retire as of June 30, 1997, under the same conditions as 
the actual retirement (that is, using the annuity computation formula 
that applies under the plan in effect on June 29, 1997, and the 
retirement age, including any applicable age reduction, based on the 
age at actual retirement; (2) the service that became creditable after 
June 30, 1997 did not exist; and (3) the average salary is the average 
salary at separation.'' The original proposed regulations were largely 
derived from this general rule.
    In the course of developing the STAR system, the development team 
and the subject matter experts from ODCP and the DCRB determined that 
additional rules for benefit calculation scenarios were needed to 
simplify development and to address situations that had not been 
considered when the original regulations were published in 2000. STAR 
was programmed with these additional rules. These amendments to subpart 
C establish these additional rules and provide additional examples of 
benefit calculation scenarios. These amendments have no significant 
financial impact and are introduced to simplify calculations and 
maintain consistency with the general principles established in the 
original regulations.
    For the convenience of readers, Treasury is restating subpart C in 
its entirety. However, this preamble addresses only those portions of 
subpart C that are being amended. For discussion of subpart C as 
originally proposed, see 64 FR 69432, 69434-36, December 13, 1999 and 
the preamble addressing the comments to the final regulations at 65 FR 
77500-77501, December 12, 2000.

Proposed Amendments

    Section 29.334 provides the rules for determining when deposit 
service is creditable for Federal Benefit Payments. The paragraph is 
expanded in section 29.334(a)(3) to provide for situations where 
deposits in Treasury funds are to be transferred to District retirement 
funds.
    Section 29.335 provides the rules for determining when refunded 
service is creditable for Federal Benefit Payments. The paragraph is 
expanded in section 29.335(c) to provide for situations where 
redeposits in Treasury funds are to be transferred to District 
retirement funds.
    Section 29.341 provides the General Principle for calculating 
Federal Benefit Payments. The paragraph is amended to cover an 
exception when Congress amends the terms of the District Retirement 
Program in effect on June 29, 1997.
    Section 29.343 provides the rules for determining the Federal 
Benefit Payment in the case of a disability retirement. Section 
29.343(c) is added to provide the rule for determining the Federal 
Benefit Payment when the individual's Federal Benefit Payment 
calculated under optional retirement exceeds the individual's total 
annuity calculated under disability retirement.

[[Page 71049]]

This situation can occur when an individual meets the requirements for 
both normal and disability retirement and elects disability retirement.
    Section 29.344 provides the rules for determining the Federal 
Benefit Payment for survivors. The paragraph is amended to combine the 
provisions of current sections 29.344(a) and 29.344(b) into section 
29.344(b), which provides the rule for determining the Federal Benefit 
Payment for survivors when death benefits are not determined by the 
length of service. Section 29.344(a) is added to provide the rule for 
determining the Federal Benefit Payment for survivors when death 
benefits are determined by the length of service. Section 29.344(c) is 
added to provide the rule for determining the Federal Benefit Payment 
for survivors when an individual retires based on disability or 
voluntary early retirement and dies before reaching the age at which a 
Federal Benefit Payment is payable to the individual.
    Section 29.345 provides the rules for adjustments of Federal 
Benefit Payments after the initial calculation. Under current section 
29.345, cost-of-living increases are applied directly to Federal 
Benefit Payments. The paragraph is amended in section 29.345(a) to 
introduce the federal percentage, which is applied each year after a 
cost-of-living increase to the total annuity to determine the new 
Federal Benefit Payment. This methodology required fewer programming 
changes in STAR and has de minimus financial impact. Section 29.345(b) 
is added to provide the rule for determining the Federal Benefit 
Payment when the total annuity is recalculated as the result of a 
service-based adjustment or a plan provision enacted after June 30, 
1997 which does not apply to the Federal Benefit Payment.
    Section 29.346 provides the rule to calculate a Federal Benefit 
Payment when there is an election of a reduced benefit. The paragraph 
is amended such that the calculation results in a reduction to the 
Federal Benefit Payment that is proportional to the reduction in the 
total annuity.
    Sections 29.351 through 29.353 provide the rules for calculating 
the federal share of refunded employee retirement contributions and 
refunded purchase of service deposits.
    The examples in appendix A to subpart C have been amended or 
expanded to illustrate the new methodology applications arising from 
the above section changes.
    Example 10A is amended to show how the Federal Benefit Payment is 
calculated for a teacher who retires and elects to provide a full 
survivor annuity. Example 10B is amended to show how the Federal 
Benefit Payment is calculated for a teacher who retires and elects to 
provide a partial survivor annuity.
    Example 13A is amended to show how a spouse survivor's Federal 
Benefit Payment is calculated when the employee elects at retirement 
that the survivor annuity be a percentage of the employee's total 
annuity. The current Example 13D is redesignated as Example 13E. The 
current Example 13C is redesignated as Example 13D and unused sick 
leave credit is added. Example 13C is added to show how a spouse 
survivor's Federal Benefit Payment is calculated when a teacher elects 
at retirement to provide a flat amount survivor annuity. Example 13F is 
added to show how a spouse survivor's Federal Benefit Payment is 
calculated when the spouse survivor's total annuity is based on plan 
provisions adopted after June 30, 1997. Example 13G is added to show 
how a spouse survivor's Federal Benefit Payment is calculated when a 
police officer or firefighter not eligible for optional retirement 
retires on disability and dies before reaching age 55. Example 13H is 
added to show how a spouse survivor's Federal Benefit Payment is 
calculated when a teacher not eligible for optional retirement retires 
on disability and dies before reaching age 62.
    Example 14A is amended to show how the federal percentage for a 
teacher who retires is used to calculate a new Federal Benefit Payment 
after a cost-of-living increase. The current Example 14B is 
redesignated as Example 14H and amended to show the use of the federal 
percentage. Example 14B is added to show how a federal percentage for a 
teacher who retires and elects a percentage survivor annuity is used to 
calculate the survivor's new Federal Benefit Payment after a cost-of-
living increase. Example 14C is added to show how if a teacher retires 
and elects a flat amount survivor annuity, a federal percentage for the 
survivor is calculated and used to calculate a new Federal Benefit 
Payment after a cost-of-living increase. Example 14D is added to show 
how if a teacher dies while an employee, and the survivor annuity is 
related to the teacher's length of service, a federal percentage for 
the teacher is calculated and used to calculate the survivor's new 
Federal Benefit Payment after a cost-of-living increase. Example 14E is 
added to show how if a teacher dies while an employee, and the survivor 
annuity is not related to the teacher's length of service, a federal 
percentage for the survivor is calculated and used to calculate a new 
Federal Benefit Payment after a cost-of-living increase. Example 14F is 
added to show how a federal percentage is calculated for a spouse 
survivor of a retired police officer or firefighter and used to 
calculate a new Federal Benefit Payment after a cost-of-living 
increase. Example 14G is added to show how if a police officer or 
firefighter dies while an employee, a federal percentage for the 
survivor is calculated and used to calculate a new Federal Benefit 
Payment after a cost-of-living increase.

Executive Order 12866, Regulatory Planning and Review

    Because this rule is not a significant regulatory action for 
purposes of Executive Order 12866, a regulatory assessment is not 
required.

Regulatory Flexibility Act

    It is hereby certified that this regulation will not have a 
significant economic impact on a substantial number of small entities. 
The regulation will only affect the determination of the Federal 
portion of retirement benefits to certain former employees of the 
District of Columbia and will not have an effect on small entities. 
Accordingly, a regulatory flexibility analysis is not required by the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

List of Subjects in 31 CFR Part 29

    Administrative practice and procedure, claims, Disability benefits, 
Firefighters, Government employees, Intergovernmental relations, Law 
enforcement officers, Pension, Retirement, Teachers.

    Accordingly, the Department of the Treasury proposes to amend 
subtitle A of title 31 of the Code of Federal Regulations by revising 
subpart C of part 29 to read as follows:

PART 29--FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF 
COLUMBIA RETIREMENT PROGRAMS

    1. The authority citation for part 29 is revised to read as 
follows:

    Authority: Subtitle A and Chapter 3 of Subtitle H, of Pub. L. 
105-33, 111 Stat. 712-731 and 786-787; as amended.

