The ERFC retirement program is funded by three sources: member contributions, employer contributions, and investment income. ERFC members contribute 3 percent of their paid contract salary or base compensation. The exact share of FCPS contributions to ERFC is determined by the Fairfax County School Board as part of the budget process, upon the recommendation of the ERFC Board of Trustees and its actuary. Investment income, which comes from investing the Plan’s assets, provides the major source of funding for the Plan.
A defined benefit retirement plan provides eligible members a specified monthly benefit at retirement. Under a defined benefit plan, a set formula is established and used to compute the retirement annuity. The amount of the benefit payments is not a function of the investment returns. ERFC and ERFC-2001 are defined benefit retirement plans, qualified under section 401(a) of the Internal Revenue Code.
Social Security benefits do not affect benefit payments provided to members hired on or after July 1, 2001, covered under the ERFC 2001 Plan structure.
ERFC, the legacy plan, which covers members hired prior to July 1, 2001, was designed specifically as an early retirement plan to supplement the benefits provided by VRS and Social Security. Under the ERFC benefit structure, members selecting the standard benefit payment type receive a lifetime benefit amount plus an additional temporary benefit, which is paid only from the time of retirement until the member is eligible for full Social Security benefits. The temporary ERFC benefit payment is not paid if you retire after full Social Security eligibility. Your date of birth is the factor that determines the age at which you will become eligible for full Social Security benefits, as shown in the following chart.
|If You Were Born||Eligible Age for Full Social Security Benefits|
|Jan. 1, 1938 or earlier||65|
|Jan. 2, 1938 - Jan. 1, 1939||65 and 2 months|
|Jan. 2, 1939 - Jan. 1, 1940||65 and 4 months|
|Jan. 2, 1940 - Jan. 1, 1941||65 and 6 months|
|Jan. 2, 1941 - Jan. 1, 1942||65 and 8 months|
|Jan. 2, 1942 - Jan. 1, 1943||65 and 10 months|
|Jan. 2, 1943 - Jan. 1, 1955||66|
|Jan. 2, 1955 - Jan. 1, 1956||66 and 2 months|
|Jan. 2, 1956 - Jan. 1, 1957||66 and 4 months|
|Jan. 2, 1957 - Jan. 1, 1958||66 and 6 months|
|Jan. 2, 1958 - Jan. 1, 1959||66 and 8 months|
|Jan. 2, 1959 - Jan. 1, 1960||66 and 10 months|
|Jan. 2, 1960 or later||67|
ERFC Plan members are also offered an alternative benefit payment type that provides a Level Lifetime Benefit (LLB) with no change in benefit payments at full Social Security age. The LLB benefit payment type is designed to provide members a benefit that is the actuarial equivalent to the standard benefit payment, with an additional guarantee that the annuity will be at least as valuable as the member’s contribution account.
Interest is credited to your ERFC member contributions account (including payments for purchased service credit under the ERFC benefit structure) annually on July 1st. The interest paid is based on the balance of your Accumulated Contributions as of July 1st of the preceding year. The interest rate is set currently at 5%, unless the Board of Trustees determines the need to adopt a different rate for a particular fiscal year. Be aware that once you begin to receive ERFC retirement benefits, no further interest will be credited to your account.
ERFC distributes member contribution statements annually in August. These individual statements are posted to your ERFC Direct account. Each benefit profile statement cites the member’s account balance effective July 1st of the preceding fiscal year, noting changes during the fiscal year and interest credits.
To ensure that you receive your annual account statements, make certain that you keep your ERFC Direct account active with your current email address. This is especially important for those members who may leave active FCPS employment while retaining contributions on account with ERFC. Inactive/deferred ERFC members and retirees can update their contact information directly online using ERFCDirect. Contact information for Active employees is provided to ERFC automatically by the FCPS Payroll Services office.
You may retire at any time during the school year. However, all benefit payments commence on the first of the month. For example, if you wanted to retire at the end of a school semester, the classes might end in mid-January, but your retirement date would become effective on February 1st.
ERFC benefits are not paid automatically; you must submit a retirement application and supporting documents to initiate your benefit payments. If you delay your application, you may lose a portion of your benefits, because retroactive payments are limited to a 90-day window before the application date.
You should contact ERFC at least 120 days before you plan to retire. This will allow sufficient time for ERFC to prepare your individual benefit estimates and to process your requests. You will also want to allow yourself plenty of time to review your options carefully before you must lock in your elections. Remember, once you are retired, most of your benefit options cannot be changed. Please also note that the 120-day allowance is especially important if you are planning to retire on July 1st. This is the most popular retirement date, and therefore spring is always the busiest time of the year at ERFC.
