State Pension Plans: Similarities and Differences Between Federal and
State Designs (Letter Report, 03/19/99, GAO/GGD-99-45).

GAO provided information on the: (1) design components of retirement
programs that states offer to their general employees and compared them
to the design components of the two principal retirement programs for
federal employees; and (2) changes states have considered and made to
their retirement programs.

GAO noted that: (1) all states used two or more of the four design
components, but few of their retirement programs had all of the same
components as the Federal Employees' Retirement System (FERS) or the
Civil Service Retirement System (CSRS); (2) the majority of
states--35--included three components and differed by only one component
from either FERS or CSRS; (3) the lack of employer contributions to
defined contribution (DC) plans distinguished these programs from FERS,
and the inclusion of social security coverage distinguished them from
CSRS; (4) in the final analysis, three state programs had the same
components as FERS and six had the same components as CSRS; (5) GAO's
review showed that all states have in some way changed the design
components of their retirement programs since the programs were
established; (6) developments in federal law that might enhance employee
benefits prompted most of these changes; (7) officials representing 21
of the 48 state retirement programs with a defined benefit (DB)
component told GAO that their states had recently considered dropping
their DB plan component in favor of a program consisting solely of a DC
component with an employer contribution and social security; (8)
however, only two states have no DB plan, and one of these
states--Michigan--recently dropped its DB plan and switched to a DC plan
with an employer contribution for its state-sponsored retirement
benefits; (9) officials from the 21 states cited reducing government
costs, enhancing portability, and lobbying by special interests as the
major reasons for considering such a change; (10) they also cited a
number of reasons for not dropping their DB plans, the most common were
that: (a) studies showed no need for the change; (b) further study was
needed; (c) labor unions opposed the change; or (d) there was lack of
interest or support for the change; (11) officials representing the
other 27 state programs told GAO that their states had never considered
dropping their DB component; and (12) the most common reasons state
officials gave for not considering such a change were that: (a) the DB
component provided greater benefits, including survivor and disability
benefits; and (b) they regarded the DB plan as a better way to retain
employees.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-99-45
     TITLE:  State Pension Plans: Similarities and Differences Between 
             Federal and State Designs
      DATE:  03/19/99
   SUBJECT:  Federal employee retirement programs
             Government retirement benefits
             Retirement pensions
             Comparative analysis
             Employee retirement plans
             Civil service pensions
             State employees
             State programs
             Social security benefits
IDENTIFIER:  Federal Thrift Savings Plan
             Federal Employees Retirement System
             Civil Service Retirement System
             
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gg99045 STATE PENSION PLANS

Similarities and Differences Between Federal and State Designs

United States General Accounting Office

GAO Report to Congressional Committees


March 1999 

GAO/GGD-99-45

March 1999   GAO/GGD-99-45

United States General Accounting Office Washington, D. C. 20548

General Government Division

B-279261

Page 1 GAO/GGD-99-45 Design of State Retirement Programs

GAO March 19, 1999 The Honorable Thad Cochran Chairman The
Honorable Daniel Akaka Ranking Minority Member Subcommittee on
International Security,

Proliferation and Federal Services Committee on Governmental
Affairs United States Senate

The Honorable Joe Scarborough Chairman The Honorable Elijah E.
Cummings Ranking Minority Member Subcommittee on Civil Service
Committee on Government Reform House of Representatives

This report describes the design components of retirement programs
that states offer to their general employees and compares them to
the design components of the two principal retirement programs for
federal employees. It also describes changes states have
considered and made to their retirement programs. We prepared the
report at our initiative to complement our earlier reports on the
approaches private sector employers were using to provide
retirement benefits to their employees and the extent to which
these approaches were changing. 1 We have addressed the report to
you because the issues discussed are within your Subcommittees'
areas of oversight.

We defined federal general employees as employees who were covered
by the Federal Employees' Retirement System (FERS) and the Civil
Service Retirement System (CSRS), excluding those who were covered
by special retirement provisions notably law enforcement officers,
firefighters, air traffic controllers, Members of Congress, and
congressional staff. 2 We defined state general employees as
employees who were not classified as

1 Private Pensions: Most Employers That Offer Pensions Use Defined
Contribution Plans (GAO/ GGD- 971, Oct. 3, 1996). Private
Pensions: Plan Features Provided By Employers That Sponsor Only
Defined Contribution Plans (GAO/GGD-98-23, Dec. 1, 1997).

2 FERS is open and available to new federal employees. CSRS has
been closed to new employees since December 31, 1983.

B-279261 Page 2 GAO/GGD-99-45 Design of State Retirement Programs

law enforcement officers, firefighters, legislative staff, or
elected or judicial officials. We also excluded teachers in those
states in which teachers were covered by different retirement
plans than the ones that covered general employees.

We used the term design to characterize which of four components
defined benefit (DB); defined contribution, with and without an
employer contribution (DC); and Social Security made up a state's
retirement program. 3 In determining what design component a state
had, we further distinguished DC components according to whether
they included an employer contribution because FERS and CSRS are
different in this respect.

Our specific objectives were to determine

 how many state retirement programs currently open to general
employees include the same design components as FERS and CSRS and
what design components the others include; and

 what design changes states have made to their retirement programs
since the programs were established and what design changes they
have recently considered and why.

Also, because of continuing congressional interest in how the
features of nonfederal retirement programs compare to those of
federal programs, the appendixes to this report present
information about key eligibility, benefits, and contribution
features of the state programs, which we categorized to reflect
differences in how the programs were designed (see apps. I through
VI).

All states used two or more of the four design components, but few
of their retirement programs had all of the same components as
FERS or CSRS. The majority of states35included three components
(DB, DC with no employer contribution, and Social Security) and
differed by only one component from either FERS or CSRS. The lack
of employer contributions to DC plans distinguished these programs
from FERS, and the inclusion of Social Security coverage
distinguished them from CSRS. In the final analysis, three state
programs had the same components as FERS and six had the same
components as CSRS. Table 1 shows the design components for each
of the 50 states' retirement programs.

3 For a DB plan, the employer determines retirement benefit
amounts for individual employees using specific formulas that
consider certain factors, such as age, years of service, and
salary levels. For a DC plan, the employee's retirement benefits
depend on the total of employer and/ or employee contributions in
the employee's individual account and the investment experience of
those accounts. Results In Brief

B-279261 Page 3 GAO/GGD-99-45 Design of State Retirement Programs

Design components Defined contribution

States Defined benefit

With employer contribution

With no employer contribution Social

Security Number of states

MN, MO, OK O O O 3

CO, LA, MA, ME, NV, OH O O 6

AL, AR, AZ, CA, CT, DE, FL, GA, HI, IA, ID, IL, KS, KY, MD, MS,
MT, NC, ND, NH, NJ, NM, NY, OR, PA, RI, SC, SD, TX, VA, VT, WA,
WI, WV, WY O O O 35

IN, TN, UT O O O O 3

AK O O O 1

MI, NE O O O 2

Source: GAO analysis of state retirement data.

Our review showed that all states have in some way changed the
design components of their retirement programs since the programs
were established. Developments in federal law that might enhance
employee benefits prompted most of these changes notably, the
extension of Social Security eligibility to state employees in the
early 1950s and the adoption of tax provisions in the 1970s
allowing state employees to contribute on a pretax basis to a DC
plan. By 1969, 44 states had provided Social Security coverage to
their employees. In 1980, Alaska discontinued its Social Security
coverage. Thus, 43 states now provide Social Security coverage to
their employees. By 1988, all states had a voluntary DC plan
available to their employees.

Officials representing 21 of the 48 state retirement programs with
a DB component told us that their states had recently considered
dropping their DB plan component in favor of a program consisting
solely of a DC component with an employer contribution and Social
Security. However, only two states have no DB plan, and one of
these statesMichiganrecently dropped its DB plan and switched to a
DC plan with an employer contribution for its state- sponsored
retirement benefits. Officials from the 21 states cited reducing
government costs, enhancing portability, and/ or lobbying by
special interests as the major reasons for considering such a
change. They also cited a number of reasons for not dropping their
DB plans, the most common of which were that (1) studies showed no
need for the change, (2) further study was needed, (3) labor
unions opposed the change, and/ or (4) there was lack of interest
or support for the change.

Table 1: Design Components of Retirement Programs for State
General Employees

B-279261 Page 4 GAO/GGD-99-45 Design of State Retirement Programs

Officials representing the other 27 state programs told us that
their states had never considered dropping their DB component. The
most common reasons state officials gave for not considering such
a change were that (1) the DB component provided greater benefits,
including survivor and disability benefits; and/ or (2) they
regarded the DB plan as a better way to retain employees.

FERS consists of three parts: a DB component, a DC component with
employer contribution, and Social Security. CSRS consists of two
parts: a DB component and a DC component with no employer
contribution. The DC component differs between FERS and CSRS.
Under FERS, federal agencies automatically contribute an amount
equal to 1 percent of salary to the Thrift Savings Plan (TSP) for
each covered employee whether or not the employee contributes. In
addition, the employer will contribute $1.00 for each $1.00 the
employee contributes up to 3 percent of salary; and $. 50 for each
$1.00 the employee contributes on the next 2 percent of salary,
for a maximum total employer contribution of 5 percent. FERS
employees may contribute an additional 5 percent of salary with no
employer contribution. The DC component in CSRS has no employer
contribution; however, employees may contribute up to a total of 5
percent of their salary to the TSP and up to 10 percent of their
salary to a separate voluntary contribution account. Except for
certain employees who were rehired after December 31, 1983,
employees in CSRS are not covered by Social Security through their
federal employment. 4

State retirement programs vary widely not only in their details
but also because most jurisdictions have separate programs for
special categories of employees, such as law enforcement officers,
firefighters, teachers, and elected or judicial officials. 5
Employees who do not fall into one of these categories are usually
covered by a retirement system for general employees. In 1911,
Massachusetts became the first state to develop a

4 Employees covered under the CSRS- Offset plan are covered by
Social Security. The CSRS- Offset plan is a version of CSRS
established for employees who were rehired after December 31,
1983, following a break in CSRS covered service of more than 1
year and who, as of the date of their last separation from
service, had completed at least 5 years of creditable civilian
service.

5 Some states have one retirement plan that covers all state and
local employees, including teachers, public safety workers, and
elected officials. Background

B-279261 Page 5 GAO/GGD-99-45 Design of State Retirement Programs

retirement program for general service state employees; 6 and by
1947, every state provided retirement benefits. 7

In addition to Social Security benefits, 8 employers may provide
retirement benefits to their employees using two basic types of
design components DB and DC. Under a DB plan, employers bear the
full responsibility for providing sufficient funding to guarantee
that the benefits promised by the formulas will be paid. A DC plan
differs in that there is no guaranteed annual benefit amount at
retirement. Therefore, the employee bears the risk of whether the
funds available at retirement will provide a desired level of
benefits. Because employers may choose to offer a combination of
these design components, that is DB, DC with employer
contribution, DC with no employer contribution, and Social
Security retirement programs can differ not only by the benefits
they provide, but also by the design components they include.

Among the arrangements used by state governments to augment
regular employee retirement plans are three DC plans authorized
under the Internal Revenue Code at sections 401( k), 403( b), and
457( b). 9 These DC plans are voluntary, supplemental, long- term
retirement programs that give employees an opportunity to defer
receipt of income until retirement or termination of employment.
10 The key attraction of these plans can be the potential tax
savings for employees. Income tax is generally deferred on

6 In 1945, the Commonwealth of Massachusetts Legislature revised
Chapter 32 of the General Laws to create a uniform statutory
framework governing the rights and benefits available to public
employees and their beneficiaries. That is, Massachusetts
consolidated its various retirement plans into one retirement
system.

