ERIP


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Departments > Retirement System > ERIP

ERIP

WHAT IS ERIP (EMPLOYEE RETENTION INCENTIVE PROGRAM)?

The Employee Retention Incentive Program or ERIP, effective January 1, 2005, is a plan designed to allow employees who have met the service "time worked" requirements to retire and draw a monthly benefit in addition to a lump sum payment at the time of retirement.

HOW ARE THE BENEFITS CALCULATED?

The monthly benefit will be based on the number of years of creditable service selected by the employee at the time of retirement. The ERIP amount will be based on time dropped in whole years (one, two or three) and must be time worked after their retirement eligibility date and January 1, 2005. The monthly benefit will be calculated according to Retirement Law guidelines and the ERIP amount will be the accumulation of the monthly pension benefit the participant would have received during the time they elected to drop from their creditable service, plus annual compounded interest of 5%.

WHEN AM I ELIGIBLE?

You become eligible for ERIP upon reaching the one year anniversary of the accumulation of sufficient creditable service to retire.
For example an employee under the 20 year plan could drop 1 year upon their 21st anniversary, 2 years upon their 22nd anniversary and 3 years upon their 23rd anniversary as long as the time dropped was accumulated after January 1, 2005. An employee under the 25 year plan could drop 1 year upon their 26th anniversary, 2 years upon their 27th anniversary and 3 years upon their 28th anniversary as long as the time dropped was accumulated after January 1, 2005.

Exclusions may apply.

WHAT KIND OF THINGS SHOULD I THINK ABOUT WHEN CONSIDERING ERIP?

Age at the time of retirement is important. Dropping years of creditable service reduces your monthly benefit and the younger you are at retirement most likely means the longer you’ll live with the reduced benefit. A young retiree dropping creditable service may cost themselves money.

Health might be an issue to think about.

Substantial increases in pay during the time you’re planning to drop might be something to consider. Dropping a promotion year or COLA year could be more detrimental than you think.

Timing due to income tax consequences might be something to consider.

Rolling your ERIP check into your deferred compensation account might be an option you want to consider.

This list is based on some of our most common questions. Because everyone’s situation is different you might have a situation you need to consider that’s specific to you. We will gladly provide whatever information we can to assist you in your ERIP decision but strongly suggest you consult a financial and/or tax advisor concerning possible tax ramifications and potential investment strategies.

ARE THERE SPECIAL PROVISIONS I NEED TO KNOW ABOUT ERIP?

Buy-back time purchased after the ERIP implementation date of January 1, 2005 may not be used in ERIP calculations unless it was time you were called to active military duty while employed by the City or Airport Authority.

In the event a retiree is rehired, only service after the rehire date is used to complete a new 20 or 25 year eligibility requirement for the ERIP option.

Employees must be in active payroll status on their eligibility date to participate in ERIP.

NOTE: You do not need to sign up for ERIP ahead of time. That election will be made at the time of retirement.