Upon applying for retirement, you will need to provide the following documents:
Documented proof of birth
(A certified copy of your birth certificate is preferred. Married women should print their full current name and Social Security number on the back of any documented proof of birth.
Your Military DD-214 discharge certificate
(If applicable, and hired prior to July 1, 2001)
Your beneficiary’s birth certificate and Social Security card
(Applicable only if you choose a survivor benefit payment option)
A certified copy of your marriage certificate
(Applicable only if you choose a survivor benefit payment option, and your Nominated Beneficiary is your spouse or former spouse)
If you retire under the legacy plan, ERFC, your Unused Sick Leave is converted automatically to retirement service credit at the time of retirement, unless you make arrangements with FCPS Payroll Services, prior to termination of employment, to transfer it to another Virginia school district. Unused Sick Leave cannot be used to reach vesting or to make you eligible for early retirement. However, if you are a fully vested FCPS employee, age 55 or older at the time you terminate employment, your Unused Sick Leave may be used to meet the 25-year service requirement for full ERFC benefits.
FCPS employees hired on or after July 1, 2001 and covered under the ERFC-2001 benefit structure are not eligible to convert their unused sick leave into retirement service credit.
At this writing, you may continue to opt for the insurance coverage plans FCPS offers to employees, including medical and dental coverage for you and your dependents, optional life insurance, and long-term care insurance. However, please note: In order to carry your existing FCPS medical and/or dental insurance plan coverage with you into retirement, you must have participated in an active FCPS insurance plan for 60 consecutive months (5 years) immediately prior to commencing your retirement.
FCPS also currently provides a partial subsidy for health insurance expenses to retirees age 55 and older. For the most up-to-date information on the available insurance options and associated costs, go to the FCPS Human Resources /Benefit Services’ website at: http://www.fcps.edu/hr/benefits/
No. Both the flexible spending account (FSA) and tax-deferred annuity (TDA) programs allow deductions from earned income only. Under current law, your retirement benefits are not considered “earned income,” and therefore, participation in these programs is not permitted after you retire.
ERFC provides individual counseling services for members who are within 5 years of retirement eligibility. You are encouraged to schedule an appointment with an ERFC counselor after you have first requested and received a comprehensive audited estimate of your retirement benefits. This is necessary so that you and your counselor are each prepared to discuss your plans with information specific to your particular circumstances. If you are within five years of ERFC retirement eligibility, you may request estimates for up to three different retirement dates by completing and submitting a Benefit Estimate Request Form (ERFC-7A for Legacy Plan members; ERFC-7B for ERFC 2001 Plan members). Note that the full audited benefit estimate reports prepared by the ERFC staff will include projections for both your ERFC and VRS benefits. You cannot request an audited estimate if you have received an audited estimate within the last 12 months. You may download the request form directly from the website, or call to request a copy by mail at 703-426-3900 or 1-800-426-4208.
After you have received your audited benefit estimate report, you may contact ERFC to schedule a counseling appointment. If you wish, you may bring your spouse, significant other, or even your financial consultant to the counseling appointment with you.
If you should die while in FCPS Eligible Employment, or while on approved leave from FCPS Eligible Employment, but prior to attaining five years of Vesting Service, your ERFC Accumulated Contributions will be refunded in full to your Named Beneficiary or to your estate. If you are fully vested with ERFC, and you die while in FCPS Eligible Employment, or during an approved leave of absence, ERFC will provide your eligible Named Beneficiary either a monthly pension benefit, or a full refund of your Accumulated Contributions. The only Named Beneficiaries who can be eligible to receive a pension (rather than a refund of your Accumulated Contributions) are your spouse, former spouse, a disabled dependent child, or another person 40 years of age or older who received at least half of his or her support from you in the year immediately preceding your death.
For all of these reasons, it is important that you keep your beneficiary designations up to date with ERFC, and that you keep your potential beneficiaries informed of your various benefits. Note: You can now update your beneficiary designation directly online through ERFCDirect.
No. Your beneficiary designation is not automatically cancelled by any changes such as a divorce or marriage, and it will not change automatically even if a divorce decree says that it does. To update or revise your beneficiary designation, go online to ERFCDirect.
Yes. Effective October 6, 2014, same-sex marriages were recognized in the Commonwealth of Virginia. ERFC will allow the selection upon retirement of Option A or B for your same-sex spouse.
If you are a retiree receiving a Basic Benefit, you can elect Option B within six months of your marriage to a same-sex spouse. ERFC must receive the request to elect Option B in writing and the change to Option B will become effective the first day of the month following ERFC’s receipt of your written election.