7 U. S. Congress. House Committee on Post Office and Civil
Service. Designing a Retirement System for Federal Workers Covered
by Social Security. Prepared by the Congressional Research
Service. Committee Print 98- 17, 98 th Congress, 2d Sess., Dec.
1984. Washington. U. S. Government Printing Office, 1985, p. 54

8 The Social Security system was established in 1935 to cover
certain workers in the private sector. Congress explicitly
excluded state and local government workers, partly because the
early objective of Social Security was first to include employees
most in need of coverage. Many state and local workers were
already included in other pension plans, and it was not until
Social Security amendments of the early 1950s that state and local
governments were permitted to elect coverage.

9 The Tax Reform Act of 1986 prohibits state governments from
establishing any new 401( k) plans after May 6, 1986, although
existing plans may continue. Federal law generally limits
participation in 403( b) plans to employees of public school
systems, colleges, and universities. As a result, most state
government employees have only section 457( b) plans available to
augment their regular government pensions.

10 The concept of public deferred compensation developed from
private letter rulings of the Internal Revenue Service for
individual private sector deferred compensation plans. In 1972,
the Internal Revenue Service issued the first of its private
letter rulings holding that tax may be deferred on employee
contributions where a state or local government was the employer.

B-279261 Page 6 GAO/GGD-99-45 Design of State Retirement Programs

contributions made to these plans and the associated earnings
during an employee's career. Taxes are due when the individual
receives benefits from the plan, usually after retirement.

To determine the numbers of state retirement programs open and
available to general employees as of July 1, 1998, that included
the same design components as FERS and CSRS, and what design
components were included in the remaining state retirement
programs, we obtained preliminary information from a database
developed by the Public Pension Coordinating Council (PPCC) for
its report, 1997 Survey of State and Local Government Employee
Retirement Systems. 11 We also obtained summary plan documents (e.
g., employee handbooks and information brochures) for each of the
50 states and interviewed state retirement officials knowledgeable
about the programs. We did not review the underlying statutes that
set forth the specific provisions of state retirement plans. We
relied on our prior work to identify the design components of FERS
and CSRS, which we then used to categorize the state retirement
plans.

On the basis of our prior work, we defined federal general
employees as employees who were covered by FERS and CSRS,
excluding those who were covered by special retirement provisions
notably law enforcement officers, firefighters, air traffic
controllers, Members of Congress, and congressional staff. We
defined state general employees as employees who were not
classified as law enforcement officers, firefighters, legislative
staff, or elected or judicial officials. We also excluded teachers
in those states in which teachers were covered by different
retirement plans than the ones that covered general employees.

As shown in table 2, we categorized state retirement plans
according to the major design components found in FERS and CSRS
specifically DB, DC with employer contribution, DC with no
employer contribution, and Social Security.

11 According to PPCC, the information collected for its 1997
survey constitutes the most detailed single source of data on
state and local government retirement systems in existence at that
time. Members of PPCC include the Government Finance Officers
Association, the National Association of State Retirement
Administrators, the National Conference on Public Employee
Retirement Systems, and the National Council on Teacher
Retirement. Scope and

Methodology

B-279261 Page 7 GAO/GGD-99-45 Design of State Retirement Programs

Design components Defined contribution Federal retirement plans
Defined benefit With employer

contribution With no employer contribution Social

Security

FERS O O O

CSRS O O

Source: GAO analysis of Office of Personnel Management data.

On the basis of the four design components shown above, we
classified the states' design components into six category types
as shown in table 3.

Design components Defined contribution

Category types Defined benefit With employer contribution

With no employer contribution Social Security

I (FERS- like) O O O

II (CSRS- like) O O

III O O O

IV O O O O

V O O O

VI O O O

Source: GAO analysis of state retirement data.

Our approach was designed to provide the most up- to- date
information (as of July 1, 1998) on the current design components
and features of state retirement plans; however, it was not
designed to provide information on some tiers of multitiered and/
or closed plans that states also may be operating. 12 We offset
this limitation to some extent by describing the changes that have
occurred in the design components of state programs since the
programs were established. We also asked retirement officials in
each state to confirm the accuracy of the information about their
programs used in our report.

12 Some states create more than one level or tier of benefits
under a retirement system when they modify the benefits. Employees
hired after a new tier is created become members of the new tier
and are subject to the modified plan provisions. When making major
modifications to their retirement programs, such as changing
design components or consolidating several plans, some states
close the established retirement plan to new members and create an
entirely new system for new employees. In addition, states with
closed plans have allowed members of the old plan to transfer to
the new plan. Similarly, CSRS employees were allowed to transfer
to FERS after it was established. Employees were provided another
opportunity to transfer during an open season held during the
latter half of calendar year 1998.

Table 2: Design Components of FERS and CSRS

Table 3: Categorization of State Retirement Programs Using FERS
and CSRS Design Components

B-279261 Page 8 GAO/GGD-99-45 Design of State Retirement Programs

To describe the changes, if any, that have been made to the design
of state retirement programs open and available to state general
employees since the programs were established, what design changes
states were considering, and the reasons for these changes, we
interviewed cognizant state retirement officials. We used this
information to determine what design components were previously
available to state general employees, as well as those components
that would be available if states made the changes they were
considering.

To provide detailed information on the features of state
retirement programs, we also used the database developed by PPCC
to obtain specific data regarding eligibility, benefits, and
contributions. As a supplement to the database, we reviewed state
retirement program summary plan documents and financial reports,
and/ or we contacted state retirement officials. Plan profiles for
each state are presented in appendixes I through VI. The profiles
are grouped by type according to their design components and are
preceded by summary data we selected to facilitate comparisons
with FERS and CSRS.

We requested comments on a draft of this report from the Director,
Office of Personnel Management (OPM). OPM responded that it had no
comments. We did our review from February 1998 to March 1999 in
accordance with generally accepted government auditing standards.

All of the 50 state retirement programs had two or more of the
four design components but few of them had all of the same design
components as FERS or CSRS. All states had a DC component, but
only nine states contributed to the plan. A defined benefit
component was included by 48 states and 43 states included Social
Security coverage. A majority of states included three of the
design components, but these were not the same components included
in either FERS or CSRS. A total of nine states had exactly the
same component mix as FERS or CSRS.

Of the nine states like FERS or CSRS, three Minnesota, Missouri,
and Oklahoma had programs similar in design to FERS. These
programs included a DB component, a DC component with an employer
contribution, and Social Security. The other six states Colorado,
Louisiana, Maine, Massachusetts, Nevada, and Ohio offered
retirement programs with the same design components as CSRS to
their general Few State Retirement

Programs Had Exactly the Same Component Mix as FERS or CSRS

B-279261 Page 9 GAO/GGD-99-45 Design of State Retirement Programs

employees. That is, these programs included a DB component 13 and
a DC component with no employer contribution.

The vast majority 35 of the states had retirement programs that
included a DB component, a DC component with no employer
contribution, and Social Security. The lack of employer
contributions distinguished these programs from FERS, and the
inclusion of Social Security coverage distinguished them from
CSRS. The remaining six states offered retirement programs that
included other combinations of the FERS and CSRS design
components. For example, Indiana, Tennessee, and Utah had programs
with a DB component, a DC component with employer contribution, a
DC component with no employer contribution, and Social Security.
Michigan and Nebraska had programs that included a DC component
with employer contribution, a DC component with no employer
contribution, and Social Security. Alaska had a retirement program
with a DB component, a DC component with employer contribution,
and a DC component with no employer contribution.

All states have in some way changed the design components of their
retirement programs since the programs were established. For the
most part, developments in federal law that might enhance employee
benefits prompted these changes notably, the extension of Social
Security eligibility to state employees in the early 1950s and the
adoption of tax provisions beginning in the 1970s allowing state
employees to contribute on a pretax basis to a DC plan.

The vast majority, or 44, of the states provided Social Security
coverage after it became available to state employees. Of these
states, 43 had provided Social Security coverage by the late
1950s; the last state to add Social Security did so in 1969.
Alaska discontinued its Social Security coverage in 1980 after
state employees elected to add a DC component with employer
contribution to the state's retirement program. Thus, 43 states
currently provide Social Security coverage to their employees. Six
states have never added Social Security coverage to their
retirement programs.

States began establishing deferred compensation plans voluntary DC
plans to augment their retirement programs in 1972. By 1978, when
Congress passed Public Law 95- 600, which created a statutory
basis for

13 Colorado and Ohio have DB programs with some DC
characteristics; i. e., the normal retirement benefit is
calculated using the higher of a DB formula or a money purchase
annuity. A money purchase annuity is a specific type of DC
component wherein contributions are stated as a percentage of the
employee's salary. Retirement benefits are equal to the amount in
the employee's individual account. All States Made Design

Changes to Their Retirement Programs Since They Were Established

B-279261 Page 10 GAO/GGD-99-45 Design of State Retirement Programs

Section 457 of the Internal Revenue Code, almost half of the
states had a voluntary DC plan. By 1988, all states had voluntary
DC plans available to state employees. Although most state
employers did not contribute to these plans, as of July 1998, five
states did provide an employer contribution. Table 4 shows the
design component changes states have made since their retirement
programs were established.

States Design component changes Number of states

All Established a voluntary, supplemental DC plan 50 All except
CO, LA, MA, ME, NV, OH Provided Social Security coverage 44 AZ,
IA, NC, ND, WY Established a DB plan and discontinued the DC plan
5

MN, MO, OK, TN, UT Added an employer contribution to the
voluntary, supplemental DC plan 5

MT, OH, OR, WI Added a DB component to the DC component a 4 AK, CO
Added a DC component to the DB plan b 2 MI Established a DC plan
and discontinued the DB plan c 1 HI Discontinued the DC component
1 AK Discontinued Social Security coverage 1

a When this modification occurred, the design changed to a DB plan
with DC characteristics wherein employees are paid the higher of
the DB formula or the amount of contributions in the member's
account. b Alaska provides a benefit based on both the DB formula
and the amount in the member's account.

Colorado pays the higher of the DB formula or the amount in the
member's account. c Employees hired prior to April 1997 remain
covered under the DB plan unless they chose to transfer

to the DC plan. Source: GAO analysis of state retirement data.

According to state retirement officials, design component changes
under discussion by one or more states during their last
legislative sessions included (1) discontinuing the DB plan and
establishing a DC plan, (2) adding a DC component to the DB plan,
(3) adding an employer contribution to the employee's voluntary DC
plan, and/ or (4) adding Social Security coverage.

Of the 48 state retirement programs with a DB component, officials
representing 21 states told us that they had considered dropping
their DB component in favor of a program consisting of a DC
component with an employer contribution and Social Security. As
shown in table 5, reducing government costs, enhancing
portability, and/ or lobbying by special interests or group( s)
were among the reasons cited for considering such a change.
However, no such change was made by these states during their last
legislative sessions. Only one state had made this change in
recent years. In 1997, Michigan modified its retirement program in
this way,

Table 4: Design Changes Made Since State Retirement Programs Were
Established

Recently Considered Design Changes to State Retirement Programs

B-279261 Page 11 GAO/GGD-99-45 Design of State Retirement Programs

which Michigan officials said was done largely as a means of
reducing government cost.

Source: GAO analysis of state retirement data.

Table 5: Reasons Cited by Retirement Officials for Why States
Considered Changing to a DC Only Plan

B-279261 Page 12 GAO/GGD-99-45 Design of State Retirement Programs

The most common reasons officials cited for their states not
making the change to a DC plan during their past legislative
sessions were that (1) studies done by the states showed there was
no need to change, (2) further study was needed, (3) the state's
labor unions opposed the change, and/ or (4) there was a lack of
interest or support. Table 6 shows the reasons state retirement
officials gave for not adopting a DC plan.

Table 6: Reasons Cited by State Retirement Officials for Why the
DC Only Plan Under Consideration Was Not Adopted

B-279261 Page 13 GAO/GGD-99-45 Design of State Retirement Programs

a A money purchase plan is a specific type of DC component wherein
contributions are stated as a percentage of the employee's salary.
Retirement benefits are equal to the amount in the individual
account of the employee.

Source: GAO analysis of state retirement data.

