SRS provides retirement, disability and death benefits to all Department of Justice criminal investigators, detention officers, and to all Montana sheriffs and their beneficiaries. SRS is a defined benefit plan. Depending on when you were hired, a percentage of your pre-tax paycheck goes into your account, which will be managed by the Montana Board of Investments. When you retire, your benefit will be calculated using a formula based on your highest years of salary and years of service.
SRS membership is mandatory for an elected or appointed county sheriff or undersheriff; deputy sheriff; a criminal or gambling investigator of the Department of Justice hired after July 1, 1993; and a full or part-time detention officer hired after July 1, 2005.
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Membership and Benefits
As a new SRS-covered employee, you were asked to complete a SRS Membership/Designation of Beneficiary form to designate your beneficiary(ies) for your SRS account.
Your beneficiary information is important. It is necessary that you keep it up-to-date. We recommend you review your beneficiary information annually or following a major life event such as a marriage, divorce, birth of a child or death of a beneficiary. You can update your information by downloading a Designation of Beneficiary form and sending it to MPERA either by regular mail or by file transfer.
Your beneficiary information is printed on your Annual Benefit Statement. Review the statement carefully. If your beneficiary information is outdated, please update it as soon as possible. Updates to beneficiary information will take effect when received by MPERA. Any beneficiary change is not effective until the form is received in our office.
If you are prohibited from changing your current beneficiary designation by a temporary restraining order (TRO) issued under § 40-4-121, MCA, such a change will not be effective while the TRO is valid.
Member Contributions
All members must contribute part of their gross pay to SRS. The current contribution rate is 10.495%. This rate will be reduced to 9.245% on July 1 of the year following the annual valuation determining the system’s funding has improved as specified by statute.
Interest: Your SRS account earns interest each month. Although you would receive your interest if you withdraw your account, if you retire the interest credited to your account will not affect the amount of your monthly retirement benefit. Interest will be credited on service purchase payments at the same rate as regular contributions. All interest credited is tax-deferred.
Taxation: Contributions made after July 1, 1985, to SRS are tax-deferred. This means state and federal taxes are not paid until you receive the money as a benefit or refund. If you have taxed money on account, part of your monthly benefit or refund will not be taxed.
Employer Contributions
Your employer currently contributes an amount equal to 13.115% of their total SRS-covered payroll to the pension trust fund. This will be reduced to 9.53% on July 1 in the year following an actuarial valuation determining the system’s funding has improved as specified by statute.
Employer contributions are not refundable and provide “pooled” funds for service retirement, disability retirement, and survivor benefits.
The amount of time you work and contribute to SRS directly affects the amount of your retirement benefit. The monthly benefit you will receive depends on the number of years you work in a SRS-covered position, your compensation, and if you purchase any service.
Membership Service
We use membership service to determine if you are eligible for vesting, retirement, or other SRS benefits. You earn one month of membership service for any month you contribute to SRS, regardless of the number of hours you worked or the pay you received during that month.
Vesting
You are “vested” after you accumulate five years of membership service. Once vested, you are entitled to any retirement benefits for which you are eligible. If you withdraw your accumulated contributions, you are no longer vested and you will give up your right to any SRS benefits.
Service Credit
We use service credit to calculate the amount of your benefit. If you work 160 hours or more in any month, you earn one month of service credit. If you work less than 160 hours, you will receive proportional service credit.
For example, if you work 80 hours you would earn one-half of a month of service credit. However, if you work at least 2,080 non-overtime hours in a fiscal year and are reported as working less than 160 hours in any months during that year, you will receive one full year of service credit. Service credit is granted when you are paid, not when it is earned.
Highest Average Compensation (HAC) is the average of a set number of highest consecutive months of salary, depending on when you were hired.
If you were hired before July 1, 2011, your HAC is 36 months.
If you were hired after July 1, 2011, your HAC is 60 months.
For members hired on or after July 1, 2013, HAC will be capped at 110% on compensation earned during each year of the highest average compensation period.
