(2013)
How will employees make their FRS plan selection?
Employees can make their selection in any of four ways:
- By printing out the enrollment form provided on this site, then completing and submitting the form;
If in the Regular, Special Risk, or Special Risk Administrative Support Classes, by:
- Enrolling interactively on this Web site using the CHOICE SERVICE, which is available to employees at the start of their respective Choice period;
- Enrolling on this Web site by clicking on the "Enroll" button and following the necessary steps; or
- Calling the MyFRS Financial Guidance Line at 1-866-446-9377.
(2014)
If I currently offer, or plan to offer, an additional savings vehicle to my employees, does the FRS Investment Plan prevent me from doing this?
No. You can choose to offer any other additional savings vehicles to your employees. It would be to their advantage to participate in a contributory savings plan (in addition to those offered by the FRS) to maximize their retirement savings.
(2015)
Will new employees be able to choose between the two plans?
Yes. In general, newly hired employees will be enrolled automatically in the FRS Pension Plan on their date of hire. If they wish to participate in the FRS Investment Plan instead of the Pension Plan, they have until 4:00 PM ET on the last business day of the fifth month after the month of hire to select the Investment Plan. (State University System employees, who are automatically enrolled in the University Optional Retirement Plan, are the exception. They must first opt out of the Optional Retirement Plan into the Pension Plan within their first 90 days, and then choose the Investment Plan.)
(2016)
Will a rehired employee (i.e., an employee who previously left FRS employment, did not draw retirement benefits, and is now returning to FRS employment) have a choice between the two plans?
If this is the first time the employee has been rehired since July 1, 2001, then yes. As with new employees, rehired employees (including FRS retirees who are rehired) who have not previously made a plan choice will be enrolled automatically in the Pension Plan on their date of rehire. If an employee wishes to participate in the Investment Plan instead of the Pension Plan, he or she has until the last business day of the fifth month after his or her date of rehire to select the Investment Plan.
(2026)
Some of my employees don't have any experience or interest in managing an investment account. Are there resources or investment funds that will simplify this task, or even do it for them?
Yes. The resources available through the FRS provide personalized assistance with designing and managing an Investment Plan account to help them meet their retirement goals and be aware of and comfortable with the risks. For persons who do not want to routinely monitor their investments to ensure that they remain on their long-term retirement plan, the Investment Plan includes three "balanced" investment funds. These funds pre-select combinations of diversified investments and maintain the desired balance over time. This balance (asset allocation) is one of the most important factors in their eventual success as a long-term retirement investor. These funds are also very low-cost. That means more of the funds' investment earnings end up in their account rather than going to pay the companies that manage the funds' investments. They may want to consider directing all of their contributions to one of these balanced funds.
(2034)
What are the contribution rates for the Investment Plan and Pension Plan? Aren't they higher in the Investment Plan, which means that plan will provide a greater retirement benefit?
The retirement contributions paid by employers to the FRS Pension Plan are not a determining factor in the calculation of retirement benefits in that plan. They are only an amount needed to fund the benefit promised by the fixed benefit formula.
The retirement contributions paid by employers to the Investment Plan, however, are directly related to the amount of retirement benefits. Those contributions, plus investment earnings on them (less expenses) will determine the amount of retirement benefits at termination.
The 2002 legislative session resulted in a new method for paying contributions by employers, called a "blended contribution rate". Under this law, employers will pay the same contribution rate for each employee regardless of whether he or she is in the Pension Plan or the Investment Plan. The contribution amount needed above that blended rate will be absorbed by the approximately $8 billion surplus in the Pension Plan.
The first chart below shows the contribution rates for the Investment Plan. These rates are fixed by law and will be in effect unless changed by future legislative action. The second chart below shows the blended rate, which is the rate actually paid by employers.
Investment Plan Contribution Rates Effective July 1, 2008
| |
Annuity |
Disability Plan |
Administration |
HIS |
Total |
| Regular Class |
9.00% |
0.25% |
0.05% |
1.11% |
10.41% |
| Special Risk Class |
20.00% |
1.33% |
0.05% |
1.11% |
22.49% |
| Special Risk Admin |
11.35% |
0.45% |
0.05% |
1.11% |
12.96% |
| Judicial Subclass |
18.90% |
0.73% |
0.05% |
1.11% |
20.79% |
| Legislative/Cabinet/Public Defenders/State Attorney Subclass |
13.40% |
0.41% |
0.05% |
1.11% |
14.97% |
| Elected County Officers Subclass |
16.20% |
0.41% |
0.05% |
1.11% |
17.77% |
| Senior Management Class |
10.95% |
0.26% |
0.05% |
1.11% |
12.37% |
Blended Contribution Rates Effective July 1, 2008
| |
Retirement Benefit |
Administration |
HIS |
Total |
| Regular Class |
8.69% |
0.05% |
1.11% |
9.85% |
| Special Risk Class |
19.76% |
0.05% |
1.11% |
20.92% |
| Special Risk Admin |
11.39% |
0.05% |
1.11% |
12.55% |
| Judicial Subclass |
18.50% |
0.05% |
1.11% |
19.56% |
| Legislative/Cabinet/Public Defender/State Attorney Subclass |
13.32% |
0.05% |
1.11% |
14.48% |
| Elected County Officers Subclass |
15.37% |
0.05% |
1.11% |
16.53% |
| Senior Management Service Class |
11.96% |
0.05% |
1.11% |
13.12% |
| DROP Class |
9.80% |
0% |
1.11% |
10.91% |
(2025)
Won't some employees who select the Investment Plan be tempted to use their money for a big purchase when they leave the FRS and then not have any retirement benefit?
Quite possibly. All accessible account balances are at risk after an FRS participant terminates employment. (Account balances become accessible three calendar months after an FRS participant terminates employment.) To help prevent this tendency to spend now, regret later, the FRS aggressively informs employees about the benefit of tax-deferred savings and long-term investment strategies. It stresses the importance of finding out how much employees need to live comfortably in retirement and determining where that income will be coming from. It also identifies post-termination investment and retirement payout opportunities (lump sum vs. annuities) for members of both FRS plans.
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