Officials representing the remaining 27 state retirement programs
with a DB component told us that their states had never considered
dropping the DB component. The most common reasons state officials
gave for not considering the change from a DB to a DC plan were
that (1) the DB component provided greater benefits, including
survivor and disability benefits; (2) they regarded the DB plan as
a better way to retain employees; and/ or (3) there was little or
no support for the change. Table 7 shows the states that had not
considered changing their current retirement plans to a DC plan
and the reasons why a DC plan had not been considered.

B-279261 Page 14 GAO/GGD-99-45 Design of State Retirement Programs

Source: GAO analysis of state retirement data.

Table 7: Reasons Cited by State Retirement Officials for Why a DC
Only Plan Was Never Considered

B-279261 Page 15 GAO/GGD-99-45 Design of State Retirement Programs

We are sending copies of this report to Senator Fred Thompson,
Chairman, and Senator Joseph I. Lieberman, Ranking Minority
Member, Senate Committee on Governmental Affairs; Representative
Dan Burton, Chairman, and Representative Henry A. Waxman, Ranking
Minority Member, House Committee on Government Reform; the
Honorable Janice R. Lachance, Director, OPM; and other interested
parties. Copies will also be made available to others upon
request.

Major contributors to this report are listed in appendix VII.
Please contact me on (202) 512- 8676 if you have any questions
concerning this report.

Michael Brostek Associate Director Federal Management and

Workforce Issues

Page 16 GAO/GGD-99-45 Design of State Retirement Programs

Contents 1 Letter 22 Appendix I Type I Plans: Selected Features
and Plan Profiles

35 Appendix II Type II Plans: Selected Features and Plan Profiles

53 Appendix III Type III Plans: Selected Features and Plan
Profiles

131 Appendix IV Type IV Plans: Selected Features and Plan Profiles

141 Appendix V Type V Plan: Selected Features and Plan Profile

147 Appendix VI Type VI Plans: Selected Features and Plan Profiles

Contents Page 17 GAO/GGD-99-45 Design of State Retirement Programs

154 Appendix VII Major Contributors to This Report

Table 1: Design Components of Retirement Programs for State
General Employees

3 Table 2: Design Components of FERS and CSRS 7 Table 3:
Categorization of State Retirement Programs

Using FERS and CSRS Design Components 7

Table 4: Design Changes Made Since State Retirement Programs Were
Established

10 Table 5: Reasons Cited by Retirement Officials for Why

States Considered Changing to a DC Only Plan 11

Table 6: Reasons Cited by State Retirement Officials for Why the
DC Only Plan Under Consideration Was Not Adopted

12 Table 7: Reasons Cited by State Retirement Officials for

Why a DC Only Plan Was Never Considered 14

Table I. 1: Selected Features of Type I State Retirement Plans as
of July 1, 1998

24 Table I. 1: (cont.) 25 Table I. 2: FERS: Provisions of the
Federal Employees'

Retirement System 26

Table I. 3: Minnesota: Provisions of the Minnesota State
Retirement System  General Employees' Plan

28 Table I. 4: Missouri: Provisions of the Missouri State

Employees' Retirement Plan 30

Table I. 5: Oklahoma: Provisions of the Oklahoma Public Employees'
Retirement System

32 Table II. 1: Selected Features of Type II State Retirement

Plans as of July 1, 1998 36

Table II. 1: (cont.) 37 Table II. 2: CSRS: Provisions of the Civil
Service

Retirement System 38

Table II. 3: Colorado: Provisions of the Public Employees'
Retirement Association of Colorado

40 Table II. 4: Louisiana: Provisions of the Louisiana State

Employees' Retirement System 42 Tables

Table II. 5: Maine: Provisions of the Maine State Retirement
System

44

Contents Page 18 GAO/GGD-99-45 Design of State Retirement Programs

Table II. 6: Massachusetts: Provisions of the Massachusetts State
Employees' Retirement System

46 Table II. 7: Nevada: Provisions of the Public Employees'

Retirement System of Nevada General Employees' Plan 48

Table II. 8: Ohio: Provisions of the Public Employees' Retirement
System of Ohio

50 Table III. 1: Selected Features of Type III State Retirement

Plans as of July 1, 1998 54

Table III. 1: (cont.) 55 Table III. 2: Selected Features of Type
III State Retirement

Plans as of July 1998 56

Table III. 2: (cont.) 57 Table III. 3: Selected Features of Type
III State Retirement

Plans as of July 1 1998 58

Table III. 3: (cont.) 59 Table III. 4: Alabama: Provisions of the
Employees'

Retirement Systems of Alabama 60

Table III. 5: Arizona: Provisions of the Arizona State Retirement
System

62 Table III. 6: Arkansas: Provisions of the Arkansas Public

Employees' Retirement System - Noncontributory Plan 64

Table III. 7: California: Provisions of the California Public
Employees' Retirement System  Tier II

66 Table III. 8: Connecticut: Provisions of the Connecticut

State Employees' Retirement Plan - Tier 2 68

Table III. 9: Delaware: Provisions of the Delaware State
Employees' Pension Plan

70 Table III. 10: Florida: Provisions of the Florida Retirement

System 72

Table III. 11: Georgia: Provisions of the Employees' Retirement
System of Georgia  General Plan

74 Table III. 12: Hawaii: Provisions of the Hawaii Employees'

Retirement System - Non- Contributory 76

Table III. 13: Idaho: Provisions of the Public Employees'
Retirement System of Idaho  General Members

78 Table III. 14: Illinois: Provisions of the Illinois State

Employees' Retirement System 80

Table III. 15: Iowa: Provisions of the Iowa Public Employees'
Retirement System

82 Table III. 16: Kansas: Provisions of the Kansas Public

Employees' Retirement Plan 84

Table III. 17: Kentucky: Provisions of the Kentucky Employees'
Retirement System  Non- Hazardous

86

Contents Page 19 GAO/GGD-99-45 Design of State Retirement Programs

Table III. 18: Maryland: Provisions of the State Employees'
Retirement System of Maryland

88 Table III. 19: Mississippi: Provisions of the Public

Employees' Retirement System of Mississippi - General Plan

90 Table III. 20: Montana: Provisions of the Montana Public

Employees' Retirement System 92

Table III. 21: New Hampshire: Provisions of the New Hampshire
Retirement System  General Plan

94 Table III. 22: New Jersey: Provisions of the Public

Employees' Retirement System of New Jersey 96

Table III. 23: New Mexico: Provisions of the Public Employees'
Retirement Association of New Mexico

98 Table III. 24: New York: Provisions of the New York State

& Local Employees' Retirement System  General Plan 100

Table III. 25: North Carolina: Provisions of the Teachers' and
State Employees' Retirement System of North Carolina

102 Table III. 26: North Dakota: Provisions of the North

Dakota Public Employees' Retirement System  General Plan

104 Table III. 27: Oregon: Provisions of the Oregon Public

Employees' Retirement System 106

Table III. 28: Pennsylvania: Provisions of the Pennsylvania State
Employees' Retirement System

108 Table III. 29: Rhode Island: Provisions of the Rhode Island

Employees' Retirement System  State Employees 110

Table III. 30: South Carolina: Provisions of the South Carolina
Retirement System  General Plan

112 Table III. 31: South Dakota: Provisions of the South

Dakota Retirement System 114

Table III. 32: Texas: Provisions of the Employees' Retirement
System of Texas

116 Table III. 33: Vermont: Provisions of the Vermont State

Retirement System 118

Table III. 34: Virginia: Provisions of the Virginia Retirement
System

120 Table III. 35: Washington: Provisions of the Washington

State Public Employees' Retirement System  Plan II 122

Table III. 36: West Virginia: Provisions of the West Virginia
Public Employees' Retirement System

124 Table III. 37: Wisconsin: Provisions of the Wisconsin

Retirement System 126

Contents Page 20 GAO/GGD-99-45 Design of State Retirement Programs

Table III. 38: Wyoming: Provisions of the Wyoming Retirement
System's Public Employees' Pension Plan

128 Table IV. 1: Selected Features of Type IV State Retirement

Plans as of July 1, 1998 132

Table IV. 1: (cont.) 133 Table IV. 2: Indiana: Provisions of the
Public Employees'

Retirement Fund of Indiana 134

Table IV. 3: Tennessee: Provisions of the Tennessee Consolidated
Retirement System  Group I

136 Table IV. 4: Utah: Provisions of the Utah Public

Employees' Non- Contributory Retirement System 138

Table V. 1: Selected Features of the Type V State Retirement Plan
as of July 1, 1998

142 Table V. 1: (cont.) 143 Table V. 2: Alaska: Provisions of the
Alaska Public

Employees' Retirement System 144

Table VI. 1: Selected Features of Type VI State Retirement Plans
as of July 1, 1998

148 Table VI. 1: (cont.) 149 Table VI. 2: Michigan: Provisions of
the Michigan State

Employees' Retirement System 150

Table VI. 3: Nebraska: Provisions of the Nebraska State Employees'
Retirement System

152

Abbreviations

CSRS Civil Service Retirement System DB defined benefit DC defined
contribution FERS Federal Employees' Retirement System OPM Office
of Personnel Management FAS final average salary calculation PPCC
Public Pension Coordinating Council

Page 21 GAO/GGD-99-45 Design of State Retirement Programs

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 22 GAO/GGD-99-45 Design of State Retirement Programs

Type I plans include three design components: DB, DC with employer
contribution, and Social Security. These components are similar to
the components found in the Federal Employees' Retirement System
(FERS).

The appendix consists of a summary of key features that we
selected to facilitate comparisons with FERS and an individual
profile for each state plan we categorized as Type I.

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 23 GAO/GGD-99-45 Design of State Retirement Programs

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 24 GAO/GGD-99-45 Design of State Retirement Programs

State Vesting period Minimum age plus service requirement for

unreduced, normal retirement benefits Final average salary
calculation a Benefit formula

FERS 5 years Minimum retirement age b and 30 years of service
Highest 3 years 1. 0% X FAS X years c Minnesota 3 years Age 65
with 3 years of service if born before

1943; age 66 with 3 years of service if born in 1943 or later

Highest 5 years 1. 7% X FAS X years Missouri 5 years Minimum age
of 50 (Rule of 80) d Highest 3 years 1. 6% X FAS X years Oklahoma
8 years No minimum age (Rule of 90) e Highest 3 of last 10 years
2. 0% X FAS X years

a Some states use months or quarters to calculate final average
salaries. For comparison purposes, we converted these time frames
to years. In addition, some states use consecutive service while
others use nonconsecutive service. However, we did not distinguish
between these two types of service. b Minimum retirement age (MRA)
is the minimum optional retirement age. The FERS MRA is age 55

for employees born before 1948. The MRA increases until it reaches
age 57 for employees born after 1969. c The benefit formula is 1.
0 percent of final average salary calculation (FAS) for each year
of service if

under age 62, or age 62 or older with less than 20 years of
service. Alternatively, the benefit formula is 1. 1 percent of FAS
for each year of service if age 62 or older with 20 years of
service. d Unreduced annuity at 80 years of combined age and
service.

e Unreduced annuity at 90 years of combined age and service.

Table I. 1: Selected Features of Type I State Retirement Plans as
of July 1, 1998

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 25 GAO/GGD-99-45 Design of State Retirement Programs

Were cost of living adjustments (COLAs) provided in the years 1992
to 1996?

Early retirement benefits

Are survivor benefits provided after retirement?

Are disability benefits provided?

Are members required to contribute?

Employer contribution rate in 1996 as a percent

of covered payroll

Yes, in all 5 years Yes f Yes Yes Yes 11.4 Yes, in all 5 years Yes
g Yes Yes Yes h 4.2 Yes, in all 5 years Yes i Yes Yes No 10.69
Yes, in 1 year Yes i Yes Yes Yes j 11.5

f The early retirement option is available in certain involuntary
separation cases and in cases of voluntary separations during
major reorganizations or reductions in force. No reduction in
annuity applies under these circumstances. g Members are allowed
to retire early with reduced benefits at age 55 with 3 years of
service.

h Members are required to contribute 4 percent of pay. i Members
are allowed to retire early with reduced benefits at age 55 with
10 years of service. j Members are required to contribute 3
percent of the first $25,000 of pay plus 3.5 percent above
$25,000. Source: GAO analysis of FERS summary plan description
data and state plan features.