    2. Subpart C is revised to read as follows:
Subpart C--Split Benefits
Sec.
29.301 Purpose and scope.
29.302 Definitions.

[[Page 71050]]

General Principles for Determining Service Credit To Calculate Federal 
Benefit Payments

29.311 Credit only for service performed on or before June 30, 1997.
29.312 All requirements for credit must be satisfied by June 30, 
1997.
29.313 Federal Benefit Payments are computed based on retirement 
eligibility as of the separation date and service creditable as of 
June 30, 1997.

Service Performed After June 30, 1997

29.321 General principle.
29.322 Disability benefits.

All Requirements for Credit Must Be Satisfied by June 30, 1997

29.331 General principle.
29.332 Unused sick leave.
29.333 Military service.
29.334 Deposit service.
29.335 Refunded service.

Calculation of the Amount of Federal Benefit Payments

29.341 General principle.
29.342 Computed annuity exceeds the statutory maximum.
29.343 Disability benefits.
29.344 Survivor benefits.
29.345 Cost-of-living adjustments.
29.346 Reduction for survivor benefits.

Calculation of the Split of Refunds of Employee Contributions and 
Deposits

29.351 General principle.
29.352 Refunded contributions
29.353 Refunded deposits
Appendix A to Subpart C of Part 29--Examples

Subpart C--Split Benefits


Sec.  29.301  Purpose and scope.

    (a) The purpose of this subpart is to addresses the legal and 
policy issues that affect the calculation of the Federal and District 
of Columbia portions of benefits under subtitle A of Title XI of the 
Balanced Budget Act of 1997, Public Law 105-33, 111 Stat. 251, 712-731, 
and 786-787 enacted August 5, 1997, as amended.
    (1) This subpart states general principles for the calculation of 
Federal Benefit Payments in cases in which the Department and the 
District government are both responsible for paying a portion of an 
employee's total retirement benefits under the Police and Firefighters 
Plan or the Teachers Plan.
    (2) This subpart provides illustrative examples of sample 
computations to show the application of the general principles to 
specific problems.
    (b)(1) This subpart applies only to benefits under the Police and 
Firefighters Plan or the Teachers Plan for individuals who have 
performed service creditable under these programs on or before June 30, 
1997.
    (2) This subpart addresses only those issues that affect the split 
of fiscal responsibility for retirement benefits (that is, the 
calculation of Federal Benefit Payments).
    (3) Issues relating to determination and review of eligibility and 
payments, and financial management, are beyond the scope of this 
subpart.
    (c) This subpart does not apply to benefit calculations under the 
Judges Plan.


Sec.  29.302  Definitions.

    In this subpart (including appendix A of this subpart)--
    Deferred retirement means retirement under section 4-623 of the 
D.C. Code (1997) (under the Police and Firefighters Plan) or section 
31-1231(a) of the D.C. Code (1997) (under the Teachers Plan).
    Deferred retirement age means the age at which a deferred annuity 
begins to accrue, that is, age 55 under the Police and Firefighters 
Plan and age 62 under the Teachers Plan.
    Department service or departmental service means any period of 
employment in a position covered by the Police and Firefighters Plan or 
Teachers Plan. Department service or departmental service may include 
certain periods of military service that interrupt a period of 
employment under the Police and Firefighters Plan or the Teachers Plan.
    Disability retirement means retirement under section 4-615 or 
section 4-616 of the DC Code (1997) (under the Police and Firefighters 
Plan) or section 31-1225 of the DC Code (1997) (under the Teachers 
Plan), regardless of whether the disability was incurred in the line of 
duty.
    Enter on duty means commencement of employment in a position 
covered by the Police and Firefighters Plan or the Teachers Plan.
    Excess leave without pay or excess LWOP means a period of time in a 
non-pay status that in any year is greater than the amount creditable 
as service under Sec.  29.105(d).
    Hire date means the date the employee entered on duty.
    Military service means--
    (1) For the Police and Firefighters Plan, military service as 
defined in section 4-607 of the DC Code (1997) that is creditable as 
other service under section 4-602 or section 4-610 of the DC Code 
(1997); and
    (2) For the Teachers Plan, military service as described in section 
31-1230(a)(4) of the DC Code (1997).
    Optional retirement means regular longevity retirement under 
section 4-618 of the DC Code (1997) (under the Police and Firefighters 
Plan) or section 31-1224(a) of the DC Code (1997) (under the Teachers 
Plan).
    Other service means any period of creditable service other than 
departmental service or unused sick leave. Other service includes 
service that becomes creditable upon payment of a deposit, such as 
service in another school system (under section 31-1208 of the DC Code 
(1997)) (under the Teachers Plan) or prior governmental service (under 
the Teachers Plan and the Police and Firefighters Plan); and service 
that is creditable without payment of a deposit, such as military 
service occurring prior to employment (under the Teachers Plan and the 
Police and Firefighters Plan).
    Pre-80 hire means an individual whose annuity is computed using the 
formula under the Police and Firefighters Plan applicable to 
individuals hired before February 15, 1980.
    Pre-96 hire means an individual whose annuity is computed using the 
formula under the Teachers Plan applicable to individuals hired before 
November 1, 1996.
    Sick leave means unused sick leave, which is creditable in a 
retirement computation, as calculated under Sec.  29.105(c).

General Principles for Determining Service Credit To Calculate Federal 
Benefit Payments


Sec.  29.311  Credit only for service performed on or before June 30, 
1997.

    Only service performed on or before June 30, 1997, is credited 
toward Federal Benefit Payments.


Sec.  29.312  All requirements for credit must be satisfied by June 30, 
1997.

    Service is counted toward Federal Benefit Payments only if all 
requirements for the service to be creditable are satisfied as of June 
30, 1997.


Sec.  29.313  Federal Benefit Payments are computed based on retirement 
eligibility as of the separation date and service creditable as of June 
30, 1997.

    Except as otherwise provided in this subpart, the amount of Federal 
Benefit Payments is computed based on retirement eligibility as of the 
separation date and service creditable as of June 30, 1997.

Service Performed After June 30, 1997


Sec.  29.321  General principle.

    Any service performed after June 30, 1997, may never be credited 
toward Federal Benefit Payments.

[[Page 71051]]

Sec.  29.322  Disability benefits.

    If an employee separates for disability retirement after June 30, 
1997, and, on the date of separation, the employee--
    (a) Satisfies the age and service requirements for optional 
retirement, the Federal Benefit Payment commences immediately, that is, 
the Federal Benefit Payment is calculated as though the employee 
retired under optional retirement rules using only service through June 
30, 1997 (See examples 7A and 7B of appendix A of this subpart); or
    (b) Does not satisfy the age and service requirements for optional 
retirement, the Federal Benefit Payment begins when the disability 
retiree reaches deferred retirement age. (See Sec.  29.343.)

All Requirements for Credit Must Be Satisfied by June 30, 1997


Sec.  29.331  General principle.

    To determine whether service is creditable for the computation of 
Federal Benefit Payments under this subpart, the controlling factor is 
whether all requirements for the service to be creditable under the 
Police and Firefighters Plan or the Teachers Plan were satisfied as of 
June 30, 1997.


Sec.  29.332  Unused sick leave.

    (a) For employees separated for retirement as of June 30, 1997, 
Federal Benefit Payments include credit for any unused sick leave that 
is creditable under the applicable plan.
    (b) For employees separated for retirement after June 30, 1997, no 
unused sick leave is creditable toward Federal Benefit Payments.


Sec.  29.333  Military service.

    (a) For employees who entered on duty on or before June 30, 1997, 
and whose military service was performed prior to that date, credit for 
military service is included in Federal Benefit Payments under the 
terms and conditions applicable to each plan.
    (b) For employees who enter on duty after June 30, 1997, military 
service is not creditable toward Federal Benefit Payments, even if 
performed as of June 30, 1997.
    (c) For employees who entered on duty on or before June 30, 1997, 
but who perform military service after that date, the credit for 
military service is not included in Federal Benefit Payments.


Sec.  29.334  Deposit service.

    (a) Teachers Plan. (1) Periods of civilian service that were not 
subject to retirement deductions at the time they were performed are 
creditable for Federal Benefit Payments under the Teachers Plan if the 
deposit for the service was paid in full to the Teachers Plan as of 
June 30, 1997.
    (2) No credit is allowed for Federal Benefit Payments under the 
Teachers Plan for any period of civilian service that was not subject 
to retirement deductions at the time it was performed if the deposit 
for the service was not paid in full as of June 30, 1997.
    (3) In cases where a retiree receives credit from the District for 
a service deposit paid in installments that was not paid in full as of 
June 30, 1997, Treasury shall transfer to the District an amount equal 
to the portion of the deposit completed prior to June 30, 1997.
    (b) Police and Firefighters Plan. No credit is allowed for Federal 
Benefit Payments under the Police and Firefighters Plan for any period 
of civilian service that was not subject to retirement deductions at 
the time that the service was performed. (See definition of 
``governmental service'' at DC Code Sec.  4-607(15) (1997).)


