"It's In The Mail"
But Is Your Address Current?
It is very important for you to notify SERS when there is an impending change in your address. That is true regardless of whether or not you're retired, and, if you are retired, regardless of how you may receive your monthly annuity payment.
If you are a retiree or annuitant who receives monthly annuity payments by check, it is especially vital for you to keep your address up-to-date: Paper checks are NOT forwarded under any circumstances, according to United States Postal Service regulation. Instead, checks addressed to an out-of-date address are returned to SERS and can only be re-issued once you submit a written change of address notice with SERS -- which could result in a substantial delay in your annuity check.
If you are expecting a change in your address, please notify SERS of the change no later than the 10th of the month so that SERS can update your address and you receive your monthly check without interruption.
While you can notify SERS at any time before an expected address change, you must list the effective date for the change. And, once you send notification to SERS of an address change, any changes to either the timing or location of your new address must be sent in writing to SERS.
To change your address, complete and mail to SERS an Annuitant Address Change Card (SERS-128). This form is available on this website through the "Forms" link, or by calling your Regional Retirement Counseling Center at 1-800-633-5461. In addition, SERS will accept any written request that contains your old address, new address, social security number and signature. For your protection, SERS requires that any changes to your retirement account, including an address change, be submitted in writing. Therefore, SERS cannot accept a change of address request by phone.
Many SERS annuitants spend the winter months in warm climates. If you are in this situation and are receiving the PEBTF's Retired Employees Health Program (REHP) coverage along with your annuity, do NOT seasonally change your address. A change such as this could adversely affect the coordination of the health care coverage for you and your eligible dependents. SERS strongly encourages you to enroll in direct deposit so that your monthly payments continue uninterrupted without impacting your health care coverage. For more information, please contact your Retirement Counselor at 1-800-633-5461.
If you are a retiree or annuitant who receives monthly payments by direct deposit to your financial institution, it is still important to notify SERS of any changes to your home address. SERS mails important information, such as your annual 1099-R tax form and your annual Personal Statement of Retirement Benefits (see "You Asked For It; It's On Its Way" in this newsletter for more information on this new mailing) in addition to this newsletter and other important notices regarding your annuity.
As an active member it also is important for you to keep your address up-to-date with SERS because SERS mails your annual Statement of Account, this newsletter and other important notices that may require your quick action.
There is no need for you to send your address information directly to SERS, however. You need only update your address with your Human Resources/Personnel office or through ESS on the SAP system. The data from those sources is then shared with SERS.
Audit Reports Effective Management of SERS
For almost a year and a half, SERS has been undergoing two simultaneous in-depth fiduciary performance audits scrutinizing every aspect of how SERS manages its $30 billion investment portfolio. The results are now in and they add up, in the words of SERS Executive Director Eric Henry, to "a very good report card."
On Sept. 26, 2006, Mr. Henry joined Auditor General Jack Wagner and other officials in the public release of two fiduciary audit reports of SERS and of the Public School Employees' Retirement System (PSERS).
"Both funds," Auditor General Wagner said, "were managed effectively and professionally."
The fiduciary audits entailed a 17-month, in-depth examination of SERS by both the Department of the Auditor General and a nationally known consulting firm, widely recognized as having the greatest expertise in studying the operations of multi-billion-dollar public pension funds, Independent Fiduciary Services (IFS), of Washington D.C.
Auditor General Jack Wagner released the fiduciary performance audits of SERS and PSERS during a news conference Sept. 26, 2006. (L-R) IFS Sr. Vice President Jeanna Cullins, Auditor General Wagner, SERS Executive Director Eric Henry and PSERS Executive Director Jeff Clay.
"These exhaustive, dual examinations of SERS' investment practices are unprecedented in Pennsylvania and, in their combined depth and breadth, may be unprecedented nationally, as well," Mr. Henry said during the news conference.
"This was an intensive study of all aspects of SERS' investment policies and operations, looking at everything from how our Board makes multi-billion dollar investment decisions to how we monitor those investments.
"They prompted the SERS Board and staff to conduct a careful and detailed examination of our own operations. And, as we had hoped they would, these reports produced a number of valuable recommendations and observations. Some of those recommendations already have been implemented, as the audit reports note. Others will be."
In addition to the areas in which they made recommendations, the auditors concluded that in many key areas, no changes are needed. In many instances, the auditors commented favorably when they found we were doing a particularly good job. IFS' positive comments included:
"Both staff and the consultant have a sophisticated understanding of investment manager styles and strategies."
"The Fund's extensive compliance program, integrated with the Custodian's systems, represents a best practice."
"The Fund is distinguished by the sophistication of its investment program. The Fund is clearly on the cutting edge of the public pension fund investment world."
"SERS has played a leadership role in corporate governance and shareholder activism at the national level."
