The S.C. Retirement System Preservation and Investment Reform Act, also known as S618, was signed into law on June 10, 2005. The following FAQ also has been updated to reflect changes resulting from the act.
1. What is the TERI program?
TERI is an acronym for the Teacher and Employee Retirement Incentive, a deferred retirement plan that lets eligible employees retire, but continue to work. TERI participants may continue employment for up to five years from the date they enter the program. The S.C. Retirement System will calculate a participant's retirement benefit as of the effective date of the TERI application. For employees entering the program after June 30, 2005, the final retirement benefit will be recalculated at the end of the TERI program to include payment for unused annual leave.
During the TERI period, the S.C. Retirement System will deposit the participant's monthly retirement benefit into their tax-deferred TERI account. No interest is paid on retirement benefits paid into the TERI account, however applicable cost-of-living increases will be added to the monthly benefit. As of July 1, 2005, TERI participants will resume paying employee contributions to the S.C. Retirement System at 6.25% of earnings. The employee contribution will increase to 6.5% on July 1, 2006. The University will continue its normal employer contributions during the specified TERI period. Those employer contributions will increase by 1% over two year starting July 1, 2006.
TERI participants accrue no further retirement service credit, and cannot apply for disability retirement during the TERI period. TERI participants are eligible for the S.C. Retirement Systems' group life insurance benefit in the amount of one year's base salary.
Upon separation from employment either during or at the end of the TERI period, the S.C. Retirement System will issue a lump-sum payment of the funds that have accumulated in the participant's TERI account. To the extent permitted by law, this amount may be rolled over into an eligible plan as specified in the TERI Payout Election Form 7500. At that time, former TERI participants will begin receiving a monthly retirement check
2. What are the eligibility requirements for participation in the TERI program?
Faculty and staff who are active members of the S.C. Retirement System and who have at least five years of earned service may participate in the TERI program if they qualify to retire with one of the following options:
Note: Prior service in the S.C. Retirement System may be reestablished to meet the five-year earned service requirement. Retirement benefits will be reduced by 5 percent for each year the employee is under the age of 65, or 4 percent for each year the employee has under 28 years of service, whichever is less.
The TERI plan is not available to employees who participate in the Police Officer Retirement System or the Optional Retirement Program.
3. Who decides if a faculty or staff member may participate in the TERI program?
Participation in the TERI program is the voluntary choice of eligible employees. It is important to remember that there is no longer an age limit to active and full employment provided the employee continues to meet the requirements of the position.
4. When is the best time to retire?
It depends upon your personal situation. We usually recommend that employees retire at the end of a quarter especially if this is one of your 12 highest quarters of earnings. Discussion with our retirement counselors can assist you in considering the factors related to your individual retirement situation.
5. What if I want to retire in less than five years; may I still participate in the TERI program?
Yes. Participation in the TERI program is limited to a maximum of five years, but an employee may terminate at any time during the five-year period without penalty. However, if you elect to participate in the TERI program for less than the five-year period, you are unable to extend the amount of time designated in the TERI enrollment form. At the end of your designated TERI period, you become fully retired. Continued employment after TERI is at the discretion of the University—just as it is now after full retirement.
6. Is there a penalty for leaving before the end of the five years stipulated in the TERI agreement?
No, but as with any decision to leave employment you must notify your department of your date of separation. The University must notify the S.C. Retirement System when a TERI employee terminates and is paid out for unused annual leave.
7. May I rescind my decision to enter the TERI program?
You may rescind your decision up until the effective date of entry stated on the TERI enrollment form.
8. Will I keep my same job if I participate in the TERI program?
Yes. There is nothing inherent in the TERI program that changes the type of position you occupy. TERI participants who were in FTE positions prior to entering the program will continue to occupy an FTE position. In addition to occupying FTE positions, TERI program participants also may occupy temporary, research grant, or time limited positions. TERI participants also are eligible to pursue other positions at the University or another state agency during the TERI period.
9. Will I have to contribute to the S.C. Retirement System after I enter the TERI program?
Yes, as of July 1, 2005, you will be required to make the same contribution to the S.C. Retirement System as active employees.
10. Will I receive any additional benefit for my continued contributions to the S. C. Retirement System?
As a TERI participant, you will not receive any additional service credit for your contributions. You will be eligible for the S.C. Retirement Systems' group life insurance benefit in the amount of one year's base salary while participating in the program.
11. How are my rights and benefits as a University faculty or staff member affected by my participation in the TERI program?
TERI participants who entered the program prior to June 6, 2005, retain the same status and employment rights they held upon entering the program. Employees who enter the TERI program after June 6, 2005, are excluded from coverage under the State Employee Grievance Procedures Act; however, faculty continue to have the employment rights afforded to them by the appropriate Faculty Manual and are not affected by the change in grievance rights for other employees.
Employees who enter the TERI program gain no new employment rights and are subject to the employment policies and procedures associated with whatever position they occupy during the program period, including those policies and procedures related to salary and benefits. In other words, TERI participants can still be terminated for poor performance or rule violations, and staff positions are subject to reduction in force if circumstances warrant. (See the first paragraph of this section for information concerning grievance rights for TERI participants.)
Participants in the TERI program are eligible for active state employee health insurance benefits and the S.C. Retirement Systems' group life insurance benefit in the amount of one year's base salary; however they are not eligible for disability retirement benefits.