If hired on or before June 30, 2023, you are eligible for service retirement benefits when you complete 20 years of membership service at any age. If hired on or after July 1, 2023, you are eligible for service retirement benefits when you complete 20 years of membership service and are at least age 50.
For members hired before July 1, 2011: Your SRS service retirement benefit is based on your years of service credit and the average of your highest consecutive 36 months of salary. This does not have to be your last 36 months of employment.
For members hired on or after July 1, 2011: Your SRS service retirement benefit is based on your years of service credit and the average of your highest consecutive 60 months of salary. This does not have to be your last 60 months of employment.
The basic formula for a SRS monthly service retirement is:
Years of Service Credit x 2.5% x HAC
Your benefit is calculated based on:- Years of Service Credit - the amount of service you earned;
- Retirement Factor - a percentage based on your years of service defined in law. For SRS members it is 2.5% (0.025).
- HAC (Highest Average Compensation) is the average of a set number of highest consecutive months of salary, depending on when you were hired. For members hired on or after July 1, 2013, HAC will be capped at 110% on compensation earned during each year of the highest average compensation period.
You are eligible for early retirement if you are at least age 50 and are vested, but have less than 20 years of membership service.
For early retirement, MPERA will reduce the amount of your service retirement benefit by an Early Retirement Factor (ERF). The ERF depends upon how many years it will take you to reach age 60 or 20 years of membership service.
Benefit Increases
The Guaranteed Annual Benefit Adjustment (GABA) will increase your retirement benefit every year if you are eligible.
Before you receive an increase under GABA, you need to have received your benefit for at least 12 months. Once eligible, you will receive your first increase in your retirement benefit payment that following January.
For example: If you retire on July 1, 2022, you will meet the 12-month requirement on July 1, 2023. You will then receive your first GABA increase beginning with your January 1, 2024 benefit.
If you were hired before July 1, 2007, (including members who transferred to an SRS-covered position from another MPERA-administered system) you will be eligible for a 3% GABA. If you terminate employment, but do not withdraw your accumulated contributions (refund), your GABA will remain 3% if you return to SRS-covered employment.
If you were hired on or after July 1, 2007, you will be eligible for a 1.5% GABA.
Other events which increase your benefit will reduce the amount you will get from GABA. If the other increases are greater than your GABA amount, then you will not receive a GABA increase.
The GABA applies to:
- Service Retirement Benefit
- Early Retirement Benefit
- Disability Retirement Benefit
- Survivorship Benefit
GABA also applies to recipients, other than members, such as contingent annuitants and survivors. It does not apply to a person receiving the lumpsum death payment as an annuity.
SRS offers four benefit payment options when you decide to retire. The option you choose determines whether or not income is provided for someone else (a contingent annuitant) after your death. If you choose an option to provide income for someone after you die, your monthly retirement benefit will be reduced. The reduction depends upon the option you choose, your age and the age of your named contingent annuitant.
Once you receive and accept your first benefit payment, you cannot change your option, except under specific circumstances.
OPTION 1
Option 1 will provide a monthly benefit for your lifetime only and is the largest monthly amount you can choose. Option 1 is also the basis for calculating all other options. The benefit is computed using the defined benefit formula.
Upon your death, your designated beneficiary will receive any balance left in your account. That balance will be the amount that was available at retirement, minus the total benefits already paid to you. All monthly benefit payments end upon your death.
OPTION 2
Option 2 will provide a monthly benefit to you for your lifetime. When you die, your contingent annuitant will receive the same amount for the rest of their life. Upon his or her death after receipt of any benefits, your remaining account balance (if any) will revert to the SRS trust fund.
The benefit amount of Option 2 is less than Option 1 because the lifetime value is spread over two lives instead of one. The Option 2 factor is based on both your age and your contingent annuitant’s age at your retirement date. According to IRS regulations, if the age difference between you and your non-spouse contingent annuitant is greater than ten years, you may not select Option 2.
Your Option 2 benefit is calculated by multiplying the Option 1 benefit by an Option 2 factor. You may not change your Option 2 election or your designated contingent annuitant, except in limited circumstances.