There are a variety of legal limits that apply to the benefits that you may receive from the ERFC plan.
At retirement, your combined annual ERFC and VRS benefits, calculated under the Basic Benefit provisions of the ERFC plan, cannot exceed 100% of your Final Average Compensation (FAC). In computing this limit, the amount of your VRS benefit is calculated based on the VRS benefit formulas, your age at retirement from ERFC, and your Creditable Virginia Service.
If you are receiving a VRS disability benefit, your combined annual ERFC and VRS benefits cannot exceed 100% of your Final Average Compensation (FAC). The limit is generally calculated using the straight annual amount payable by VRS for the disability.
Section 415(b) of the Internal Revenue Code requires certain limits in the amount of benefits provided to plan members in all qualified employer retirement plans. These limits apply to your combined benefits from ERFC and VRS. Additional information about these limits may be obtained by contacting the ERFC office, or by reviewing Article XVII (for ERFC members) or Article VII (for ERFC-2001 members) of the ERFC Plan Document.
All or part of your ERFC benefit is subject to state and federal income taxation from the first month of retirement. At the time of your retirement, ERFC will provide you a detailed statement itemizing your taxable versus non-taxable monthly ERFC benefit. Any ERFC contributions you may have paid into the retirement system prior to July 1, 1985 have already been taxed, and are not subject to further taxation. A special calculation, designed by the Internal Revenue Service, is used to determine which portion of your benefit if any, is not taxable.
Currently, the standard deductions withheld from your ERFC benefit payments include:
Federal income taxes
State/Local income taxes (including the District of Columbia, Maryland, North Carolina, South Carolina, and Virginia)
Health Insurance (optional)
Dental Insurance (optional)
Apple Federal Credit Union (optional)
If you opt to continue the available FCPS health and dental insurance coverage in retirement, you may choose to have these costs deducted automatically from your ERFC benefit payments, assuming your monthly annuity is large enough to cover the withholding.
Yes. ERFC applies an annual cost-of-living adjustment (COLA) to retirement benefits. Under the current schedule, your first COLA will equal 1.49 percent of your monthly ERFC retirement benefit (or roughly half of the full COLA approved for ERFC in a given year), and will be implemented on March 31st in the first full calendar year following your effective date of retirement. Thus, for example, if you should retire during the first quarter of any given year, your initial ERFC COLA will not be applied until March 31st of the following calendar year. Thereafter, your ERFC benefit will increase by 3% annually on March 31st.
ERFC offers up to five different benefit payment options to accommodate your personal needs in retirement.
Under the basic benefit payment option, you will receive monthly retirement benefits for life, but upon your death, no ongoing pension benefits are provided to your survivors or your estate.
There are two survivor benefit payment options, which provide a reduced benefit during your lifetime in order to provide an ongoing benefit to your spouse or certain other beneficiaries after you die. Upon your death with a survivor benefit payment option - either 100% under Option A, or 50% under Option B – of your reduced ERFC benefit continues to be paid to your spouse or eligible beneficiary for the remainder of his or her life.
Option C provides you a lifetime benefit equal to 96% of what you would have received under the basic benefit option, with payments guaranteed for a minimum 120 consecutive months (10 years). You (the member) would continue to receive this ERFC benefit if you are still living after the minimum 120 month payment period has passed – and for the rest of your life. If the minimum 120 month payment period has been fulfilled at the time of your death, no further benefit payments will be provided to a surviving beneficiary. However, if you should die before receiving all 120 payments from ERFC, your designated beneficiary would receive the remaining balance of those payments.
Under benefit payment Option D (available only to members employed prior to July 1, 2001 and covered under the ERFC Plan structure), you may elect to receive a partial lump sum payment, plus an ongoing reduced monthly retirement benefit. The lump sum can be as small as $1,000, or as large as your total Accumulated Contributions, less interest and Purchased Service Credit amounts. The reduced monthly benefit amount offers no provision for payments to a surviving beneficiary or to an estate after your death. It is important to note that your election to receive a direct lump sum payment under Option D may affect the taxes you owe for the year in which the distribution is made.
Your monthly ERFC benefit payments will cease when you die, unless you have elected one of the optional forms of payment that provides a benefit to your surviving spouse or to an eligible beneficiary. (See Question #21)
If you die before receiving benefit payments equal to the sum of your Accumulated Contributions, your surviving Named Beneficiary or your estate may apply for a refund of the balance of your residual Accumulated Contributions. Residual Accumulated Contributions is the difference between your Accumulated Contributions balance at the time of retirement and the sum of the pension benefits paid on your account.
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Springfield, Virginia 22151-2205
July 6, 2015