Table I. 1: (cont.)

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 26 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution Yes DC with NO employer contribution No Social
Security Yes

Year Social Security coverage was provided 1987 Year original plan
was established 1987

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Immediately a

Age and service requirements for normal unreduced benefits Minimum
retirement age (MRA) b with 30 years of

service, age 60 with 20 years of service, age 62 with 5 years of
service c Final average salary (FAS) calculation Highest 3 years
Does plan only include state general employees? Not applicable.
This is a federal plan.

Benefits

Annual benefit formula 1. 0% X FAS X years of service if under age
62, or age 62 or older with less than 20 years of service d Is
there a maximum benefit? No

Are early retirement benefits provided? Yes e Minimum age and
years of service for early retirement Age 50 with 20 years of
service or any age with 25

years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.0% 1995 COLA 2.0% 1994 COLA 2.0% 1993 COLA 2.0% 1992
COLA 2.7% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year No Variable rate based on investment performance No Variable
rate based on the Consumer Price Index Yes f

Table I. 2: FERS: Provisions of the Federal Employees' Retirement
System

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 27 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? g Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? h Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 7. 0% i What was the actual employer's contribution as a
percent of covered payroll in 1996? 11.4%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a Except for the government's automatic 1. 0 percent contribution
and its associated earnings, which requires 3 years of service. b
The MRA is age 55 for an individual born before 1948, and
gradually increases until it reaches age

57 for employees born after 1969. For example, an individual born
in 1950 has a MRA of 55 years and 6 months. c FERS also has a
normal retirement option of MRA with 10 to 29 years of service.
However, there is a

reduction of 5 percent for each year under age 62. This option is
similar to the early retirement option available under CSRS. d
Members receive 1.1 percent of high 3 for each year of service if
age 62 or older with 20 years of

service. e The early retirement option is available in certain
involuntary separation cases and in cases of

voluntary separations during major reorganizations or reductions
in force. No reduction in annuity applies under these
circumstances. f If inflation is under 2. 0 percent, same as CPI;
if inflation is between 2.0 and 3.0 percent, the COLA is

2.0 percent; if inflation is 3.0 percent or more, the COLA is the
CPI minus 1 percent. FERS COLAS generally do not apply to
annuitants who are under age 62. g The pop- up provision allows a
retiree's monthly annuity to be restored to 100 percent of his or
her

standard annuity if the beneficiary predeceases the retiree. h The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Under FERS and CSRS, deposits
can be made for creditable service during which no retirement
deductions were made. i Member's contribution is the difference
between 7 percent of basic pay and the Social Security tax

rate i. e., 0. 8 percent to the DB component and 6.2 percent to
Social Security. Employees covered by FERS will pay an additional
0.25 percent in 1999, another 0.15 percent in 2000, and a final
extra 0.1 percent in 2001.

Source: GAO analysis of summary plan description data.

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 28 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution Yes DC with NO employer contribution No Social
Security Yes

Year Social Security coverage was provided 1956 Year original plan
was established 1929

Eligibility

Number of years to vest in DB component 3 Number of years to vest
in employer's contribution to DC component Immediate

Age and service requirements for normal unreduced benefits Age 65
with 3 years of service if born before 1943; age

66 with 3 years of service if born in 1943 or later Final average
salary (FAS) calculation Highest 5 years Does plan only include
state general employees? Yes

Benefits

Annual benefit formula 1. 7% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
3 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 8.03% 1995 COLA 6.39% 1994 COLA 3.98% 1993 COLA 6.01%
1992 COLA 4.60% How the post- retirement COLA is determined: Ad
hoc at the discretion of the governing body No Fixed rate from
year to year No Variable rate based on investment performance Yes
Variable rate based on the Consumer Price Index Yes

Table I. 3: Minnesota: Provisions of the Minnesota State
Retirement System  General Employees' Plan

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 29 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b No

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 4. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 4.2%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The pop- up provision allows a retiree's monthly annuity to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 30 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution Yes DC with NO employer contribution No Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1957

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Immediate

Age and service requirements for normal unreduced benefits Rule of
80 at a minimum age of 50 (any combination of

age and years of service that add up to 80), age 60 with 15 years
of service, age 65 with 5 years of service Final average salary
(FAS) calculation Highest 3 years Does plan only include state
general employees? No, the plan also includes state public safety,

legislative, and other state employees a

Benefits

Annual benefit formula 1. 6% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 4.0% 1995 COLA 4.0% 1994 COLA 4.0% 1993 COLA 4.0% 1992
COLA 4.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year No Variable rate based on investment performance No Variable
rate based on the Consumer Price Index Yes

Table I. 4: Missouri: Provisions of the Missouri State Employees'
Retirement Plan

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 31 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? No If so, at what rate of pay?
Not applicable What was the actual employer's contribution as a
percent of covered payroll in 1996? 10.69%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly annuity to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 32 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution Yes DC with NO employer contribution No Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1964

Eligibility

Number of years to vest in DB component 8 Number of years to vest
in employer's contribution to DC component Immediate

Age and service requirements for normal unreduced benefits Rule of
90 (any combination of age and years of service

that adds up to 90), or age 62 with 6 years of service Final
average salary (FAS) calculation Highest 3 of last 10 years Does
plan only include state general employees? No, the plan also
includes local general employees a

Benefits

Annual benefit formula 2. 0% X FAS X years of service Is there a
maximum benefit? Internal Revenue Code Section 415( b)( 10) limits
for

members who joined after January 1, 1990 Are early retirement
benefits provided? Yes

Minimum age and years of service for early retirement Age 55 with
10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 0% 1995 COLA 0% 1994 COLA 2.0% 1993 COLA 0% 1992 COLA 0%
How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No Variable rate based on investment performance No Variable rate
based on the Consumer Price Index No

Table I. 5: Oklahoma: Provisions of the Oklahoma Public Employees'
Retirement System

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 33 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is the COLA based on the original or current benefit? Neither

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 3% of the first $25, 000 of pay plus 3. 5% above $25,000 What
was the actual employer's contribution as a percent of covered
payroll in 1996? 11.5%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly annuity to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix I Type I Plans: Selected Features and Plan Profiles

Page 34 GAO/GGD-99-45 Design of State Retirement Programs

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 35 GAO/GGD-99-45 Design of State Retirement Programs

Type II plans include two design components: DB and DC with no
employer contribution. These components are similar to the
components found in the Civil Service Retirement System (CSRS).

The appendix consists of a summary of key features that we
selected to facilitate comparisons with CSRS and an individual
profile for each state plan we categorized as Type II.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 36 GAO/GGD-99-45 Design of State Retirement Programs

State Vesting period Minimum age plus service requirement for

unreduced, normal retirement benefits Final average salary
calculation a Benefit formula

CSRS 5 years Age 55 with 30 years of service Highest 3 years 1.5%
X FAS X years (first 5

years), 1.75% X FAS X years (next 5 years), 2.0% X FAS X

years (years over 10) Colorado 5 years Age 50 with 30 years of
service Highest 3 years 2. 5% X FAS X years b Louisiana 10 years
No minimum age - Any age with 30 years of service Highest 3 years
2. 5% X FAS X years Maine 10 years Age 62 with 10 years of service
c Highest 3 years 2. 0% X FAS X years Massachusetts 10 years No
minimum age - Any age with 20 years of service Highest 3 years
Varies by age d Nevada 5 years No minimum age - Any age with 30
years of service Highest 3 years 2. 5% X FAS X years Ohio 5 years
No minimum age - Any age with 30 years of service Highest 3 years
2. 1% X FAS X years e

a Some states use months or quarters to calculate final average
salaries. For comparison purposes, we converted these time frames
to years. In addition, some states use consecutive service, and
others use nonconsecutive service. However, we did not distinguish
between these two types of service. b A retiring member receives
the higher of the DB calculation or a money purchase benefit. The
money

purchase benefit equals the value of member contributions, a 50
percent employer match, and accumulated interest on the
contributions. c If the member is at least age 62, the vesting
period is reduced from 10 years to 1 year as long as that

year of service immediately precedes retirement. d The benefit
formula varies by age from 0.1% X FAS X years of service at age 41
to 2.5% X FAS X

years of service at age 65. e The benefit formula is 2.1% X FAS X
years of service for the first 30 years of service and is 2.5% X

FAS X years of service for service greater than 30 years. A
retiring member receives the higher of the DB calculation or a
money purchase benefit. The money purchase benefit equals the
value of member contributions and a 100 percent employer match.

Source: GAO analysis of CSRS summary plan description data and
state plan features.

Table II. 1: Selected Features of Type II State Retirement Plans
as of July 1, 1998

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 37 GAO/GGD-99-45 Design of State Retirement Programs

Were cost of living adjustments (COLAs) provided in the years 1992
to 1996?

Early retirement benefits

Are survivor benefits provided after retirement?

Are disability benefits provided?

Are members required to contribute?

Employer contribution rate in 1996 as a percent

of covered payroll

Yes, in all 5 years Yes f Yes Yes Yes g 7.0 Yes, in all 5 years
Yes h Yes Yes Yes i 11.6 Yes, in 1 year Yes j Yes Yes Yes k 12.8
Yes, in all 5 years Yes l Yes Yes Yes m 16.13 Yes, in 3 years No
Yes Yes Yes n 17.71 Yes, in all 5 years Yes o Yes Yes No 17.04
Yes, in all 5 years Yes p Yes Yes Yes q 13.31

f The early retirement option is available in certain involuntary
cases and in cases of voluntary separations during major
reorganizations or reductions in force. The annuity is reduced by
one- sixth of 1 percent for each month the employee is under age
55 (2 percent a year). g Members are required to contribute 7
percent of pay. Employees covered by CSRS will pay an

additional 0. 25 percent in 1999, another 0.15 percent in 2000,
and a final extra 0.1 percent in 2001. h Members are allowed to
retire early with reduced benefits at age 50 with 25 years of
service.

i Members are required to contribute 8 percent of pay. j Members
are allowed to retire early with reduced benefits at any age with
20 years of service. k Members are required to contribute 7.5
percent of pay. l Members are allowed to retire early with reduced
benefits at any age with 25 years of service. m Members are
required to contribute 7.65 percent of pay. n Members are required
to contribute 9 percent of pay. o Members are allowed to retire
early with reduced benefits at any age with 5 years of service. p
Members are allowed to retire early with reduced benefits at age
60 with 5 years of service. q Members are required to contribute
8.5 percent of pay.

Source: GAO analysis of state plan features.

Table II. 1: (cont.)

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 38 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No a

Year Social Security coverage was provided Not applicable a Year
original plan was established 1920

Eligibility Number of years to vest in DB component 5 Number of
years to vest in employer's contribution to DC component Not
applicable, no employer contribution Age and service requirements
for normal unreduced benefits Age 55 with 30 years of service, age
60 with 20 years of

service, age 65 with 5 years of service Final average salary (FAS)
calculation Highest 3 years Does plan only include state general
employees? Not applicable. This is a federal plan.