OPTION 3
Option 3 will provide a monthly benefit to you for your lifetime. When you die, your contingent annuitant will receive one-half (½) of that amount for the rest of their life. Upon his or her death after receipt of any benefits, your remaining account balance (if any) will revert to the SRS trust fund. The benefit amount of Option 3 is less than Option 1 because the lifetime value is spread over two lives instead of one. The Option 3 factor is based on both your age and your contingent annuitant’s age at your retirement date. However, because the contingent annuitant receives only one-half (½) of your benefit, your benefit would be larger than the Option 2 benefit.
Your Option 3 benefit is calculated by multiplying the Option 1 benefit by an Option 3 factor. You may not change your Option 3 election or your designated contingent annuitant, except in limited circumstances.
Changing Your Option If You Elected 2 or 3
There are only two circumstances under which you can change your Option 2 or Option 3 payment or contingent annuitant. You may only change if:
- your original contingent annuitant dies; or
- you and your contingent annuitant divorce and there is no family law order in place, as defined in § 19-2-907, MCA, granting your contingent annuitant the right to receive part of the benefit.
Under these conditions, if you had selected either Option 2 or 3 when you retired, you may:
- revert to the higher Option 1 retirement benefit that was available at the time of your retirement, plus any guaranteed annual benefit adjustments (GABA) you have received; or
- change your Option and name a new contingent annuitant; or
- keep the same Option and name a new contingent annuitant.
To change your payment option or contingent annuitant, you must designate a new contingent annuitant or payment option in writing, within 18 months of the death of or divorce from the contingent annuitant. Please note your retirement benefit calculation will change if you select a new option or new contingent annuitant, because the calculations are based on your age and your new contingent annuitant’s age at the time of the election. Contact us to receive an estimate of the new benefit and an application form.
OPTION 4
Option 4 will provide a continuing benefit to one or more contingent annuitants. As with all options, you will receive the monthly benefit for your life. If you die before the end of the “certain” or guaranteed period, your contingent annuitant will receive the benefit for the balance of the guaranteed period. If you name more than one contingent annuitant, they will receive the continuing benefit payment, divided equally, for the remainder of the guaranteed period. Payments to the contingent annuitant(s) will stop when the guaranteed period ends.
This benefit has two alternatives:
10-year period certain. You must be age 75 or younger when you retire to be eligible for this benefit. You will receive this benefit for life. If you die before the 10-year period ends, then your contingent annuitant(s) will receive the same benefit for the remainder of the 10-year period. The 10-year period begins on your effective date of retirement.
20-year period certain. You must be age 65 or younger when you retire to be eligible for this benefit. You will receive this benefit for life. If you die before the 20-year period ends, then your contingent annuitant(s) will receive the same benefit for the remainder of the 20-year period. The 20-year period begins on your effective date of retirement.
For this Option, you can change your contingent annuitant designation. Contingent annuitant(s) receiving the Option 4 benefit may, in turn, designate their own contingent annuitants.
NOTE: The Option 4 benefit will be calculated using Option 4 factors which are based on your age only.
If you become disabled, you may be entitled to a disability retirement benefit. Disability is the total inability to perform your work due to physical or mental incapacity even with reasonable accommodations required by the Americans with Disabilities Act (ADA). The disability does not have to be work-related, but must occur while you were employed in an SRS-covered position, and your condition must be of permanent or extended and uncertain duration. You must be vested to receive a non-duty related disability.
Disability Benefit
If the Board determines you have become disabled and you are eligible for benefits, they will be calculated as follows:
Duty Related Disability
Vesting is not required. If you have less than 20 years of membership service, you will receive a disability retirement benefit equal to one-half (½) of your Highest Average Compensation (HAC).
If you have more than 20 years of membership service, you will receive a disability benefit equal to 2.5% of your HAC for each year of service credit.
Non-Duty Related Disability
Vesting is required. You will receive a disability retirement benefit based on the actuarial equivalent of your accrued service retirement benefit when the disability occurred.