Sec.  29.335  Refunded service.

    (a) Periods of civilian service that were subject to retirement 
deductions but for which the deductions were refunded to the employee 
are creditable for Federal Benefit Payments if the redeposit for the 
service was paid in full to the District government as of June 30, 
1997.
    (b) No credit is allowed for Federal Benefit Payments for any 
period of civilian service that was subject to retirement deductions 
but for which the deductions were refunded to the employee if the 
redeposit for the service was not paid in full to the District 
government as of June 30, 1997.
    (c) In cases where a retiree receives credit from the District for 
a service redeposit paid in installments that was not paid in full as 
of June 30, 1997, Treasury shall transfer to the District an amount 
equal to the portion of the redeposit completed prior to June 30, 1997.

Calculation of the Amount of Federal Benefit Payments


Sec.  29.341  General principle.

    (a) Where service is creditable both before and after June 30, 
1997, Federal Benefit Payments are computed under the rules of the 
applicable plan as though--
    (1) The employee were eligible to retire effective July 1, 1997, 
under the same conditions as the actual retirement (that is, using the 
annuity computation formula that applies under the plan in effect on 
June 29, 1997, and the retirement age, including any applicable age 
reduction, based on the age at actual retirement);
    (2) The service that became creditable after June 30, 1997, did not 
exist; and
    (3) The average salary is the average salary at separation.
    (b) Exceptions to the general principle apply where:
    (1) Congress amends the terms of the District Retirement Program in 
effect on June 29, 1997. For example, see section 11012(e) and (f) of 
the Balanced Budget Act of 1997, as amended by Public Laws 106-554, 
107-290, and 108-133 (codified at DC Code Sec.  1-803.02(e) and (f));
    (2) The retirement is based on disability after June 30, 1997 (see 
29.343); or
    (3) The benefit is based on the death of an employee after June 30, 
1997 and the survivor benefit is not based on years of service (see 
29.344).
    Note to Sec.  29.341: See examples 7B, 9, and 13 of appendix A of 
this subpart.


Sec.  29.342  Computed annuity exceeds the statutory maximum.

    (a) In cases in which the total computed annuity exceeds the 
statutory maximum:
    (1) Federal Benefit Payments may equal total benefits even if the 
employee had service after June 30, 1997.
    (2) If the employee had sufficient service as of June 30, 1997, to 
qualify for the maximum annuity under the plan, the Federal Benefit 
Payment is the maximum annuity under the plan. This will be the entire 
benefit except for any amount in excess of the normal maximum due to 
unused sick leave, which is the responsibility of the District. (See 
example 3, of appendix A of this subpart.)
    (b) If the employee did not perform sufficient service as of June 
30, 1997, to reach the statutory maximum benefit, but has sufficient 
service at actual retirement to exceed the statutory maximum, the 
Federal Benefit Payment is the amount earned through June 30, 1997. The 
District benefit payment is the amount by which the total benefit 
payable exceeds the Federal Benefit Payment.


Sec.  29.343  Disability benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to disability benefits prior to optional retirement age.
    (b) In cases involving disability benefits prior to optional 
retirement age, no Federal Benefit Payment is payable

[[Page 71052]]

until the retiree reaches the age of eligibility to receive a deferred 
annuity (age 55 under the Police and Firefighters Plan and age 62 under 
the Teachers Plan). When the age for deferred annuity is reached, the 
Federal Benefit Payment is paid using creditable service accrued as of 
June 30, 1997, and average salary (computed under the rules for the 
applicable plan) as of the date of separation. (See examples 6 and 7 of 
appendix A of this subpart.)
    (c) In no case will the amount of the Federal Benefit Payment 
exceed the amount of the total disability annuity.


Sec.  29.344  Survivor benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, 
applies to death benefits that are determined by length of service. In 
these cases, the survivor's Federal Benefit Payment is calculated by 
multiplying the survivor's total benefit by the ratio of the deceased 
retiree or employee's Federal Benefit Payment to the deceased retiree 
or employee's total annuity. (See examples 13A and B of appendix A of 
this subpart.)
    (b) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to death benefits that are not determined by length of 
service. In these cases, the survivor's Federal Benefit Payment is 
calculated by multiplying the survivor's total benefit by the deceased 
retiree or employee's number of full months of service through June 30, 
1997, and then dividing by the retiree or employee's number of months 
of total service at retirement. (See examples 13C-F of appendix A of 
this subpart.)
    (c) In cases involving a disability or early voluntary retiree who 
dies before reaching the age at which a Federal Benefit Payment is 
payable, the survivor's Federal Benefit Payment is calculated as though 
the employee had not retired from service, but had separated from 
service with eligibility to receive a deferred annuity. (See examples 
13G and 13H of appendix A of this subpart.)


Sec.  29.345  Annuity adjustments.

    (a) In cases in which the total annuity and the Federal Benefit 
Payment are equally impacted by a cost-of-living adjustment, the new 
Federal Benefit Payment is determined by applying the federal 
percentage of the total annuity to the new total annuity. (See examples 
14A-G of appendix A of this subpart.)
    (b) In cases in which the total annuity and the Federal Benefit 
Payment are not equally impacted by a change, such as a new plan 
provision or service-based adjustment, the Federal Benefit Payment is 
recalculated where applicable, and the federal percentage of the total 
annuity used to determine subsequent Federal Benefit Payments is 
recalculated. (See example 14H of appendix A of this subpart.)


Sec.  29.346  Reduction for survivor benefits.

    If a retiree elects a reduction for a survivor annuity, the ratio 
of the unreduced Federal Benefit Payment to the unreduced total annuity 
is multiplied by the reduced total annuity to determine the reduced 
Federal Benefit Payment. (See example 10 of appendix A of this 
subpart.)

Calculation of the Split of Refunds of Employee Contributions and 
Deposits


Sec.  29.351  General principle.

    Treasury will fund refunds of employee contributions and purchase 
of service deposits paid by or on behalf of a covered employee to the 
District of Columbia Police Officers' and Firefighters' Retirement Fund 
or District of Columbia Teachers' Retirement Fund on or before June 30, 
1997.


Sec.  29.352  Refunded contributions.

    For any given pay period, employee contributions are considered to 
have been made before the freeze date if the pay date was on or before 
June 30, 1997. As a result, for calendar year 1997, Treasury will fund 
refunds of employee contributions made by teachers through pay period 
12 and fund refunds of employee contributions made by police officers 
and firefighters through pay period 13. If pay period records are 
unavailable for calendar year 1997, and the participant separated on or 
before June 30, 1997, Treasury will fund 100 percent of the refund of 
retirement contributions. If pay period records are unavailable for 
calendar year 1997, and the participant was hired before January 1, 
1997 and separated after December 31, 1997, Treasury will fund 50 
percent of the refund of retirement contributions made to teachers in 
calendar year 1997, and 48 percent of the retirement contributions made 
to police officers or firefighters in calendar year 1997. Otherwise, if 
the participant separated after June 30, 1997, the percent of 
contributions made in calendar year 1997 funded by Treasury is assumed 
to be the ratio where the numerator is the number of days before July 1 
the participant was employed in calendar year 1997 and the denominator 
is the number of days the participant was employed in calendar year 
1997.


Sec.  29.353  Refunded deposits.

    Treasury will fund refunds of purchase of service deposits made by 
employees by lump sum payment or by installment payments on or before 
June 30, 1997.

Appendix A to Subpart C of Part 29--Examples

    This appendix contains sample calculations of Federal Benefit 
Payments in a variety of situations.

Optional Retirement Examples

Example 1: No Unused Sick Leave

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in October 1997. At 
retirement, he is age 51 with 20 years and 3 days of departmental 
service plus 3 years, 4 months, and 21 days of military service that 
preceded the departmental service. The Federal Benefit Payment 
begins at retirement. It is based on the 19 years, 8 months, and 22 
days of departmental service and 3 years, 4 months, and 21 days of 
military service performed as of June 30, 1997. Thus, the Federal 
Benefit Payment is based on 23 years and 1 month of service, all at 
the 2.5 percent accrual rate. The total annuity is based on 23 years 
and 4 months of service, all at the 2.5 percent accrual rate.