Benefits

Annual benefit formula 1. 5% X FAS X first 5 years of service,
1.75% X FAS X next 5 years of service, 2.0% X FAS X years of
service over 10 Is there a maximum benefit? 80% of FAS b Are early
retirement benefits provided? Yes c Minimum age and years of
service for early retirement Age 50 with 20 years of service, any
age with 25 years

of service d Cost of living adjustments (COLAs) Has the plan
provided post- retirement COLAs in the past 5 years? Yes 1996 COLA
2.6% 1995 COLA 2.8% 1994 COLA 2.6% 1993 COLA 3.0% 1992 COLA 3.7%
How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body No Fixed rate from year to year
No Variable rate based on investment performance No Variable rate
based on the Consumer Price Index Yes Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes

Table II. 2: CSRS: Provisions of the Civil Service Retirement
System

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 39 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is a pop- up provision included in the survivor's benefit options?
e Yes Are disability benefits provided? Yes Does the plan allow
for the purchase of service credits? f Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 7. 0% g What was the actual employer's contribution as a
percent of covered payroll in 1996? 7.0% Was 100 percent of the
employer's actuarially required contribution actually contributed
in 1996? Yes If no, what percent was actually contributed in 1996?
Not applicable

a CSRS- Offset employees are covered by Social Security. These
employees were separated from CSRS covered federal employment for
more than a year and returned to a position in which they were
covered by CSRS after 1983. Social Security coverage for CSRS-
Offset employees began in 1984. b Excluding credit for unused sick
leave. An employee's full months of unused sick leave accumulated

is included in the total years and months of creditable service
but not in determining retirement eligibility or the high 3. c The
early retirement option is available in certain involuntary cases
and in cases of voluntary

separations during major reorganizations or reductions in force. d
Annuity reduced by one- sixth of 1.0% for each month the employee
is under age 55 (2.0% a year).

e The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. f The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Under FERS and CSRS, deposits
can be made for creditable service during which no retirement
deductions were made. g The 7 percent does not include the 1. 45
percent contribution to Medicare. Employees covered by

CSRS as well as those covered by FERS will pay an additional 0.25
percent in 1999, another 0. 15 percent in 2000, and a final extra
0. 1 percent in 2001.

Source: GAO analysis of summary plan description data.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 40 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No

Year Social Security coverage was provided Not applicable, no
Social Security Year original plan was established 1931

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component a Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 50
with 30 years of service, age 60 with 20 years of

service, age 65 with 5 years of service Final average salary (FAS)
calculation Highest 3 years Does plan only include state general
employees? No, the plan also includes state public safety and

judicial employees; and local general and school employees (except
for Denver schools) b

Benefits

Annual benefit formula 2. 5% X FAS X years of service c Is there a
maximum benefit 100% of FAS Are early retirement benefits
provided? Yes Minimum age and years of service for early
retirement Age 50 with 25 years of service; age 55 with 20 years;

age 60 with 5 years

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.84% 1995 COLA 2.53% 1994 COLA 2.82% 1993 COLA 2.90%
1992 COLA 6.7% How the post- retirement COLA is determined: Ad hoc
at the discretion of the governing body No Fixed rate from year to
year No Variable rate based on investment performance No

Table II. 3: Colorado: Provisions of the Public Employees'
Retirement Association of Colorado

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 41 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index Yes Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? d Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? e Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 8.0% What was the actual employer's contribution as a percent
of covered payroll in 1996? 11.6%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a Colorado also provides a money purchase option in which members
fully vest at retirement. b The provisions for other employee
groups may be different from those shown for state general
employees. c A retiring member receives the higher of the DB
calculation or a money purchase benefit. The money

purchase benefit equals the value of member contributions, a 50
percent employer match, and accumulated interest on the
contributions. d The pop- up provision allows a retiree's monthly
payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. e The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 42 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No

Year Social Security coverage was provided Not applicable, no
Social Security Year original plan was established 1946

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 55 with 25 years

of service, age 60 with 10 years of service Final average salary
(FAS) calculation Highest 3 years Does plan only include state
general employees? No, the plan also includes state public safety,

legislative, and judicial employees a

Benefits

Annual benefit formula 2. 5% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 100% of FAS Are early
retirement benefits provided? Yes Minimum age and years of service
for early retirement Any age with 20 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.5% 1995 COLA 0% 1994 COLA 0% 1993 COLA 0% 1992 COLA 0%
How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No Variable rate based on investment performance Yes

Table II. 4: Louisiana: Provisions of the Louisiana State
Employees' Retirement System

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 43 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Neither

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 7. 5% What was the actual employer's contribution as a
percent of covered payroll in 1996? 12.8%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 44 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No

Year Social Security coverage was provided Not applicable, no
Social Security Year original plan was established 1942

Eligibility

Number of years to vest in DB component 10 a Number of years to
vest in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 62
with 10 years of service a Final average salary (FAS) calculation
Highest 3 years Does plan only include state general employees?
No, the plan also includes state teachers and local

general employees b

Benefits

Annual benefit formula 2. 0% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Any age with
25 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.8% 1995 COLA 3.1% 1994 COLA 2.4% 1993 COLA 3.0% 1992
COLA 3.1% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year No Variable rate based on investment performance No

Table II. 5: Maine: Provisions of the Maine State Retirement
System

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 45 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index Yes Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 7. 65% What was the actual employer's contribution as a
percent of covered payroll in 1996? 16.13%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a A member can retire at age 62 or after, upon meeting one of the
following conditions: (1) the member has 10 years of service on
account with the plan whether or not he/ she is in plan- covered
service at the age of 62, and he/ she has not withdrawn the
contributions; or (2) the member has accumulated at least 1 year
of service immediately prior to retirement. b The provisions for
other employee groups may be different from those shown for state
general

employees. c The pop- up provision allows a retiree's monthly
payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 46 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No

Year Social Security coverage was provided Not applicable, no
Social Security Year original plan was established 1946

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 20 years of service, age 55 with 10 years

of service Final average salary (FAS) calculation Highest 3 years
Does plan only include state general employees? No, the plan also
includes local teachers and state

hazardous materials and public safety employees a

Benefits

Annual benefit formula Benefit factor varies by age: (0. 1% at age
41 to 2.5% at age 65) X FAS X years of service Is there a maximum
benefit? Yes, the maximum benefit is 80% of FAS

Are early retirement benefits provided? No Minimum age and years
of service for early retirement Not applicable

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 0% 1994 COLA 3.0% 1993 COLA 0% 1992 COLA
5.0% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body No Fixed rate from year to year
No Variable rate based on investment performance No

Table II. 6: Massachusetts: Provisions of the Massachusetts State
Employees' Retirement System

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 47 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index Yes Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c No

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 9. 0% d What was the actual employer's contribution as a
percent of covered payroll in 1996? 17.71%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. d Members contribute an
additional 2 percent of amount of salary over $30,000.

Source: GAO analysis of state plan features.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 48 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No

Year Social Security coverage was provided Not applicable, no
Social Security Year original plan was established 1947

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 65
with 5 years of service, age 60 with 10 years of

service, any age with 30 years of service Final average salary
(FAS) calculation Highest 3 years Does plan only include state
general employees? No, the plan also includes local general
employees and

local teachers a

Benefits

Annual benefit formula 2. 5% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 75% of FAS Are early
retirement benefits provided? Yes Minimum age and years of service
for early retirement Any age with 5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2  3.5% b 1995 COLA 2  3.5% b 1994 COLA 2  3.5% b 1993
COLA 2  3.5% b 1992 COLA 2  3.5% b How the post- retirement COLA
is determined: Ad hoc at the discretion of the governing body No
Fixed rate from year to year Yes b Variable rate based on
investment performance No

Table II. 7: Nevada: Provisions of the Public Employees'
Retirement System of Nevada General Employees' Plan

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 49 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? No If so, at what rate of pay?
Not applicable What was the actual employer's contribution as a
percent of covered payroll in 1996? 17.04%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b Retirees are to receive
annual benefit increases ranging from 2 to 5 percent based on the
number of

years since retirement. However, increases are limited to the
average change in the Consumer Price Index for the preceding 3
years. c The pop- up provision allows a retiree's monthly payment
to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 50 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security No

Year Social Security coverage was provided No applicable, no
Social Security Year original plan was established 1933

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 65 with 5 years of

service Final average salary (FAS) calculation Highest 3 years
Does plan only include state general employees? No, the plan also
includes state legislative and noncertified school employees; and
local general, public

safety, legislative, and non- certified school employees a

Benefits

Annual benefit formula 2. 1% X FAS X years of service (years 1
30) + 2.5% X FAS X years of service (> 30 years) b Is there a
maximum benefit? Yes, the maximum benefit is 100% of FAS

Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 60 with 5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 3.0% 1994 COLA 3.0% 1993 COLA 3.0% 1992
COLA 3.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year Yes

Table II. 8: Ohio: Provisions of the Public Employees' Retirement
System of Ohio

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 51 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance No Variable rate
based on the Consumer Price Index Yes Is the COLA based on the
original or current benefit? Original

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 8. 5% What was the actual employer's contribution as a
percent of covered payroll in 1996? 13.31%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b A retiring member
receives the higher of the DB calculation or a money purchase
benefit. The money

purchase benefit equals the value of member contributions and a
100- percent employer match. c The pop- up provision allows a
retiree's monthly payment to be restored to 100 percent of his or
her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix II Type II Plans: Selected Features and Plan Profiles

Page 52 GAO/GGD-99-45 Design of State Retirement Programs

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 53 GAO/GGD-99-45 Design of State Retirement Programs

Type III plans include three design components: DB, DC with no
employer contribution, and Social Security.

The appendix consists of a summary of key features that we
selected to facilitate comparisons with FERS and CSRS, and an
individual profile for each state plan we categorized as Type III.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 54 GAO/GGD-99-45 Design of State Retirement Programs

State Vesting period Minimum age plus service requirement for

unreduced, normal retirement benefits Final average salary
calculation a Benefit formula

Alabama 10 years No minimum age - Any age with 25 years of service
Highest 3 of last 10 years 2.0125% X FAS X

years b Arizona Immediate No minimum age (Rule of 80) c Highest 3
of last 10 years 2. 0% X FAS X years

Arkansas 5 years No minimum age - Any age with 30 years of service
Highest 4 years 1. 7% X FAS X years

California 10 years Age 65 with 10 years of service Highest 1 year
1.25% X FAS X years Connecticut 5 years Age 60 with 25 years of
service Highest 3 years 1. 33% X FAS X years d

Delaware 5 years No minimum age - Any age with 30 years of service
Highest 3 years 1. 67% X FAS X years

Florida 10 years No minimum age - Any age with 30 years of service
Highest 5 years 1. 60% X FAS X years e

Georgia 10 years No minimum age - Any age with 30 years of service
Highest 2 years 1. 70% X FAS X years Hawaii 10 years Age 55 with
30 years of service Highest 3 years 1. 25% X FAS X years Idaho 5
years No minimum age (Rule of 90) f Highest 3 years, 6 months
1.917% X FAS X years

Illinois 8 years No minimum age - Any age with 35 years of service
Highest 4 of last 10 years 1. 67% X FAS X years Iowa 4 years g No
minimum age (Rule of 88) h Highest 3 years i 60% X (years of

service/ 30) j a Some states use months or quarters to calculate
final average salaries. For comparison purposes,

we converted these time frames to years. In addition, some states
use consecutive service while others use nonconsecutive service.
However, we did not distinguish between these two types of
service. b Service retirement benefits are based on a guaranteed
minimum or a formula method, with the

member receiving payment under the method that yields the highest
monthly benefit. c Unreduced annuity at 80 years of combined age
and service.

d The benefit formula is 1.33% X FAS X years of service for the
first 35 years plus 0. 5% X (FAS over $27,300) X years of service
for the first 35 years of service plus 1.625% X FAS X years of
service for service greater than 35 years. e The benefit formulas
are: 1.60% X FAS X years of service at age 62 or 30 years of
service; 1.63% X

FAS X years of service at age 63 or 31 years of service; 1. 65% X
FAS X years of service at age 64 or 32 years of service; 1. 68% X
FAS X years of service at age 65 or 33 years of service. f
Unreduced annuity at 90 years of combined age and service.

g Immediate vesting at age 55. h Unreduced annuity at 88 years of
combined age and service. i If highest average 3- years' salary
exceeded $52,000 in 1998, the plan was to use the average of the
highest 5 years' salary or $52, 000, whichever was larger, to
calculate the final average salary. j The benefit formula is 60% X
(years of service/ 30) plus 1.0% X FAS X years of service (years
30 to

35).

Table III. 1: Selected Features of Type III State Retirement Plans
as of July 1, 1998

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 55 GAO/GGD-99-45 Design of State Retirement Programs

Were cost of living adjustments (COLAs) provided in the years 1992
to 1996?