The Auditor General, in addition to his overall comment regarding effective and professional management, also noted specific areas for positive comment, including:
"SERS' procurement processes for external consultants worked as intended and the investment consultants and actuary complied with their contracts."
"SERS made a conscientious effort to make investments in Pennsylvania and reported these investments to the General Assembly."
"Overall, the results confirm the effectiveness of the Board's investment program and risk management practices, and demonstrate that the SERS Board and staff are doing a good job of caring for the $30 billion entrusted to us," said SERS Board Chairman Nicholas Maiale. "These reports give us a roadmap for further improvement to help SERS maintain its leadership role in the public pension industry."
Mr. Henry added, "we also hope these audits will serve to reassure members that their retirement system is well managed and their benefits are secure. With the whole issue of retirement so much in the news today, with so many headlines about private pension plans being shut down, and with all the sensationalistic stories that have been written about what might happen in the future, it's understandable that our members sometimes worry about their own benefits.
"What these audits show is that the money entrusted to us is being properly managed so that we can continue meeting our obligation to our active and retired members, and their beneficiaries."
Auditor General Urges Funding Action
In addition to publicly releasing the performance audit reports, Auditor General Wagner took the opportunity of the news conference to call on the Legislature and the Governor to take steps to smooth out employer contributions in both systems.
In contrast to employee contributions, which are fixed by state law, employer contributions fluctuate over time and have been at historic lows since 1996 -- even dropping to zero for two years. Legislation enacted in 2003 resulted in an extension of record-low employer contribution rates into 2012. However, the tradeoff for holding rates below normal until then is a projected series of much larger "balloon payments" starting in 2012.
If the employers were to pay more in the interim, the post-2012 payments would become smaller and more manageable from a budgetary standpoint. On that basis, Auditor General Wagner recommended increasing employer contributions prior to the scheduled balloon payments.
SERS, like most pension systems, is designed with the expectation that employers will make contributions to help keep it sound. And while some pension systems across the nation may face a crisis due to severe underfunding, that is not the case with SERS. SERS' 92.9 percent funded status makes it among the best-funded public pension plans in the country. By way of comparison, the average funding level for public pension plans is 80 percent.
Employer contributions, while important, are the smallest of the three sources of SERS' funding. Over the past ten years, approximately 83 percent of SERS funding has come from investment earnings while only 10 percent of funding has come from employees and only seven percent from employers.
In 2005 SERS earned 14.5 percent, or more than $3.6 billion, on its investment portfolio, performance that placed it among the top 10 percent of all pension funds nationwide. More recently, SERS' return for the 12 months ended June 30, 2006, was 17.1 percent.
You Asked For It; It's On Its Way;
SERS' First-Ever Personal Statement of Retirement Benefits
Many annuitants have expressed an interest in an annual statement, so SERS is pleased to announce that this January you will receive your first.
"Our goal is to provide you with valuable information about your SERS benefit," said SERS Executive Director Eric Henry. "In the future we will expand the statements to include additional helpful information."
Your statement will list information about you, the retirement option you selected at retirement and the total gross annuity payments you received in 2006. (For survivor annuitants, the retirement option information lists the retirement option your SERS member elected at retirement.)
The statement also will detail the amount you instructed SERS to withhold for taxes, if any, in 2006.
In addition, you will find a 2007 Retirement Payment Calendar in this statement. While in the past SERS mailed the annual Retirement Payment Calendar separately, it will now be included in your annual statement.
Because it is very important that you keep your address up-to-date with SERS (see "It's In The Mail" But Is Your Address Current?, in this newsletter), your statement will include a change of address form that you can cut out of the statement, should you need it in the future.
While your Personal Statement of Retirement Benefits includes information about your federal taxes, it is not intended for tax preparation purposes. You will still receive your SERS-issued 1099-R in a separate mailing in January for you to file your taxes.
SERS Retirement Payment Dates
SERS retirement benefits are payable on the last working day of each month. For annuitants who receive their annuity payment by direct deposit, the money is deposited into the bank account you requested on the last working day of each month. For annuitants who receive their annuity payments by check through the mail, SERS mails all checks on the next-to-last working day of each month. Your check should arrive in the mail within 10 business days.
For Jan. 2007, SERS retirement payments by check will be mailed Tue., Jan. 30, and all electronic payments will be direct deposited into annuitant accounts on Wed., Jan. 31.
What are Your Current Wishes? Keep Your Beneficiary Forms Current
Beneficiary forms are often overlooked. Counselors have reported that when they sit down with a member who is preparing to retire, it is not unusual to find only the original form in the member's file -- the form the member filed with SERS when he or she began employment decades ago.