                       Example 1A--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Total Annuity Computation
Birth date: 09/10/46
Hire date: 10/09/77
Separation date: 10/11/97
Department service: 20/00/03
Other service: 03/04/21
Sick leave:
.025 service: 23.333333
.03 service:
Average salary: $45,680.80
Total: $26,647.12
Total/month: $2,221.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 9/10/46
Hire date: 10/09/77
Freeze date: 06/30/97
Department service: 19/08/22
Other service: 03/04/21
Sick leave:
.025 service: 23.083333
.03 service:
Average salary: $45,680.80
Total: $26,361.61
Total/month: $2,197.00
Total federal/month / total/month: 0.989194
------------------------------------------------------------------------

    B. In this example, the individual covered by the Police and 
Firefighters Plan was hired earlier than in example 1A and thus 
performed more service as of both June 30, 1997, and retirement in 
October 1997. At retirement, he is age 51 with 21 years, 11

[[Page 71053]]

months and 29 days of departmental service plus 3 years, 4 months, 
and 21 days of military service that preceded the departmental 
service. The Federal Benefit Payment begins at retirement. It is 
based on the 21 years, 8 months, and 18 days of departmental service 
and 3 years, 4 months, and 21 days of military service performed as 
of June 30, 1997. Thus, the Federal Benefit Payment is based on 25 
years and 1 month of service, 1 year and 8 months at the 3.0 percent 
accrual rate and 23 years and 5 months at the 2.5 percent accrual 
rate (including 1 month consisting of 18 days of departmental 
service and 21 days of other service). The total annuity is based on 
25 years and 4 months of service, 1 year and 11 months at the 3.0 
percent accrual rate and 23 years and 5 months at the 2.5 percent 
accrual rate (including 1 month consisting of 29 days of 
departmental service and 21 days of other service).

                       Example 1B--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Separation date: 10/11/97
Department service: 21/11/29
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.916667
Average salary: $45,680.80
Total: $29,368.96
Total/month $2,447.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Freeze date: 06/30/97
Department service: 21/08/18
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.666667
Average salary: $45,680.80
Total: $29,026.36
Total/month: $2,419.00
Total federal/month / total/month: 0.988557
------------------------------------------------------------------------

Example 2: Unused Sick Leave Credit

    In this example, an individual covered by the Police and 
Firefighters Plan and hired before 1980 retires in March 1998. At 
retirement, she is age 48 with 24 years, 8 months, and 6 days of 
departmental service plus 6 months and 4 days of other service 
(deposit paid before June 30, 1997) and 11 months and 11 days of 
unused sick leave. For a police officer (or a non-firefighting 
division firefighter) such an amount of sick leave would be 1,968 
hours (246 days, based on a 260-day year, times 8 hours per day). 
For a firefighting division firefighter, such an amount would be 
2,069 hours (341 days divided by 360 days per year times 2,184 hours 
per year). The Federal Benefit Payment begins at retirement. It is 
based on the 23 years, 11 months, and 23 days of departmental 
service performed as of June 30, 1997, and 6 months and 4 days of 
other service. Thus, the Federal Benefit Payment is based on 20 
years departmental and 6 months of other service at the 2.5 percent 
accrual rate and 3 years and 11 months of service at the 3.0 percent 
accrual rate. The total annuity is based on 20 years and 6 months of 
service at the 2.5 percent accrual rate and 5 years and 7 months of 
service at the 3 percent accrual rate.

                       Example 2--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Separation date: 03/13/98
Department service: 24/08/06
Other service: 00/06/04
Sick leave: 00/11/11
.025 service: 20.5
.03 service: 5.583333
Average salary: $61,264.24
Total: $41,659.68
Total/month: $3,472.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Freeze date: 06/30/97
Department service: 23/11/23
Other service: 00/06/04
Sick leave:
.025 service: 20.5
.03 service: 3.916667
Average salary: $61,264.24
Total: $38,596.47
Total/month: $3,216.00
Total federal/month / total/month: 0.926267
------------------------------------------------------------------------

Example 3: Calculated Benefit Exceeds Statutory Maximum

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in March 1998. At 
retirement, he is age 55 with 32 years and 17 days of departmental 
service. The Federal Benefit Payment begins at retirement. It is 
based on the 31 years, 3 months, and 17 days of departmental service 
performed as of June 30, 1997. Thus, the Federal Benefit Payment is 
based on 20 years of service at the 2.5 percent accrual rate and 11 
years and 3 months of service at the 3.0 percent accrual rate. 
However, the annuity is limited to 80 percent of the basic salary at 
time of retirement. (This limitation does not apply to the unused 
sick leave credit.) The annuity computed as of June 30, 1997, equals 
the full benefit payable; therefore, the Federal Benefit Payment is 
the total benefit.

                       Example 3A--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total: $64,782.34
Total/month: $5,399.00
Maximum: $61,744.00
Maximum/month: $5,145.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Freeze date: 03/30/97
Department service: 31/03/17
Other service:
Sick leave:
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
Maximum/month: $5,145.00
Total federal/month / total/month: 1.0
------------------------------------------------------------------------

    B. In this example, the individual in example 3A also has 6 
months of unused sick leave at retirement. The sick leave credit is 
not subject to the 80% limitation and does not become creditable 
service until the date of separation. For a police officer (or a 
non-firefighting division firefighter) such an amount of sick leave 
would be 1,040 hours (130 days, based on a 260-day year, times 8 
hours per day). For a firefighting division firefighter, such an 
amount would be 1,092 hours (180 days divided by 360 days per year 
times 2,184 hours per year). Six months of unused sick leave 
increases the annual total benefit by 1.5 percent of the average 
salary, or in the example by $94 per month. The District is 
responsible for the portion of the annuity attributable to the 
unused sick leave because it became creditable at retirement, that 
is, after June 30, 1997.

                       Example 3B--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total wo/sl credit: $64,782.34
Total/month: $5,399.00
Max wo/sl credit: $61,744.00
Max w/sl credit: $62,873.92
Monthly benefit: $5,239.00

[[Page 71054]]

 
 
 
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Freeze date: 06/30/97
Department service: 31/03/17
Other service:
Sick leave: none
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
Monthly benefit: $5,145.00
Total federal/month / total/month: 0.982058
------------------------------------------------------------------------

Example 4: Excess Leave Without Pay

    In this example, an individual covered by the Teachers Plan 
hired before 1996 retires in February 1998. At retirement, she is 
age 64 with 27 years of departmental service and 6 years, 7 months, 
and 28 days of other service (creditable before June 30, 1997). 
However, only 6 months of leave in a fiscal year without pay may be 
credited toward retirement under the Teachers Plan. She had 3 months 
and 18 days of excess leave without pay as of June 30, 1997. Since 
the excess leave without pay occurred before June 30, 1997, the time 
attributable to the excess leave without pay is subtracted from the 
service used in both the Federal Benefit Payment and the total 
benefit computations. The Federal Benefit Payment begins at 
retirement. It is based on the 32 years and 8 months of service (32 
years, 11 months, and 28 days minus 3 months and 18 days and the 
partial month dropped); 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate, 
and 22 years and 8 months of service at the 2 percent accrual rate. 
The total annuity is based on 33 years and 4 months of service (33 
years, 7 months and 28 days minus 3 months and 18 days and the 
partial month dropped) 5 years of service at the 1.5 percent accrual 
rate, 5 years of service at the 1.75 percent accrual rate and 23 
years and 4 months of service at the 2 percent accrual rate.

    Note: For the Teachers Plan, section 1230(a) of title 31 of the 
D.C. Code (1997) allows for 6 months leave without pay in any fiscal 
year. For the Police and Firefighters Plan, section 610(d) of title 
4 of the D.C. Code (1997) allows for 6 months leave without pay in 
any calendar year.