Early retirement benefits

Are survivor benefits provided after retirement?

Are disability benefits provided?

Are members required to contribute?

Employer contribution rate in 1996 as a percent

of covered payroll

Yes, in 3 years No Yes Yes Yes k 6.99 Yes, in 4 years Yes l Yes
Yes Yes m 3.85

Yes, in all 5 years Yes n Yes Yes No 10 Yes, in all 5 years Yes o
Yes Yes No 9.89 Yes, in all 5 years Yes o Yes Yes Yes p 14.33

Yes, in 3 years Yes q Yes Yes Yes r 5.62 Yes, in all 5 years Yes s
Yes Yes No 16.77 Yes, in all 5 years No Yes Yes Yes t 13.63 Yes,
in all 5 years Yes u Yes Yes No 7.76 Yes, in all 5 years Yes n Yes
Yes Yes v 11.61

Yes, in all 5 years Yes w Yes Yes Yes x 5.1 Yes, in 3 years Yes y
Yes Yes Yes z 5.92

k Members are required to contribute 5 percent of pay. l Members
are allowed to retire early with reduced benefits at age 50 with 5
years of service. m Members are required to contribute 2.85
percent of pay. n Members are allowed to retire early with reduced
benefits at age 55 with 5 years of service. o Members are allowed
to retire early with reduced benefits at age 55 with 10 years of
service. p Members are required to contribute 2 percent of pay. q
Members are allowed to retire early with reduced benefits at age
55 with 15 years of service. r Members are required to contribute
3 percent of pay. s Members are allowed to retire early with
reduced benefits at any age with 10 years of service. t Members
are required to contribute 1.5 percent of pay. u Members are
allowed to retire early with reduced benefits at age 55 with 20
years of service. v Members are required to contribute 6.97
percent of pay. w Members are allowed to retire early with reduced
benefits at age 55 with 30 years of service. x Members are
required to contribute 4 percent of pay. y Members are allowed to
retire early with reduced benefits at age 55 with any years of
service. z Members are required to contribute 3.7 percent of pay.

Source: GAO analysis of state plan features.

Table III. 1: (cont.)

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 56 GAO/GGD-99-45 Design of State Retirement Programs

State Vesting period Minimum age plus service requirement for

unreduced, normal retirement benefits Final average salary
calculation a Benefit formula

Kansas 10 years b No minimum age (Rule of 85) c Highest 3 years 1.
75% X FAS X years Kentucky 4 years Age 65 with 4 years of service
Highest 5 years 1. 97% X FAS X years Maryland 5 years No minimum
age - Any age with 30 years of service Highest 3 years 1. 4% X FAS
X years

Mississippi 4 years No minimum age - Any age with 25 years of
service Highest 4 years 1.875% X FAS X years d

Montana 5 years e No minimum age - Any age with 30 years of
service Highest 3 years 1. 786% X FAS X years f New Hampshire 10
years Age 60 with 10 years of service Highest 3 years 1. 67% X FAS
X years g New Jersey 10 years h Age 60 with any service Highest 3
years 1. 67% X FAS X years New Mexico 5 years No minimum age - Any
age with 25 years of service Highest 3 years 3. 0% X FAS X years
New York 10 years Age 55 with 30 years of service Highest 3 years
1. 67% X FAS X years i North Carolina 5 years No minimum age - Any
age with 30 years of service Highest 4 years 1. 80% X FAS X years

North Dakota 5 years b No minimum age (Rule of 85) c Highest 3 of
last ten years 1.77% X FAS X years

Oregon 5 years j No minimum age - Any age with 30 years of service
Highest 3 years 1. 67% X FAS X years f a Some states use months or
quarters to calculate final average salaries. For comparison
purposes,

we converted these time frames to years. In addition, some states
use consecutive service while others use nonconsecutive service.
However, we did not distinguished between these two types of
service. b Immediate vesting at age 65.

c Unreduced annuity at 85 years of combined age and service. d The
benefit formula is 1.875% X FAS X years of service for the first
25 years plus 2. 0% X FAS X years of service greater than 25
years. e Immediate vesting at age 65 while an active member.

f The normal retirement benefit is calculated using the higher of
a DB formula or a money purchase annuity. A money purchase annuity
is a specific type of DC component wherein contributions are
stated as a percentage of the employee's salary. Retirement
benefits are equal to the amount in the employee's individual
account. g The benefit formula is 1.67% X FAS X years of service
for ages 60 to 64 or 1.51% X FAS X years of

service for age 65 and older. h Immediate vesting at age 60.

i The benefit formula is1. 67% X FAS X years of service for the
first 25 years plus 2.0% X FAS X years of service for the next 5
years plus 1. 5% X FAS X years of service for service greater than
30 years. j Immediate vesting at age 50 while working in a covered
position.

Table III. 2: Selected Features of Type III State Retirement Plans
as of July 1998

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 57 GAO/GGD-99-45 Design of State Retirement Programs

Were cost of living adjustments (COLAs) provided in the years 1992
to 1996?

Early retirement benefits

Are survivor benefits provided after retirement?

Are disability benefits provided?

Are members required to contribute?

Employer contribution rate in 1996 as a percent

of covered payroll

Yes, in 3 years Yes k Yes Yes Yes l 3.2 Yes, in all 5 years Yes m
Yes Yes Yes n 8.89 Yes, in all 5 years Yes o Yes Yes Yes p 13.61
Yes, in all 5 years No Yes Yes Yes q 9.75

Yes, in 3 years Yes r Yes Yes Yes s 6.7 Yes, in 3 years Yes t Yes
Yes Yes n 3.14 Yes, in all 5 years Yes u Yes Yes Yes n 2.13 Yes,
in all 5 years No Yes Yes Yes v 16.59 Yes, in all 5 years Yes k
Yes Yes Yes w 2.2 Yes, in all 5 years Yes x Yes Yes Yes y 8.15

Yes, in 2 years Yes m Yes Yes Yes l 4.12 Yes, in all 5 years Yes z
Yes Yes Yes y 9.15

k Members are allowed to retire early with reduced benefits at age
55 with 10 years of service. l Members are required to contribute
4 percent of pay. m Members are allowed to retire early with
reduced benefits at age 55 with 5 years of service. n Members are
required to contribute 5 percent of pay. o Members are allowed to
retire early with reduced benefits at age 55 with 15 years of
service. p Members are required to contribute 2 percent of pay. q
Members are required to contribute 7.25 percent of pay. r Members
are allowed to retire early with reduced benefits at age 50 with 5
years of service. s Members are required to contribute 6.8 percent
of pay. t Members are allowed to retire early with reduced
benefits at age 50 with 10 years of service. u Members are allowed
to retire early with reduced benefits at age 55 with 25 years of
service. v Members are required to contribute 7.42 percent of pay.
w Members are required to contribute 3 percent of pay. x Members
are allowed to retire early with reduced benefits at age 50 with
20 years of service. y Members are required to contribute 6
percent of pay. z Members are allowed to retire early with reduced
benefits at age 55 with less than 30 years of service. Source: GAO
analysis of state plan features.

Table III. 2: (cont.)

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 58 GAO/GGD-99-45 Design of State Retirement Programs

State Vesting period Minimum age plus service requirement for

unreduced, normal retirement benefits Final average salary
calculation a Benefit formula

Pennsylvania 10 years b No minimum age - Any age with 35 years of
service Highest 3 years 2. 0% X FAS X years

Rhode Island 10 years No minimum age - Any age with 28 years of
service Highest 3 years 1. 7% X FAS X years c South Carolina 5
years No minimum age - Any age with 30 years of

service Highest 3 years 1. 82% X FAS X years South Dakota 3 years
Age 55 with 30 years of service d Highest 3 of last 10 years 1. 3%
X FAS X years e Texas 5 years No minimum age (Rule of 80) f
Highest 3 years 2. 25% X FAS X years

Vermont 5 years g No minimum age - Any age with 30 years of
service Highest 3 years 1. 67% X FAS X years

Virginia 5 years Age 55 with 30 years of service Highest 3 years
1. 5% X FAS X years h Washington 5 years Age 65 with 5 years of
service Highest 5 years 2. 0% X FAS X years West Virginia 5 years
Age 55 with 25 years of service i Highest 3 of last 10 years 2. 0%
X FAS X years Wisconsin Immediate Age 57 with 30 years of service
Highest 3 years 1. 6% X FAS X years j Wyoming 4 years No minimum
age (Rule of 85) k Highest 3 years 2. 0% X FAS X years

a Some states use months or quarters to calculate final average
salaries. For comparison purposes, we converted these time frames
to years. In addition, some states use consecutive service while
others use nonconsecutive service. However, we did not
distinguished between these two types of service. b Vesting after
3 years at age 60.

c The benefit formula is 1.7% X FAS X years of service for the
first 10 years plus 1. 9% X FAS X years of service for the next 10
years plus 3.0% X FAS X years of service for the next 14 years
plus 2.0% X FAS X years of service for years of service greater
than 34. d Unreduced annuity at 85 years of combined age and
service with minimum age of 55.

e The benefit formula is 1.475% X FAS X years of service X
credited service before July 1, 1998 plus 1. 3% X FAS X years of
service for all other creditable service. Alternatively, the
formula is 2.0% X FAS X years of service minus primary Social
Security benefits. f Unreduced annuity at 80 years of combined age
and service with minimum of 10 years service.

g Immediate vesting at age 62. h The benefit formula is 1.5% X FAS
X years of service for the first $13, 200 of FAS plus 1.65% X FAS
X years of service for FAS above $13,200. If service exceeds 35
years then the formula is 1.65% X FAS X years of service. i
Unreduced annuity at 80 years of combined age and service with
minimum age of 55.

j The normal retirement benefit is calculated using the higher of
a DB formula or a money purchase annuity. A money purchase annuity
is a specific type of DC component wherein contributions are
stated as a percentage of the employee's salary. Retirement
benefits are equal to the amount in the employee's individual
account. k Unreduced annuity at 85 years of combined age and
service with minimum of 4 years service.

Table III. 3: Selected Features of Type III State Retirement Plans
as of July 1 1998

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 59 GAO/GGD-99-45 Design of State Retirement Programs

Were cost of living adjustments (COLAs) provided in the years 1992
to 1996?

Early retirement benefits

Are survivor benefits provided after retirement?

Are disability benefits provided?

Are members required to contribute?

Employer contribution rate in 1996 as a percent

of covered payroll

Yes, in 1 year Yes l Yes Yes Yes m 7.28 Yes, in all 5 years No Yes
Yes Yes n 11.32 Yes, in all 5 years Yes o Yes Yes Yes p 7.55 Yes,
in all 5 years Yes q Yes Yes Yes m 5.5 No, none provided No Yes
Yes Yes p 6.1

Yes, in all 5 years Yes q Yes Yes Yes r 9.6 Yes, in all 5 years
Yes s Yes Yes Yes m 4.75 Yes, in all 5 years Yes t Yes Yes Yes u
7.42 Yes, in 1 year Yes v Yes Yes Yes w 9.5 Yes, in all 5 years
Yes x Yes Yes Yes p 7.1 Yes, in all 5 years Yes y Yes Yes Yes z
5.68

l Members are allowed to retire early with reduced benefits at any
age with 10 years of service. m Members are required to contribute
5 percent of pay. n Members are required to contribute 9.5 percent
of pay. o Members are allowed to retire early with reduced
benefits at age 55 with 25 years of service. p Members are
required to contribute 6 percent of pay. q Members are allowed to
retire early with reduced benefits at age 55 with 5 years of
service. r Members are required to contribute 2. 75 percent of
pay. s Members are allowed to retire early with reduced benefits
at age 50 with 10 years of service. t Members are allowed to
retire early with reduced benefits at age 55 with 20 years of
service. u Members are required to contribute 5.08 percent of pay.
v Members are allowed to retire early with reduced benefits at age
55 with 10 years of service. w Members are required to contribute
4. 5 percent of pay. x Members are allowed to retire early with
reduced benefits at age 55. y Members are allowed to retire early
with reduced benefits at age 50 with 4 years of service. z Members
are required to contribute 5.57 percent of pay.