SERS has seven Regional Retirement Counseling Centers throughout the Commonwealth serving active members based on their work location, and retirees and survivor annuitants based on their residence location.
Retirement Counselors are available in each center to answer questions you may have about your retirement benefit. You can reach your Retirement Counselor by calling 1-800-633-5461.
Your beneficiary is the person(s) or organization(s) you last designated in writing and filed with SERS as your chosen recipient of any death benefit that may be payable on your annuity. That death benefit could amount to a large sum of money, and it is up to you to make sure SERS knows your current wishes.
Active members are strongly encouraged to keep their beneficiary elections updated, especially after life changing events such as a marriage, a divorce, the birth of a child, or the death of a named beneficiary.
Your annual Statement of Account (distributed by SERS each March) lists the primary beneficiary on record. If your Statement of Account does not list a beneficiary, your beneficiary form has not been updated since the SERS computer systems were upgraded in the mid 1990's or you have specifically requested that information not be included on your Statement of Account.
To ensure your wishes are on file with SERS, Active members and members who left State service but are vested in the system are encouraged to complete and file an updated Active/Vested Beneficiary Nomination (SERS-402) form with SERS. This form is available on this website through the "Forms" link, from your agency human resources/personnel office or by calling SERS at 1-800-633-5461. (The online form can be completed online and then printed so that you can sign it and mail it to SERS.)
Keep in mind that other beneficiary forms are required for your group life insurance, deferred compensation and tax sheltered annuities -- your human resources office can provide you with those forms.
The rules for beneficiary forms are different for retired members receiving annuity benefits. You might not need to designate a beneficiary depending upon the retirement option you chose at retirement.
If you selected the Maximum Single Life Annuity (MSLA) and withdrew your accumulated deductions or you selected a traditional joint and survivor annuity (Option 2 or 3), you did not designate a beneficiary. For MSLA with a withdrawal of accumulated deductions, Option 2 and Option 3 retirements, SERS pays any death benefit (usually the number of days the member lived in the month of death) to your estate or next of kin.
If you elected an MSLA and did not withdraw your accumulated deductions or you elected Option 1, or a joint and survivor option with a guaranteed present value, you were required to list a beneficiary. To ensure that your wishes are up-to-date and filed with SERS, you are encouraged to file an updated Retiree/Survivor Annuitant Beneficiary Nomination (SERS-403) form. This form is available by calling your Retirement Counselor at 1-800-633-5461.
Get a Tax-Deferred Boost in Your Retirement Savings
The Commonwealth of Pennsylvania Deferred Compensation Program (DCP) provides you with the ability to build significant tax-deferred savings to help you realize your retirement dreams.
While your SERS retirement plan provides retirement benefits according to a fixed formula, guaranteed for life, the voluntary DCP provides benefits based on your account balance at retirement. Through DCP, you pick the investment strategy that best suits you, and you defer pre-tax income to those investments.
SERS Address Update Alert
While the location of the SERS Headquarters remains the same, the address has changed. We are no longer using a Post Office box. Mail sent to SERS must include the street address, including the suite number, and our updated zip code.
For prompt delivery, mail should be addressed:
State Employees' Retirement System
30 North Third Street, Suite 150
Harrisburg, PA 17101-1716
Before and After: The Stages of Retirement
In What Stage are You?
"As it turns out, retirement is not a single event. It does not take place in a day, or even in a single year." That's according to a recent article in the Sharing Ideas for Retirement Education and Administration newsletter.
The article, detailing the findings of The New Retirement Mindscape study, identified five stages of retirement spanning from fifteen to six years before retirement, through 16 or more years after retirement.
People move through "distinct and predictable stages of retirement -- each with its own complex emotions and needs," the article reported. "As people move through these stages, each stage has an impact on every other area of their life -- their family, their workplace, their community, and their financial situation."
1 st Stage: Imagination (15-6 years before retirement)
2 nd Stage: Anticipation (Up to 5 years before retirement)
3 rd Stage: Liberation (Retirement Day and the following year)
4 th Stage: Reorientation (2-15 years after retirement)
5 th Stage: Reconciliation (16 or more years after retirement)
Hon. Nicholas J. Maiale, Chairman
Mr. Michael J. Acker, Sr. V.P. Triad Strategies
Hon. Gibson E. Armstrong, State Senator
Hon. Robert A. Bittenbender, Former State Secretary of the Budget
Hon. Robert P. Casey, Jr., State Treasurer
Mr. David R. Fillman, AFSCME Executive Director
Ms. Lynne P. Fox, Manager, Intl. VP Phila. Joint Board UNITE HERE!
Hon. Robert W. Godshall, State Representative
Hon. Raphael J. Musto, State Senator
Hon. M. Joseph Rocks, Retired Member and Former State Senator
Hon. Michael R. Veon, State Representative