                      Example 4--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Separation date: 02/28/98
Department service: 27/00/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $53,121.00
Total: $33,421.98
Total/month: $2,785.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Freeze date: 06/30/97
Department service: 26/04/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 22.666667
Average salary: $53,121.00
Total: $32,713.66
Total/month: $2,726.00
Total federal/month / total/month: 0.978815
------------------------------------------------------------------------

Example 5: Service Credit Deposits

    A. An individual covered by the Teachers Plan hired before 1996 
retires in October 1997. At retirement, he is age 61 with 30 years 
and 3 days of departmental service plus 3 years, 4 months, and 21 
days of other service that preceded the departmental service for 
which the deposit was fully paid on or before June 30, 1997. The 
Federal Benefit Payment begins at retirement. It is based on the 29 
years, 8 months, and 22 days of departmental service and 3 years, 4 
months, and 21 days of service performed as of June 30, 1997. Thus, 
the Federal Benefit Payment is based on 33 years and 1 month of 
service; 5 years of service at the 1.5 percent accrual rate, 5 years 
of service at the 1.75 percent accrual rate, and 23 years and 1 
month of service at the 2 percent accrual rate. The total annuity is 
based on 33 years and 4 months of service; 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent 
accrual rate and 23 years and 4 months of service at the 2 percent 
accrual rate.

                      Example 5A--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department Service: 30/00/03
Other service: 03/04/21
Deposit paid before freeze date:
Other service credit allowed:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
 
 
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: 03/04/21
Deposit paid before freeze date:
Other service credit allowed:
Sick Leave:
.015 service: 5
.0175 service: 5
.02 service: 23.08333; 13 days
dropped
Average salary: $45,680.80
Total: $28,512.45
Total/month: $2,376.00
Total federal/month / total/month: 0.992067
------------------------------------------------------------------------

    B. In this example, the employee in example 5A did not pay any 
of the deposit to obtain credit for the 3 years, 4 months, and 21 
days of other service as of June 30, 1997. Thus, none of the other 
service is used in the computation of the Federal Benefit Payment. 
An individual covered by the Teachers Plan hired before 1996 retires 
in October 1997. At retirement, he is age 61 with 30 years and 3 
days of departmental service plus 3 years, 4 months, and 21 days of 
other service that preceded the departmental service for which the 
deposit was paid in full in October 1997 (at retirement). The 
Federal Benefit Payment begins at retirement. It is based on only 
the 29 years, 8 months, and 22 days of departmental service 
performed as of June 30, 1997; 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate, 
and 19 years and 8 months of service at the 2 percent accrual rate. 
The total annuity is based on 33 years and 4 months of service; 5 
years of service at the 1.5 percent accrual rate, 5 years of service 
at the 1.75 percent accrual rate and 23 years and 4 months of 
service at the 2 percent accrual rate.

                      Example 5B--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-----------------------------------------------------------------------
                       Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
$0.00
Department service: 30/00/03
Other service: 03/04/21
Total deposit paid after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                  Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67

[[Page 71055]]

 
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Total deposit paid after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days
dropped
Average salary: $45,680.80
Total: $25,390.90
Total/month: $2,116.00
Total federal/month / total/month: 0.883507
------------------------------------------------------------------------

    C. In this example, the employee in examples 5A and B began 
installment payments on the deposit to obtain credit for the 3 
years, 4 months, and 21 days of other service as of June 30, 1997, 
but did not complete the deposit until October 1997 (at retirement). 
The other service is not used in the computation of the Federal 
Benefit Payment because the payment was not completed as of June 30, 
1997. Thus, the result is the same as in example 5B.

                      Example 5C--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department service: 30/00/03
Other service: 03/04/21
Partial deposit paid as of 6/30/97:
Deposit completed after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Partial deposit paid as of 6/30/97:
Deposit completed after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary: $45,680.80
Total: $25,390.90
Total/month: $2,116.00
Total federal/month / total/month: 0.883507
------------------------------------------------------------------------

Disability Retirement Examples

Example 6: Disability Occurs Before Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in 
the line of duty in October 1997. At retirement, he is age 45 with 
18 years, 5 months, and 11 days of departmental service. Since he 
had performed less than 20 years of service and had not reached the 
age of eligibility for an optional retirement, the Federal Benefit 
Payment does not begin at retirement. When the disability annuitant 
reaches age 55, he satisfies the age and service requirements for 
deferred retirement. At that time (August 20, 2007), the Federal 
Benefit Payment begins. It is based on the 18 years, 1 month, and 17 
days of departmental service performed as of June 30, 1997, all at 
the 2.5 percent accrual rate.

          Example 6A--Police Disability in Line of Duty, Age 45
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Separation date: 10/24/97
Department service: 18/05/11
Other service:
Sick leave:
.025 service: 18.416667
.03 service:
Average salary: $47,788.64
Final salary: $50,938.00
Total: $22,002.70
Total/month: $1,834.00
2/3 of average pay: $31,859.11
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Freeze date: 06/30/97
Department service: 18/01/17
Other service:
Sick leave:
.025 service: 18.083333
.03 service:
Average salary: $47,788.64
Final salary: $50,938.00
Total: $21,604.43
Total/month: $1,800.00; deferred
Total federal/month / total/month: 0.0 (at time of retirement)
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan 
hired before 1996 retires based on a disability in December 1997. At 
retirement, she is age 49 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since she does not qualify for 
optional retirement at separation, the Federal Benefit Payment does 
not begin at separation. When the disability annuitant reaches age 
62, she will satisfy the age and service requirements for deferred 
retirement. At that time (March 9, 2010), the Federal Benefit 
Payment begins. The time attributable to the excess leave without 
pay is subtracted from the service used to compute the Federal 
Benefit Payment. Since the excess leave without pay occurred before 
June 30, 1997, the deferred Federal Benefit Payment is based on the 
23 years and 6 months of service; 5 years of service at the 1.5 
percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 13 and 6 months of service at the 2 percent accrual rate.

                 Example 6B--Teachers Disability Age 49
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00; deferred
Total federal/month / total/month: 0.0 (at time of retirement)
------------------------------------------------------------------------

Example 7: Disability Occurs After Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in 
the line of duty in October 1997. At retirement, she is age 55 with 
24 years, 5 months, and 11 days of departmental service. Since she 
was also eligible for optional retirement at the time of separation, 
the Federal Benefit Payment commences at retirement. It is based on 
the 24 years, 1 month, and 17 days of departmental service performed 
as of June 30, 1997. Thus, the Federal Benefit Payment is based on 
20 years of service at the 2.5 percent accrual rate and 4 years and 
1 month of service at the 3 percent accrual rate. The total annuity 
is based on the disability formula and is equal to two-thirds of 
average pay because that amount is higher than the 63.25 percent 
payable based on total service.

          Example 7A--Police Disability in Line of Duty Age 55
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 10/01/42
Hire date: 05/14/73
Separation date: 10/24/97
Department service: 24/05/11

[[Page 71056]]

 
Other service:
Sick leave:
.025 service: 20
.03 service: 4.416667
Average salary: $47,788.64
Final salary: $50,938.00
Total: $30,226.31
Total/month: $2,519.00
2/3 of average pay: $31,859.11
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 10/01/42
Hire date: 05/14/73
Freeze date: 06/30/97
Department service: 24/01/17
Other service:
Sick leave:
.025 service: 20
.03 service: 4.083333
Average salary: $47,788.64
Final salary: $50,938.00
Total: $29,748.43
Total/month: $2,479.00
Total federal/month / total/month: 0.984121
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan 
hired before 1996 retires based on a disability in December 1997. At 
retirement, he is age 60 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since he qualifies for 
optional retirement at separation, the Federal Benefit Payment 
begins at retirement. Since the excess leave without pay occurred 
before June 30, 1997, and the total annuity is based on actual 
service (that is, exceeds the guaranteed disability minimum), the 
time attributable to the excess leave without pay is subtracted from 
the service used to compute the Federal Benefit Payment and total 
benefit. The Federal Benefit Payment is based on 23 years and 6 
months of service; 5 years of service at the 1.5 percent accrual 
rate, 5 years of service at the 1.75 percent accrual rate, and 13 
years and 6 months of service at the 2 percent accrual rate. The 
total annuity payable is based on 24 years of service; 5 years of 
service at the 1.5 percent accrual rate, 5 years of service at the 
1.75 percent accrual rate, and 14 years of service at the 2 percent 
accrual rate.