Source: GAO analysis of state plan features.

Table III. 3: (cont.)

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 60 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1945

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 25 years of service, age 60 with 10 years

of service Final average salary (FAS) calculation Highest 3 years
of last 10 years

Does plan only include state general employees? No, the plan also
includes state public safety and local general employees a

Benefits

Annual benefit formula 2. 0125% X FAS X years of service b Is
there a maximum benefit? No Are early retirement benefits
provided? No Minimum age and years of service for early retirement
Not applicable

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 4.0% 1995 COLA 0% 1994 COLA 7.0% 1993 COLA 5.0% 1992
COLA 0% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No Variable rate based on investment performance No

Table III. 4: Alabama: Provisions of the Employees' Retirement
Systems of Alabama

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 61 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 5. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 6.99%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b Service retirement
benefits are based on a guaranteed minimum or a formula method,
with the

member receiving payment under the method that yields the highest
monthly benefit. c The pop- up provision allows a retiree's
monthly payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 62 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1953

Eligibility

Number of years to vest in DB component Immediate Number of years
to vest in employer's contribution to DC component Not applicable,
no employer contribution

Age and service requirements for normal unreduced benefits Rule of
80 (any combination of age and years of service

that add up to 80), age 62 with 10 years of service, age 65 with
any years of service Final average salary (FAS) calculation
Highest 3 years in last 10 years

Does plan only include state general employees? Yes

Benefits

Annual benefit formula 2. 0% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 50 with
5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.0% 1995 COLA 2.5% 1994 COLA 1.4% 1993 COLA 0% 1992
COLA 5.0% How the post- retirement COLA is determined:

Ad hoc at the discretion of the governing body No Fixed rate from
year to year No Variable rate based on investment performance Yes

Table III. 5: Arizona: Provisions of the Arizona State Retirement
System

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 63 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index Yes Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 2. 85% What was the actual employer's contribution as a
percent of covered payroll in 1996? 3.85%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 64 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1957

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 65 with 5 years of

service Final average salary (FAS) calculation Highest 4 years
Does plan only include state general employees? No, the plan also
includes state legislative employees

and local general, public safety, and legislative employees a

Benefits

Annual benefit formula 1. 7% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 100 percent of final
pay Are early retirement benefits provided? Yes Minimum age and
years of service for early retirement Age 55 with 5 years of
service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.8% 1995 COLA 2.6% 1994 COLA 3.0% 1993 COLA 3.0% 1992
COLA 3.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year No

Table III. 6: Arkansas: Provisions of the Arkansas Public
Employees' Retirement System - Noncontributory Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 65 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance No Variable rate
based on the Consumer Price Index Yes Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes c

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? No If so, at what rate of pay?
Not applicable What was the actual employer's contribution as a
percent of covered payroll in 1996? 10%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c
Applicable only when beneficiary is a spouse.

d The purchase of service credit allows plan members to buy credit
for years in which they did not otherwise earn a pension benefit.
Source: GAO analysis of state plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 66 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1956 Year original plan
was established 1931

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 65
with 10 years of service Final average salary (FAS) calculation
Highest 1 year

Does plan only include state general employees? Yes

Benefits

Annual benefit formula 1. 25% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.0% 1995 COLA 2.0% 1994 COLA 2.0% 1993 COLA 2.0% 1992
COLA 2.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year Yes Variable rate based on investment performance No

Table III. 7: California: Provisions of the California Public
Employees' Retirement System  Tier II

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 67 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Original

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b Yes

Contributions

Are members required to contribute? No If so, at what rate of pay?
Not applicable What was the actual employer's contribution as a
percent of covered payroll in 1996? 9.89%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 68 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1956 Year original plan
was established 1939

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 60
with 25 years of service Final average salary (FAS) calculation
Highest 3 years Does plan only include state general employees?
Yes

Benefits

Annual benefit formula 1. 33% X FAS X the first 35 years of
service (salary less than $27,300) + 0.5% X FAS X the first 35
years of service (salary above $27, 300) + 1.625% X FAS X years of
service (for service greater than 35 years) Is there a maximum
benefit? No

Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 55 with 10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 3.0% 1994 COLA 3.0% 1993 COLA 3.0% 1992
COLA 3.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year No

Table III. 8: Connecticut: Provisions of the Connecticut State
Employees' Retirement Plan - Tier 2

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 69 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance No Variable rate
based on the Consumer Price Index Yes Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 2. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 14.33%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 70 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1953 Year original plan
was established 1945

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 60 with 15 years

of service, age 62 with 5 years of service Final average salary
(FAS) calculation Highest 3 years Does plan only include state
general employees? No, the plan also includes state teachers,
higher

education, and legislative employees a

Benefits

Annual benefit formula 1. 67% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
15 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.0% 1995 COLA 2.0% 1994 COLA 3.0% 1993 COLA 0% 1992
COLA 0% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No Variable rate based on investment performance No

Table III. 9: Delaware: Provisions of the Delaware State
Employees' Pension Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 71 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 3. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 5.62%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 72 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1927

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 62 with 10 years

of service Final average salary (FAS) calculation Highest 5 years
Does plan only include state general employees? No, the plan also
includes state and local public safety

employees, elected and state and local judicial officials, senior
level management, local general, school district employees, and
state higher education employees a

Benefits

Annual benefit formula 1. 60% X FAS X years of service at age 62
or 30 years of service 1.63% X FAS X years of service at age 63 or
31 years of service 1.65% X FAS X years of service at age 64 or 32
years of service 1.68% X FAS X years of service at age 65 or 33
years of service Is there a maximum benefit? Yes, the maximum
benefit is 100 percent of FAS

Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Any age with 10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 3.0% 1994 COLA 3.0%

Table III. 10: Florida: Provisions of the Florida Retirement
System

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 73 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

1993 COLA 3.0% 1992 COLA 3.0% How the post- retirement COLA is
determined: Ad hoc at the discretion of the governing body No
Fixed rate from year to year Yes Variable rate based on investment
performance No Variable rate based on the Consumer Price Index No
Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? No If so, at what rate of pay?
Not applicable What was the actual employer's contribution as a
percent of covered payroll in 1996? 16.77%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 74 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1952 Year original plan
was established 1949

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 60 with 10 years

of service Final average salary (FAS) calculation Highest 2 years
Does plan only include state general employees? Yes

Benefits

Annual benefit formula 1. 70% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 90 percent of FAS Are
early retirement benefits provided? No Minimum age and years of
service for early retirement Not applicable

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 3.0% 1994 COLA 3.0% 1993 COLA 3.0% 1992
COLA 3.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body Yes Fixed rate from year to
year No Variable rate based on investment performance No Variable
rate based on the Consumer Price Index No

Table III. 11: Georgia: Provisions of the Employees' Retirement
System of Georgia  General Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 75 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 1. 5% What was the actual employer's contribution as a
percent of covered payroll in 1996? 13.63%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 76 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1956 Year original plan
was established 1925

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 55
with 30 years of service, age 62 with 10 years of

service Final average salary (FAS) calculation Highest 3 years
Does plan only include state general employees? No, the plan also
includes state public safety

employees a

Benefits

Annual benefit formula 1. 25% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 100 percent of FAS
Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 55 with 20 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.5% 1995 COLA 2.5% 1994 COLA 2.5% 1993 COLA 2.5% 1992
COLA 2.5% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year Yes Variable rate based on investment performance No

Table III. 12: Hawaii: Provisions of the Hawaii Employees'
Retirement System - Non- Contributory

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 77 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Original

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? No If so, at what rate of pay?
Not applicable What was the actual employer's contribution as a
percent of covered payroll in 1996? 7.76%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 78 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1956 Year original plan
was established 1963

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Rule of
90 (any combination of age and service that add

up to 90), age 65 with 5 years of service Final average salary
(FAS) calculation Highest 3 years, 6 months Does plan only include
state general employees? No, the plan also includes local
teachers, state higher

education, state non- certified school, and local general
employees a

Benefits

Annual benefit formula 1. 917% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is the Internal Revenue
Code

section 415 limit Are early retirement benefits provided? Yes

Minimum age and years of service for early retirement Age 55 with
5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.6% 1995 COLA 2.9% 1994 COLA 2.8% 1993 COLA 3.1% 1992
COLA 3.8% How the post- retirement is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
Yes

Table III. 13: Idaho: Provisions of the Public Employees'
Retirement System of Idaho  General Members

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 79 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance Yes Variable rate
based on the Consumer Price Index No Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c No

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 6. 97% What was the actual employer's contribution as a
percent of covered payroll in 1996? 11.61%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 80 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1969 Year original plan
was established 1944

Eligibility

Number of years to vest in DB component 8 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 35 years of service, age 60 with 8 years of

service Final average salary (FAS) calculation Highest 4 of last
10 years Does plan only include state general employees? No, the
plan also includes state public safety, and other

state employees a

Benefits

Annual benefit formula 1. 67% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 75 percent of FAS Are
early retirement benefits provided? Yes Minimum age and years of
service for early retirement Age 55 with 30 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 3.0% 1994 COLA 3.0% 1993 COLA 3.0% 1992
COLA 3.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year Yes Variable rate based on investment performance No

Table III. 14: Illinois: Provisions of the Illinois State
Employees' Retirement System

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 81 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 4. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 5.1%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different than
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 82 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1953 Year original plan
was established 1953

Eligibility

Number of years to vest in DB component 4 a Number of years to
vest in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Rule of
88 (any combination of age and service that add

up to 88 years), age 62 with 20 years of service, age 65 with any
years of service Final average salary (FAS) calculation Highest 3
years b

Does plan only include state general employees? No, the plan also
includes state teachers in higher education and legislative
employees; local general employees, local teachers, local higher
education teachers, and local public safety officials c

Benefits

Annual benefit formula 60% X (years of service/ 30) X FAS + 1.0% X
FAS X years of service (years 30 to 35) Is there a maximum
benefit? Yes, the maximum benefit is 65% of FAS

Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 55 with any years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 1.9% 1995 COLA 1.56% 1994 COLA 3.39% 1993 COLA 0% 1992
COLA 0% How the post- retirement COLA is determined:

Table III. 15: Iowa: Provisions of the Iowa Public Employees'
Retirement System

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 83 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Ad hoc at the discretion of the governing body No Fixed rate from
year to year No Variable rate based on investment performance No
Variable rate based on the Consumer Price Index Yes Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? d No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? e Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 3. 7% What was the actual employer's contribution as a
percent of covered payroll in 1996? 5.92%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a Immediate vesting at age 55. b In 1998, if the member's highest
average 3- years' salary was over $52, 000, the average highest 5-
years' salary, or $52,000 whichever was larger was used to
calculate the final average salary. c The provisions for other
employee groups may be different from those shown for state
general

employees. d The pop- up provision allows a retiree's monthly
payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. e The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 84 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1962

Eligibility

Number of years to vest in DB component 10 a Number of years to
vest in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Rule of
85 (any combination of age and years of service

that add up to 85), age 62 with 10 years of service, age 65 with
any years of service Final average salary (FAS) calculation
Highest 3 years

Does plan only include state general employees? No, the plan also
includes state legislative employees and local teachers and
general employees b

Benefits

Annual benefit formula 1. 75% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 0% 1995 COLA 0% 1994 COLA 3.0% 1993 COLA 14.5% 1992 COLA
3.6% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No

Table III. 16: Kansas: Provisions of the Kansas Public Employees'
Retirement Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 85 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance No Variable rate
based on the Consumer Price Index No Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 4. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 3.2%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? No

If no, what percent was actually contributed in 1996? 79.5%

a Immediate vesting at age 65. b The provisions for other employee
groups may be different from those shown for state general
employees. c The pop- up provision allows a retiree's monthly
payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 86 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1956