Disability Reviews
At its discretion, the Board may review the medical condition of any member receiving a disability. Periodic reviews are performed to determine if you still qualify for disability retirement. If necessary, the Board may require you to undergo an independent medical examination at the Board’s expense.
If the Board determines you are no longer disabled, you must be reinstated to the position you held immediately before retirement or to a position comparable in pay, benefits and duties within your capacity, whichever is first available.
Payment of Disability Benefit
Unless canceled by the Board for reasons described below, you will be paid the disability benefit until you reach age 50, the normal retirement age. After reaching the normal retirement age, your disability benefit will automatically be converted to a service retirement benefit without a recalculation.
You will receive applicable benefit increases, such as GABA, when you become eligible.
Disability Benefit Cancellation
The Board will cancel your disability retirement in the following cases:
- you are no longer totally disabled and can return to your former position;
or - you refuse to submit to a medical examination during a disability review.
If the Board determines you are no longer disabled and can be reinstated, to your previously held position, we will notify your employer. Your former employer may request a medical or psychological review to determine your ability to return to work as a member of the sheriff’s office.
Contact us for complete details about disability benefits and how to apply.
Death Before Retirement
If you die before retirement, your designated beneficiary(ies) may elect one of the following options for which they qualify:
- a lump-sum payment of your accumulated contributions; or
- a survivorship benefit equal to 2.5% of your Highest Average Compensation (HAC) for each year of service credit, reduced by a factor based upon the number of years your age was less than age 60, or the number of years required for you to have completed 20 years of membership service, whichever provides for the larger benefit; or
- a survivorship benefit equal to one-half your HAC, if you died as a direct and proximate result of injuries received in the course of employment.
Death After Retirement
If you retire under Option 1, and you die before receiving benefits equal to your account balance (your contributions plus interest), your beneficiaries will receive your remaining account balance. Your remaining account balance is your contributions plus interest at the date of retirement, minus any benefit payments you received.
If you were receiving an Option 2, 3, or 4 retirement benefit, your contingent annuitant will receive the benefit explained in the Payment Options section.
Death Benefit Claim
Upon notification of your death, MPERA will send a death benefit claim form to your designated beneficiary or contingent annuitant. To claim a death benefit, the completed form must be returned to MPERA along with a certified copy of your death certificate.
Types of Service Available to SRS Members for Purchase
You do not need to be vested (have five years of membership service) to purchase Refunded Service.
If you leave your job and request a refund of your accumulated contributions (contributions plus interest) and later return to a SRS-covered position, you can purchase the refunded service at anytime prior to retirement if you are an active member. You must be vested to purchase refunded service if you are inactive. To purchase the refund, you must repay the accumulated contributions you received and pay the interest at the actuarial assumed rate of return in effect at the time of the redeposit.
Refunded service is both membership service and service credit.
You do not need to be vested (have five years of membership service) to purchase Montana Public Service.
If you refunded (or you are eligible to receive a refund) from other public service employment with the state of Montana or a political subdivision, you may be eligible to purchase that service in SRS at actuarial cost. You cannot buy service from another public retirement system that will make you eligible for retirement in SRS until you receive a refund of the service from the other public system.
You must be an active SRS member to be eligible to purchase this service.
Montana public service is both membership service and service credit.
“One-for-Five” Service.
For each five-year period of membership service, you can buy one year of service credit. You may buy up to five years of “One-for-Five” years. You could also buy less than a full year.
One-for-Five is both membership service and service credit for the Sheriff’s system.
You must be vested (have five years of membership service) to purchase Military/Reserve Military Service.
At any time prior to retirement, you may purchase up to five years of your active military or reserve military service at the actuarial cost. You can purchase reserve military time prior to your separation from service in the reserves. You cannot purchase military time if you are receiving a retirement benefit from the military or from another retirement system or plan, for that time.
Reserve military service cannot be purchased if you have already received service credit under USERRA for that time period.
This service is both membership service and service credit.