                 Example 7B--Teachers Disability Age 60
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00
Total federal/month / total/month: 0.977540
------------------------------------------------------------------------

Deferred Retirement Examples

Example 8: All Service Before June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in March 1986 with 
title to a deferred annuity. In November 1997, he reaches age 55 and 
becomes eligible for the deferred annuity based on his 15 years, 9 
months, and 8 days of departmental service, all at the 2.5 percent 
accrual rate. The total annuity is based on the same 15 years, 9 
months, and 8 days of service all at the 2.5 percent accrual rate. 
Since all the service is creditable as of June 30, 1997, the Federal 
Benefit Payment equals the total annuity.

                       Example 8--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Separation date: 03/08/86
Department service: 15/09/08
Other service:
Sick leave:
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69; deferred
Total/month: $998.00; deferred
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Freeze date: 03/08/86
Department service: 15/09/08
Other service:
Sick leave:
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69; deferred
Total/month: $998.00; deferred
Total federal/month / total/month: 1.0; deferred
------------------------------------------------------------------------

Example 9: Service Straddles June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in December 1997 with 
title to a deferred annuity. In November 2007, he will reach age 55 
and becomes eligible to receive a deferred annuity. At that time, 
the Federal Benefit Payment begins. It is based on the 18 years and 
1 month of departmental service performed as of June 30, 1997, all 
at the 2.5 percent accrual rate. The total annuity begins at the 
same time, based on his 18 years, 6 months, and 8 days of 
departmental service, all at the 2.5 percent accrual rate.

                       Example 9--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Separation date: 12/08/97
Department service: 18/06/08
Other service:
Sick leave:
.025 service: 18.5
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $14,072.55; deferred
Total/month: $1,173.00; deferred
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Freeze date: 06/30/97
Department service: 18/01/00
Other service:
Sick leave:
.025 service: 18.083333
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $13,755.60; deferred
Total/month: $1,146.00; deferred
Total federal/month / total/month: 0.976982; deferred
------------------------------------------------------------------------

Reduction To Provide a Survivor Annuity Examples

Example 10: Survivor Reduction Calculations

    Both of the following examples involve a former teacher who 
elected a reduced annuity to provide a survivor benefit:
    A. In this example, the employee elects to provide full survivor 
benefits of 55% of the employee's unreduced annuity. The total 
annuity is reduced by 2\1/2\ percent of the first $3,600 and 10 
percent of the balance. The reduced Federal Benefit Payment is 
determined by multiplying the reduced total annuity (rounded) by the 
ratio of the unreduced Federal Benefit Payment to the unreduced 
total annuity. Military service occurred prior to June 30, 1997 and 
purchase of other service was completed prior to June 30, 1997.

[[Page 71057]]



           Example 10A--Teachers Optional W/Survivor Reduction
                              [Pre-96 Hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Total unreduced/month: $3,539.00
Reduction: $3,976.41
Total: $38,487.72
Total/month: $3,207.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total federal unreduced: $41,796.28
Total federal unreduced/month: $3,483.00
Total federal unreduced/month / total unreduced/month: 0.984176
Total federal/month: $3,156.00
------------------------------------------------------------------------

    B. In this example, the employee elects to provide a partial 
survivor annuity of 26% of the employee's unreduced annuity. The 
total annuity is reduced by 2\1/2\ percent of the first $3,600 of 
$20,073.95 and 10 percent of the balance. The reduced Federal 
Benefit Payment is determined by multiplying the reduced total 
annuity (rounded) by the ratio of the unreduced Federal Benefit 
Payment to the unreduced total annuity.

           Example 10B--Teachers Optional W/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Total unreduced/month: $3,539.00
Reduction: $1,737.40
Total reduced: $40,726.73
Total reduced/month: $3,394.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire Date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total federal unreduced: $41,796.28
Total federal unreduced/month: $3,483.00
Total federal unreduced/month / total unreduced/month: 0.984176
Total federal reduced/month: $3,340.00
------------------------------------------------------------------------

Early Optional or Involuntary Retirement Examples

Example 11: Early Optional With Age Reduction

    In this example, an individual covered by the Teachers Plan 
hired before 1996 retires voluntarily in February 1998, under a 
special program that allows early retirement with at least 20 years 
of service at age 50 older, or at least 25 years of service at any 
age. At retirement, she is 6 full months short of age 55. She has 25 
years and 5 months of departmental service; 6 years, 2 months, and 
19 days of other service (creditable before June 30, 1997); and 2 
months and 9 days of unused sick leave. Since she is not eligible 
for optional retirement and she is eligible to retire voluntarily 
only because of the District-approved special program, the Federal 
Benefit Payment is calculated similar to a disability retirement. It 
does not begin until she becomes eligible for a deferred annuity at 
age 62. When it commences the Federal Benefit Payment will be based 
on the service creditable as of June 30, 1997: 30 years and 11 
months of service; 5 years of service at the 1.5 percent accrual 
rate, 5 years of service at the 1.75 percent accrual rate, and 20 
years and 11 months of service at the 2 percent accrual rate. The 
total annuity is based on 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate 
and 21 years and 9 months of service at the 2 percent accrual rate 
(including the unused sick leave). Because the Federal Benefit 
Payment is based on the deferred annuity, rather than the early 
voluntary retirement, it is not reduced by the age reduction factor 
used to compute the total benefit.

             Example 11--Teachers Early Out W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total/month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80; deferred
Reduction factor: 1.000000 no reduction
Total reduced: $40,240.80; deferred
Total/month: $3,353.00 deferred
Total federal unreduced/month / total unreduced/month: 0.0 (at time of
 retirement)
------------------------------------------------------------------------

Example 12: Involuntary With Age Reduction

    In this example, an individual covered by the Teachers Plan 
hired before 1996 retires involuntarily in February 1998. At 
retirement, she is 6 full months short of age 55. She has 25 years 
and 5 months of departmental service; 6 years, 2 months, and 19 days 
of other service (creditable before June 30, 1997); and 2 months and 
9 days of unused sick leave. The Federal Benefit Payment begins at 
retirement. It is based on the 30 years and 11 months of service; 5 
years of service at the 1.5 percent accrual rate, 5 years of service 
at the 1.75 percent accrual rate, and 20 years and 11 months of 
service at the 2 percent accrual rate. The total annuity is based on 
5 years of service at the 1.5 percent accrual rate, 5 years of 
service at the 1.75 percent accrual rate and 21 years and 9 months 
of service at the 2 percent accrual rate (including the unused sick 
leave). Both the Federal Benefit Payment and the total benefit are 
reduced by the age reduction factor.

            Example 12--Teachers Involuntary W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14

[[Page 71058]]

 
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total/month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Age reduction factor: 0.990000
Total reduced: $39,838.39
Total/month: $3,320.00
Total federal/month / total/month: 0.972182
------------------------------------------------------------------------

Death Benefits Example

Example 13: Death Benefits Calculation

    Examples A and B involve service-based death benefits 
calculations. Examples C-F involve non-service-based death benefits 
calculations. Examples G and H involve disability death benefit 
calculations.
    A. In this example, an individual covered by the Teachers Plan 
retires in December 1997 and elects to provide a full survivor 
annuity. He dies in June 1998. The survivor's Federal Benefit 
Payment is 98.4 percent ($3,483 / $3,539) of the total survivor 
benefit.

                  Example 13A--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Death date: 06/24/98
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
Average salary: $66,785.00
Total unreduced/month (retiree): $3,539.00
Total/month (survivor): $1,946.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Death date: 06/24/98
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
Average salary: $66,785.00
Total federal unreduced/month (retiree): $3,483.00
Total federal unreduced/month (retiree) / total unreduced/month
 (retiree): 0.984176
Total federal/month (survivor): $1,915.00
------------------------------------------------------------------------

    B. In this example, a teacher dies in service on June 30, 1998 
after 31 years of departmental service. Since the survivor annuity 
is based on actual service, the Federal Benefit Payment is 96.5 
percent ($1,818 / $1,883) of the total survivor benefit.

                  Example 13B--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Separation date: 06/30/98
Death date: 06/30/98
Department service: 31/00/00
Average salary: $38,787.88
Total (retiree): $22,593.94
Total/month (retiree): $1,883.00
Total/month (survivor): $1,036.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Freeze date: 06/30/97
Death date: 06/30/98
Department service: 30/00/00
Average salary: $38,787.88
Total federal (retiree): $21,818.18
Total federal/month (retiree): $1,818.00
Total federal/month (retiree) / total/month (retiree): 0.965481
Total federal/month (survivor): $1,000.00
------------------------------------------------------------------------

    C. In this example, as in Example A, an individual covered by 
the Teachers Plan retires in December 1997 but elects to provide a 
survivor annuity of $12,000. He dies in June 1998. Because the 
amount of the survivor annuity is not service-based, the Federal 
Benefit Payment is a prorated portion of the total benefit. Since 
the teacher had 398 months of service as of the freeze date and 404 
months of service, at retirement, the Federal Benefit Payment equals 
398/404ths of the total benefit.