Eligibility

Number of years to vest in DB component 4 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 65
with 4 years of service Final average salary (FAS) calculation
Highest 5 years

Does plan only include state general employees? Yes

Benefits

Annual benefit formula 1. 97% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.8% 1995 COLA 2.11% 1994 COLA 2.11% 1993 COLA 1.0% 1992
COLA 1.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No Fixed rate from year to
year No Variable rate based on investment performance No Variable
rate based on the Consumer Price Index Yes

Table III. 17: Kentucky: Provisions of the Kentucky Employees'
Retirement System  Non- Hazardous

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 87 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 5. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 8.89%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? No

If no, what percent was actually contributed in 1996? 92%

a The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 88 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided Not available Year
original plan was established 1941

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 62 with 5 years of

service, age 63 with 4 years of service, age 64 with 3 years of
service, age 65 or older with 2 years of service Final average
salary (FAS) calculation Highest 3 years

Does plan only include state general employees? No, the plan also
includes state teachers, state public safety, state judicial,
state other, local general and local public safety employees a

Benefits

Annual benefit formula 1. 4% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
15 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 2.81% 1995 COLA 2.61% 1994 COLA 2.95% 1993 COLA 3.0%
1992 COLA 3.0% How the post- retirement COLA is determined: Ad hoc
at the discretion of the governing body No Fixed rate from year to
year No

Table III. 18: Maryland: Provisions of the State Employees'
Retirement System of Maryland

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 89 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance No Variable rate
based on the Consumer Price Index No Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 2. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 13.61%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 90 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1952

Eligibility

Number of years to vest in DB component 4 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 25 years of service, age 60 with 4 years of

service Final average salary (FAS) calculation Highest 4 years
Does plan only include state general employees? No, the plan also
includes state teachers; state higher

education; county and city employees; state noncertified school;
state legislative, and other state employees a

Benefits

Annual benefit formula 1. 875% X FAS X years of service (years 1
25) + 2. 0% X FAS X years of service greater than 25 years Is
there a maximum benefit? No

Are early retirement benefits provided? No Minimum age and years
of service for early retirement Not applicable

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 4.0% 1995 COLA 4.0% 1994 COLA 2.5% 1993 COLA 3.0% 1992
COLA 2.75% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body Yes Fixed rate from year to
year No

Table III. 19: Mississippi: Provisions of the Public Employees'
Retirement System of Mississippi - General Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 91 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance Yes Variable rate
based on the Consumer Price Index Yes Is the COLA based on the
original or current benefit? Original

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 7. 25% What was the actual employer's contribution as a
percent of covered payroll in 1996? 9.75%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 92 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1955 Year original plan
was established 1945

Eligibility

Number of years to vest in DB component 5 a Number of years to
vest in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 60 with 5 years of

service, age 65 while in service with no service requirement Final
average salary (FAS) calculation Highest 3 years Does plan only
include state general employees? No, the plan also includes school
district, local general

and state higher education employees b

Benefits

Annual benefit formula 1. 786% X FAS X years of service c Is there
a maximum benefit? Yes, the maximum benefit is 100 percent of FAS
Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 50 with 5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 0% 1995 COLA 0% 1994 COLA 5.0% 1993 COLA 1.42% 1992 COLA
1.3% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No

Table III. 20: Montana: Provisions of the Montana Public
Employees' Retirement System

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 93 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance Yes Variable rate
based on the Consumer Price Index No Is the COLA based on the
original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? d No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? e Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 6. 8% What was the actual employer's contribution as a
percent of covered payroll in 1996? 6.7%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a Immediate vesting at age 65 while an active member. b The
provisions for other groups of employees may be different from
those shown for state general employees. c The normal retirement
benefit is calculated using the higher of a DB formula or a money
purchase

annuity. A money purchase annuity is a specific type of DC
component wherein contributions are stated as a percentage of the
employee's salary. Retirement benefits are equal to the amount in
the employee's individual account. d The pop- up provision allows
a retiree's monthly payment to be restored to 100 percent of his
or her

standard annuity if the beneficiary predeceases the retiree. e The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 94 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1955 Year original plan
was established 1945

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 60
with any years of service (10 years required to

vest) Final average salary (FAS) calculation Highest 3 years Does
plan only include state general employees? Yes

Benefits

Annual benefit formula 1. 67% X FAS X years of service (ages 60 to
64) or 1.51% X FAS X years of service (age 65 and older) Is there
a maximum benefit? No

Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 50 with 10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 0% 1995 COLA 2.0% 1994 COLA 2.5% 1993 COLA 3.0% 1992
COLA 0% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body No Fixed rate from year to year
No Variable rate based on investment performance Yes

Table III. 21: New Hampshire: Provisions of the New Hampshire
Retirement System  General Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 95 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? a Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? b Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 5. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 3.14%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The pop- up provision allows a retiree's monthly payment to be
restored to 100 percent of his or her standard annuity if the
beneficiary predeceases the retiree. b The purchase of service
credit allows plan members to buy credit for years in which they
did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 96 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1921

Eligibility

Number of years to vest in DB component 10 a Number of years to
vest in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 60
with any years of service Final average salary (FAS) calculation
Highest 3 years Does plan only include state general employees?
No, the plan also includes state legislative and local

general employees b

Benefits

Annual benefit formula 1. 67% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
25 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 1.98% 1995 COLA 1.5% 1994 COLA 1.62% 1993 COLA 1.62%
1992 COLA 1.74% How the post- retirement COLA is determined: Ad
hoc at the discretion of the governing body No Fixed rate from
year to year No Variable rate based on investment performance No

Table III. 22: New Jersey: Provisions of the Public Employees'
Retirement System of New Jersey

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 97 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index Yes Is the COLA
based on the original or current benefit? Original

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c No

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 5.0% What was the actual employer's contribution as a percent
of covered payroll in 1996? 2.13%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a Immediate vesting at age 60. b The provisions for other employee
groups may be different from those shown for state general
employees. c The pop- up provision allows a retiree's monthly
payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 98 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
Components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1956 Year original plan
was established 1947

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 25 years of service, age 60 with 20 years

of service, age 61 with 17 years of service, age 62 with 14 years
of service, age 63 with 11 years of service, age 64 with 8 years
of service, age 65 with 5 years of service Final average salary
(FAS) calculation Highest 3 years Does plan only include state
general employees? No, the plan also includes volunteer fire
fighters,

magistrates, and local general employees a

Benefits

Annual benefit formula 3. 0% X FAS X years of service Is there a
maximum benefit? Yes, the maximum benefit is 80 percent of FAS Are
early retirement benefits provided? No Minimum age and years of
service for early retirement Not applicable

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.0% 1995 COLA 3.0% 1994 COLA 3.0% 1993 COLA 3.0% 1992
COLA 3.0% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body No

Table III. 23: New Mexico: Provisions of the Public Employees'
Retirement Association of New Mexico

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 99 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Fixed rate from year to year Yes Variable rate based on investment
performance No Variable rate based on the Consumer Price Index No
Is the COLA based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 7. 42% What was the actual employer's contribution as a
percent of covered payroll in 1996? 16.59%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 100 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1921

Eligibility

Number of years to vest in DB component 10 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Age 55
with 30 years of service, age 62 with 10 years of

service, age 70 with 5 years of service Final average salary (FAS)
calculation Highest 3 years Does plan only include state general
employees? No, the plan also includes local general and local
noncertified school employees a

Benefits

Annual benefit formula 1. 67% X FAS X years of service (years 1
25) plus 2.0% X FAS X years of service (years 25  30) plus 1.5% X
FAS X years of service (> 30 years) Is there a maximum benefit? No

Are early retirement benefits provided? Yes Minimum age and years
of service for early retirement Age 55 with 10 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 3.77% b 1995 COLA 2.63% b 1994 COLA 3.06% b 1993 COLA
3.54% b 1992 COLA 4.20% b How the post- retirement COLA is
determined: Ad hoc at the discretion of the governing body Yes
Fixed rate from year to year No

Table III. 24: New York: Provisions of the New York State & Local
Employees' Retirement System  General Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 101 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on investment performance No Variable rate
based on the Consumer Price Index No Is the COLA based on the
original or current benefit? Original

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 3. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 2.2%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? No

If no, what percent was actually contributed in 1996? 55.9%

a The provisions for other employee groups may be different from
those shown for state general employees. b The COLAs shown for
1992 through 1996 represent the average of the COLAs paid during
those

years. c The pop- up provision allows a retiree's monthly payment
to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 102 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1951 Year original plan
was established 1941

Eligibility

Number of years to vest in DB component 5 Number of years to vest
in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Any age
with 30 years of service, age 60 with 25 years

of service, age 65 with 5 years of service Final average salary
(FAS) calculation Highest 4 years Does plan only include state
general employees? No, the plan also includes state teachers and
state

public safety employees a

Benefits

Annual benefit formula 1. 80% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 50 with
20 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 4.4% 1995 COLA 2.0% 1994 COLA 3.5% 1993 COLA 1.6% 1992
COLA 1.6% How the post- retirement COLA is determined: Ad hoc at
the discretion of the governing body Yes Fixed rate from year to
year No Variable rate based on investment performance No

Table III. 25: North Carolina: Provisions of the Teachers' and
State Employees' Retirement System of North Carolina

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 103 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? b Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? c Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 6. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 8.15%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a The provisions for other employee groups may be different from
those shown for state general employees. b The pop- up provision
allows a retiree's monthly payment to be restored to 100 percent
of his or her

standard annuity if the beneficiary predeceases the retiree. c The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 104 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided Design
components

Defined benefit (DB) Yes Defined contribution (DC) with employer
contribution No DC with NO employer contribution Yes Social
Security Yes

Year Social Security coverage was provided 1955 Year original plan
was established 1965

Eligibility

Number of years to vest in DB component 5 a Number of years to
vest in employer's contribution to DC component Not applicable, no
employer contribution

Age and service requirements for normal unreduced benefits Rule of
85 (any combination of age and years of service

that add up to 85), age 65 with any years of service Final average
salary (FAS) calculation Highest 3 of last 10 years Does plan only
include state general employees? No, the plan also includes state
judicial and other

employees b

Benefits

Annual benefit formula 1. 77% X FAS X years of service Is there a
maximum benefit? No Are early retirement benefits provided? Yes
Minimum age and years of service for early retirement Age 55 with
5 years of service

Cost of living adjustments (COLAs)

Has the plan provided post- retirement COLAs in the past 5 years?
Yes

1996 COLA 0% 1995 COLA 0% 1994 COLA 1.0% 1993 COLA 2.0% 1992 COLA
0% How the post- retirement COLA is determined: Ad hoc at the
discretion of the governing body Yes Fixed rate from year to year
No Variable rate based on investment performance No

Table III. 26: North Dakota: Provisions of the North Dakota Public
Employees' Retirement System - General Plan

Appendix III Type III Plans: Selected Features and Plan Profiles

Page 105 GAO/GGD-99-45 Design of State Retirement Programs

General design and features of plan Provision provided

Variable rate based on the Consumer Price Index No Is the COLA
based on the original or current benefit? Current

Supplemental/ auxiliary benefits

Are survivor benefits provided after retirement? Yes Is a pop- up
provision included in the survivor's benefit options? c Yes

Are disability benefits provided? Yes Does the plan allow for the
purchase of service credits? d Yes

Contributions

Are members required to contribute? Yes If so, at what rate of
pay? 4. 0% What was the actual employer's contribution as a
percent of covered payroll in 1996? 4.12%

Was 100 percent of the employer's actuarially required
contribution actually contributed in 1996? Yes

If no, what percent was actually contributed in 1996? Not
applicable

a Immediate vesting at age 65. b The provisions for other employee
groups may be different from those shown for state general
employees. c The pop- up provision allows a retiree's monthly
payment to be restored to 100 percent of his or her

standard annuity if the beneficiary predeceases the retiree. d The
purchase of service credit allows plan members to buy credit for
years in which they did not

otherwise earn a pension benefit. Source: GAO analysis of state
plan features.

*** End of document. ***