12. What happens to my annual and sick leave? Will I accumulate leave as a participant in the TERI program?
Upon entering the TERI program, up to 90 days of unused sick leave may be applied to your service credit. Your sick leave balance will be reduced by the amount of sick leave used to calculate your retirement benefit.
Participants in the TERI program will be eligible to earn and use annual leave and sick leave if they are in positions that are eligible for leave benefits. Annual leave will be earned at the rate consistent with their years of state service for leave accrual purposes. State service while participating in the TERI program will constitute state service for bonus leave accrual purposes.
Employees entering the TERI program after June 30, 2005, will be eligible to be paid for up to 45 days of unused annual leave only upon termination of employment. TERI participants' average final compensation will be recalculated upon termination of employment to include the number of annual leave days paid at separation. All unused sick leave will be forfeited.
13. If I participate in the TERI program, will I be eligible for cost-of-living, merit and performance salary increases?
Yes. Consideration for cost-of-living, merit and performance raises will be the same for TERI participants as for all other employees. However, pay increases you receive after entering the TERI program will not increase your average final compensation, which is calculated at the time you enter the TERI program. Your retirement benefit is calculated using your average final compensation, which means the average of your 12 highest consecutive quarters of earnings—normally, but not necessarily—your last 12 quarters.
14. How is my retirement benefit calculated?
The S.C. Retirement System provides extensive online information concerning how your retirement benefit is calculated at: http://www.retirement.sc.gov/publications/select.pdf. Retirement calculators are available at http://www.retirement.sc.gov/calculators/default.htm. The average of your twelve highest consecutive quarters is used to calculate your average final compensation.
15. How are earnings posted?
Earnings are posted by the quarter in which they are paid to you. Quarters are: January - March, April - June, July - September, and October - December. The regular nine-month salary of faculty is posted during the academic year. Summer school and/or earnings outside the base time are posted in the quarter in which they are paid.
16. Will summer school earnings affect my retirement income?
Summer school earnings are included in reportable earnings for the purpose of computing your 12 highest consecutive quarters. Payments for the Summer I session are normally included in the April-June quarter.
17. How does annual leave pay affect my retirement benefit?
Current legislation allows faculty and staff who earn annual leave and enter the TERI program before July 1, 2005, to receive an annual leave payout upon entering the program. One-third of the annual leave payout is added to the average final compensation and the retirement benefit amount is calculated on this amount. Those employees entering the program before July 1, 2005, are eligible to receive a second annual leave payout at the time of separation from the TERI program
Faculty and staff who earn annual leave and enter the TERI program after June 30, 2005, will not be paid for annual leave upon entering the program; however, they will receive an annual leave payout at the time of separation from TERI. One-third of their annual leave payout will be added to the average final compensation that was determined when they entered the program, and their retirement benefit will be recalculated on this
18. Will state and federal income tax be withheld from the retirement benefit payment held in my TERI account?
No state or federal income tax will be withheld from the payments held in the tax-deferred TERI account. Upon separation from employment either during or at the end of the TERI period, the S.C. Retirement System will issue a taxable lump-sum payment to the participant, or the participant may roll the amount of the TERI account into an eligible tax-deferred plan, to the extent permitted by law. If a lump-sum distribution is made to the retiree and not rolled over into an eligible tax-deferred plan, state and federal taxes will be applicable.
19. What happens if I experience a break in service during my participation in the TERI program?
A participant in the TERI program will be considered to have terminated employment if a break in service is experienced. An employee experiences a break in state service when there is an interruption of continuous state service for a period of more than 15 calendar days, when the employee remains in leave without pay status for more than one calendar year, or when the employee is paid for unused annual leave.
20. How does participation in the TERI program affect a faculty member's tenure status?
It does not. A tenured faculty member entering the TERI program will retain tenure during the five-year period of continued employment as long as the faculty member remains employed in a tenure-eligible position. Participation in the program does not guarantee employment for the amount of time designated in the TERI enrollment form.
21. Are TERI participants eligible to hold and receive endowed chairs?
Yes, TERI participants are eligible to hold and receive endowed chairs.
22. Are TERI participants still subject to the post-tenure review process?
If post-tenure review is scheduled during the time period specified in the TERI enrollment form, the faculty member will be subject to the post-tenure review process in accordance with the provisions of the applicable Faculty Manual. The end of participation in the TERI program sets the maximum date of full employment with the University.
23. What about customary financial support from the University such as travel support, sabbatical leave, and internal research grants?
Consideration for customary institutional support such as travel, sabbatical leave, internal research grants, etc., will be the same for TERI participants as for those faculty not participating in the TERI program.
24. How does participation in the TERI program affect retirement agreements between the University and individual faculty members?
If an employee has signed a retirement agreement that contains a date the employee intends to retire, the employee is expected to retire as specified in the agreement.
If an employee has signed a retirement agreement for two years in the future, and if they are eligible to participate in the TERI program, there is nothing about the retirement agreement that would preclude their participation in the TERI program. A critical point to consider is that the average final compensation is calculated at the time the employee enters the TERI program, so subsequent salary increases could still be given but would not count toward the final average compensation.
25. Does TERI participation have any effect on guaranteed summer school teaching?
No. Participants in the TERI program may teach summer school in accordance with the applicable Faculty Manual.
26. May I continue to work for the University after I complete my TERI period? Is there an earnings limitation on post-retirement employment?
Continued employment after completion of the TERI period is at the discretion of the University just as it is now after full retirement. The retiree earnings limitation was removed effective July 1, 2005.