                  Example 13C--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Death date: 06/24/98
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
Months of service: 404
Total: $12,000.00
Total/month: $1,000.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Death date: 06/24/98
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
Months of service: 398
Federal service / total service: 0.985149
Total: $11,820.00
Total/month: $985.00
------------------------------------------------------------------------

    D. In this example, a teacher dies in service on April 1, 1998 
after 14 years and 6 months of departmental service. Because the 
survivor annuity is based on the guaranteed minimum, the Federal 
Benefit Payment is a prorated portion of the total benefit. Since 
the teacher had 165 months of service as of the freeze date and 180 
months of service, including unused sick leave, at death, the 
Federal Benefit Payment equals 165/180ths of the total benefit.

                  Example 13D--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 10/01/83
Separation date: 04/01/98
Death date: 04/01/98
Department service: 14/06/01
Unused Sick Leave: 00/06/00
Average salary: $36,000.00
Months of service: 180
Total: $7,920.00
Total/month: $660.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Freeze date: 06/30/97
Death date: 04/01/98
Department Service: 13/09/00
Average salary: $36,000.00
Months of service: 165
Federal service / total service: 0.916667
Total: $7,260.00
Total/month: $605.00
------------------------------------------------------------------------

    E. In this example, as in the prior example, a teacher dies in 
service on April 1, 1998 after 15 years of departmental service. 
However, in this example, the teacher was age 40 on the hire date. 
The amount of service used in the survivor annuity calculation 
equals the amount of service that the teacher would have had if the 
teacher continued covered employment until age 60. Because the 
survivor annuity is based on projected service, a form of the 
guaranteed minimum, the Federal Benefit Payment is a prorated 
portion of the total benefit. Since the teacher had 171 months of 
service as of the freeze date and 180 months of service at death, 
the Federal Benefit Payment equals 171/180ths of the total benefit.

[[Page 71059]]



                  Example 13E--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/43
Hire date: 04/01/83
Separation date: 04/01/98
Death date: 04/01/98
Department service: 15/00/01
Departmental Service projected to age 60: 20/00/01
.015 service: 5
.0175 service: 5
.02 service: 10
Average salary: $36,000.00
Months of service: 180
Total: $7,177.50
Total/month: $598.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/43
Hire date: 04/01/83
Freeze date: 06/30/97
Death date: 04/01/98
Department service: 14/03/00
Average salary: $36,000.00
Months of service: 171
Federal service / total service: 0.950000
Total: $6,818.63
Total/month: $568.00
------------------------------------------------------------------------

    F. In this example, a police officer dies in the line of duty on 
July 31, 2001 after 18 years of departmental service. The survivor 
annuity is equal to 100 percent of the officer's pay at the time of 
death, as provided by District legislation effective October 1, 
2000. However, the Federal Benefit Payment is calculated based on 
plan provisions in effect on June 29, 1997, which provided for a 
survivor annuity equal to 40 percent of the officer's pay at the 
time of death. Because the Federal Benefit Payment is not service-
based and the officer had 167 months of service as of the freeze 
date and 216 months of service, including unused sick leave, at 
death, the Federal Benefit Payment equals 167/216ths of the total 
benefit calculated according to plan provisions in effect on July 1, 
1997. The difference between the total benefit paid and the Federal 
Benefit Payment calculated according to plan provisions in effect on 
June 29, 1997 is the responsibility of the District government.

                   Example 13F--Police Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 07/13/62
Hire date: 08/01/83
Death date: 07/31/2001
Department service: 18/00/00
Average salary: $54,000.00
Final salary: $56,000.00
Months of service: 216
Total: $56,004.00
Total/month: $4,667.00
Total based on July 1, 1997 provisions: $21,600.00
Total/month based on July 1, 1997 provisions: $1,800.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 07/13/62
Hire date: 08/01/83
Freeze date: 06/30/97
Death date: 07/31/2001
Department service: 13/11/00
Months of service: 167
Federal service / total service: 0.773148
Total: $16,704.00
Total/month: $1,392.00
------------------------------------------------------------------------

    G. In this example, a firefighter dies on July 1, 1999 at age 47 
after retiring based on a disability in the line of duty in November 
1997. At separation, the firefighter was not eligible for optional 
retirement but was eligible to receive a deferred retirement annuity 
at age 55. Therefore, the survivor's Federal Benefit Payment is 
calculated based on the plan rules for deferred retirees. Under the 
Police and Firefighters Plan, if a separated police officer or 
firefighter eligible for deferred retirement dies before reaching 
age 55, the survivor is eligible to receive an annuity. The survivor 
annuity is based on the firefighter's adjusted average pay. 
Therefore, the survivor's Federal Benefit Payment is a prorated 
portion of the survivor annuity. Since the firefighter had 217 
months of service as of the freeze date and 222 months of service at 
retirement, the survivor's Federal Benefit Payment equals 217/222nds 
of the total survivor benefit.

   Example 13G--Firefighters Disability/Early Voluntary Death Benefits
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Separation date: 11/28/97
Death date: 07/01/99
Department service: 18/06/15
Adjusted average salary: $45,987.00
Months of service: 222
Total: $18,396.00
Total/month: $1,533.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Freeze date: 06/30/97
Death date: 07/01/99
Department service: 18/01/17
Adjusted average salary: $45,987.00
Months of service: 217
Federal service / total service: .977477
Total: $17,976.00
Total/month: $1,498.00
------------------------------------------------------------------------

    H. In this example, a teacher dies on August 3, 1999 at age 58 
after retiring based on a disability in April 1998. At separation, 
the teacher was not eligible for optional retirement but was 
eligible to receive a deferred retirement annuity at age 62. 
Therefore, the survivor's Federal Benefit Payment is calculated 
based on the plan rules for deferred retirees. Under the Teachers 
Plan, if a separated teacher eligible for deferred retirement dies 
before reaching age 62, the survivor is not eligible to receive an 
annuity. Therefore, the survivor's Federal Benefit Payment is zero 
and the survivor annuity is the full responsibility of the District.

     Example 13H--Teachers Disability/Early Voluntary Death Benefits
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 08/01/41
Hire date: 07/01/76
Separation date: 04/30/98
Death date: 08/03/99
Total: $21,888.00
Total/month: $1,824.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 08/01/41
Hire date: 07/01/76
Separation date: 04/30/98
Death date: 08/03/99
Total: $0.00
Total/month: $0.00
Total federal/month / total/month: 0.0
------------------------------------------------------------------------

Cost of Living Adjustment (COLA) Examples

Example 14: Application of Cost of Living Adjustments

    In cases in which the District plan applies the same cost of 
living adjustment that is provided for the Federal Benefit Payment, 
the federal percentage is applied to the new total benefit after the 
adjustment to determine the new Federal Benefit Payment after the 
adjustment.
    A. In this example, a teacher retiree receives a cost of living 
adjustment that is the same for the federal and District portions of 
the total benefit. The federal percentage for the retiree is applied 
to the new total benefit after the adjustment to determine the new 
Federal Benefit Payment after the adjustment.

        Example 14A--Teachers COLA--Retiree W/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
Total unreduced: $42,464.13
Total unreduced/month: $3,539.00
Total/month: $3,207.00
Federal unreduced: $41,796.28
Federal unreduced/month: $3,483.00
Federal percentage = federal unreduced/month / total unreduced/month:
 0.984176
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 5%:
Total COLA: $160.00
New total/month: $3,367.00

[[Page 71060]]

 
New federal benefit/month = new total benefit/month x federal percentage
 = $3,314.00
------------------------------------------------------------------------

    B. In this example, a survivor of a deceased teacher retiree 
receives a cost of living adjustment that is the same for the 
federal and District portions of the total benefit. Since the 
survivor benefit is service related, the federal percentage for the 
retiree is applied to the new total benefit of the survivor after 
the adjustment to determine the new Federal Benefit Payment after 
the adjustment.

             Example 14B--Teachers COLA--Survivor of Retiree
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
   Benefit Computation (at death of retiree whose annuity was based on
                 service--percentage survivor election)
------------------------------------------------------------------------
Total/month: $2,043.00
Federal percentage (retiree): 0.984176
Federal/month: $2,011.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 4.5%:
Total COLA: $92.00
New total/month: $2,135.00
New federal benefit/month = new total benefit/month x federal percentage
 = $2,101.00
------------------------------------------------------------------------

    C. In this example, a survivor of a deceased teacher retiree 
receives a cost of living adjustment that is the same for the 
federal and District portions of the total benefit. Since the 
survivor annuity is non-service related, the federal percentage for 
the survivor is applied to the new total benefit of the survivor 
after the adjustment to determine the new Federal Benefit Payment 
after the adjustment.

             Example 14C--Teachers COLA--Survivor of Retiree
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Benefit Computation (at death of retiree--flat amount survivor election)
------------------------------------------------------------------------
Total months of service: 404
Federal months of service: 398
Total/month: $1,000.00
Federal percentage = federal service / total service: 0.985149
Federal/month: $985.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 4.5%:
Total COLA: $45.00
New total/month: $1,045.00
New federal benefit/month = new total benefit/month x federal percentage
 = $1,029.00
------------------------------------------------------------------------


    Note: This method also applies to a percentage survivor election 
by a retiree whose annuity was based on a guaranteed minimum.

    D. In this example, a survivor of a deceased teacher receives a 
cost of living adjustment that is the same for the federal and 
District portions of the total benefit. Since the survivor annuity 
is service related, the federal percentage based on the deceased 
teacher's service is applied to the new total benefit of the 
survivor after the adjustment to determine the new Federal Benefit 
Payment after the adjustment.

            Example 14D--Teachers COLA--Survivor of Employee
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
             Benefit Computation (at death-based on service)
------------------------------------------------------------------------
Total/month: $1,036.00
Federal/month: $1,000.00
Federal percentage = federal/month
/ total/month: 0.965251
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 5%:
Total COLA: $52.00
New total benefit/month: $1,088.00
New federal benefit/month = new total benefit/month x federal percentage
 = $1,050.00
------------------------------------------------------------------------

    E. In this example, a survivor of a deceased teacher receives a 
cost of living adjustment that is the same for the federal and 
District portions of the total benefit. Since the survivor annuity 
is non-service related, the federal percentage for the survivor is 
applied to the new total benefit of the survivor after the 
adjustment to determine the new Federal Benefit Payment after the 
adjustment.

            Example 14E--Teachers COLA--Survivor of Employee
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
            Benefit Computation (at death-guaranteed minimum)
------------------------------------------------------------------------
Total months of service: 180
Federal months of service: 171
Total/month: $598.00
Federal percentage = federal service / total service: 0.950000
Federal/month: $568.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 5%:
Total COLA: $30.00
New total/month: $628.00
New federal benefit/month: = new total benefit/month x federal
 percentage = $597.00
------------------------------------------------------------------------

    F. In this example, a survivor of a deceased retired police 
officer receives a cost of living adjustment that is the same for 
the federal and District portions of the total benefit. Since the 
survivor annuity is non-service related, the federal percentage for 
the survivor is applied to the new total benefit of the survivor 
after the adjustment to determine the new Federal Benefit Payment 
after the adjustment.

              Example 14F--Police COLA--Survivor of Retiree
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                Benefit Computation (at death of retiree)
------------------------------------------------------------------------
Total months of service: 240
Federal months of service: 236
Total/month: $1,614.00
Federal percentage = federal service / total service: 0.983333
Federal/month: $1,587.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 5%:
Total COLA: $81.00
New total/month: $1,695.00
New federal benefit/month = new total benefit/month x federal percentage
 = $1,667.00
------------------------------------------------------------------------

    G. In this example, a survivor of a deceased firefighter 
receives a cost of living adjustment that is the same for the 
federal and District portions of the total benefit. Since the 
survivor annuity is non-service related, the federal percentage for 
the survivor is applied to the new total benefit of the survivor 
after the adjustment to determine the new Federal Benefit Payment 
after the adjustment.

           Example 14G--Firefighter COLA--Survivor of Employee
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
     Benefit Computation (at death of employee in the line of duty)
------------------------------------------------------------------------
Total/month: $4,667.00
Federal/month: $1,867.00
Federal percentage = federal/month / total/month: 0.400043
                            COLA Computation
------------------------------------------------------------------------
District and Federal COLA rate 4.5%:
Total COLA: $210.00
New total benefit/month: $4,877.00
New federal benefit/month = New total benefit/month x federal percentage
 = $1,951.00
------------------------------------------------------------------------

    H. In this example, a new District plan provision applies a 
different cost of living adjustment than is provided for the Federal 
Benefit Payment. In Variation 1, the federal cost of living 
adjustment is applied to the Federal Benefit Payment and the 
District cost

[[Page 71061]]

of living adjustment is applied to the total benefit. In Variation 
2, the federal cost of living adjustment is applied to the Federal 
Benefit Payment and the District cost of living adjustment is 
applied to the District benefit payment. A new federal percentage 
equal to the ratio of the Federal Benefit Payment to the total 
benefit is established after the adjustments.

                       Example 14H--Teachers COLA
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                   Benefit Computation (at retirement)
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/04/48
Hire date: 03/01/86
Separation date: 02/28/2013
Department service: 27/00/00
Other service paid in 1995: 06/07/28
Excess LWOP in 1990: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $53,121.00
Total: $33,421.96
Total/month: $2,785.00
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/04/48
Hire date: 03/01/86
Freeze date: 06/30/1997
Department service: 11/04/00
Other service paid in 1995: 06/07/28
Excess LWOP in 1990: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 7.666667
Average salary: $53,121.00
Total: $16,777.38
Total/month: $1,398.00
Federal percentage: 0.501975
------------------------------------------------------------------------
                       COLA Computation Variations
                               Variation 1
------------------------------------------------------------------------
District COLA rate 5% applied to total benefit:
Total COLA: $139.00
New total benefit/month: $2,924.00
Federal COLA rate 4%
Federal COLA: $56.00
New federal benefit/month: $1,454.00
New federal percentage: 0.497264
------------------------------------------------------------------------
                               Variation 2
------------------------------------------------------------------------
District COLA rate 5% applied to District benefit:
Old District benefit/month: $1,387.00
District COLA: $69.00
New District benefit/month: $1,456.00
Federal COLA rate 4%:
Federal COLA: $56.00
New federal benefit/month: $1,454.00
New total benefit/month: $2,910.00
New federal percentage: 0.499656
------------------------------------------------------------------------

Retroactive Payment of Accrued Annuity Example

Example 15: Accrual of Federal Benefit Payment

    The Federal Benefit Payment begins to accrue on the annuity 
commencing date, regardless of whether the employee is added to the 
annuity roll in time for the regular payment cycle. If the employee 
is due a retroactive payment of accrued annuity, the portion of the 
retroactive payment that would have been a Federal Benefit Payment 
(if it were made in the regular payment cycle) is still a Federal 
Benefit Payment. In this example, a teacher retired effective 
September 11, 1998. She was added to the retirement rolls on the pay 
date November 1, 1998 (October 1 to October 31 accrual cycle). Her 
Federal Benefit Payment is $3000 per month and her total benefit 
payment is $3120 per month. Her initial check is $5200 because it 
includes a prorated payment for 20 days (September 11 to September 
30). The Federal Benefit Payment is $5000 of the initial check 
($3000 for the October cycle and $2000 for the September cycle).

                  Example 15--Teachers Accrued Benefit
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Separation date: 09/10/98
Department service: 32/00/10
.015 service: 5
.0175 service: 5
.02 service: 22
Average salary: $62,150.00
Total: $37,445.38
Total/month: $3,120.00
Sept 11-30: $2,080.00
Oct 1-31: $3,120.00
Nov 1-30: $3,120.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Freeze date: 06/30/97
Department service: 30/10/00
.15 service: 5
.0175 service: 5
.02 service: 20.833333
Average salary: $62,150.00
Total: $35,995.21
Total/month: $3,000.00
Sept 11-30: $2,000.00
Oct 1-31: $3,000.00
Nov 1-30: $3,000.00
------------------------------------------------------------------------


    Dated: November 4, 2010.
Nancy Ostrowski,
Director, Office of DC Pensions.

[FR Doc. 2010-29152 Filed 11-19-10; 8:45 am]
BILLING CODE 4825-10-P