OHIO HIGHWAY PATROL RETIREMENT SYSTEM

Retirement Benefits

This information is provided in edited form as a quick reference and is not intended to replace the Member Handbook. Additional information about any benefit can be obtained from the handbook or by contacting HPRS.

The Highway Patrol Retirement System (HPRS) is a defined benefit plan that provides pension benefits to retirees from the Ohio State Highway Patrol and their survivors. The plan operates on contributions from the members during active service, from the Highway Patrol, and from investment income. Benefit levels are determined by statute (ORC Chapter 5505) and administered by the HPRS Board of Trustees.

Final Average Salary (FAS) - A final average salary is derived from the average of the highest three years of salary. FAS will be based on the highest five years of salary if you retire or enter DROP on or after January 1, 2015. The FAS represents the base amount upon which the pension is calculated. The FAS includes hazardous duty, shift differential, longevity and professional achievement supplements, but does not include overtime, report back time and repayment of accumulated leave time.

In order to be grandfathered for FAS using the highest three years, a member must retire before January 1, 2015, or have entered DROP as of the last day of the employer's payroll period immediately prior to January 1, 2015, which is December 27, 2014.

On January 1, 2015, the highest five years will be used for FAS calculations. A member who wants to enter DROP between December 28-31, 2014, will be eligible for a FAS using the three highest years only if he/she qualified for DROP on December 27, 2014. Additionally, the service credit a member would earn between December 28th and December 31st will not be considered in calculating retirement benefits. In other words, a member would effectively enter DROP on December 27, 2014.

Service Credit (SC) - Service credit is the total number of years or part thereof, of full-time service the member accumulates. Service credit includes full-time active service with the State Highway Patrol, and can also include military service, or service with one of the other Ohio Public Retirement Systems. You can transfer accumulated service that has not been withdrawn from another system or you can purchase service time that has been withdrawn. Contact HPRS for the forms necessary to transfer service or the cost of purchasing service.

Pension Factor (PF) - A pension factor is determined from the member's total years of service credit. A member receives 2.5% for each of the first 20 years of service, 2.25% for each of the next five years, and 2.0% for each year in excess of 25, with a maximum of 79.25% or 34 years of service. The FAS is multiplied by this factor to determine the amount of pension due.

Your pension is calculated using these three components. While your retirement application is being processed, HPRS will confirm your service credit, and the exact service credit number will be used to calculate your PF. HPRS will then confirm your salary, calculate your FAS and apply the PF to your FAS.

Age and Service Retirement

  • Members accumulating at least 20, but less than 25, years of active service credit with the State Highway Patrol are entitled to a PF of 2.5% of FAS multiplied by the first 20 years of full-time service, 2.25% PF of FAS for the years between 20 and 25 of full-time service. The pension is payable at age 52, or at a reduced level beginning at age 48.
  • Members accumulating more than 25 years of active service credit with the State Highway Patrol are entitled to a PF of 2.5% of FAS for the first 20 years of full-time service, 2.25% PF of FAS for the next five years and 2.0% PF for the years in excess of 25 accruing to a maximum pension of 79.25% of FAS. The pension is payable beginning at age 48 if at least 25 years.

Other Pension

  • Members accumulating at least 15, but less than 20, years of active service credit with the State Highway Patrol are entitled to a PF of 1.5% of FAS multiplied by the number of years of full-time service. The pension is payable at age 55. A member is not considered a retiree in HPRS when receiving this pension. For instance, a member receiving this type of pension cannot vote for retiree trustees, receive health care benefits, or be eligible for COLA.

Disability Retirement

  • A member disabled due to an injury or illness that is not job related is entitled to a minimum pension benefit of 50% of FAS. The PF is calculated as though the member had achieved 20 years of full-time active service with the State Highway Patrol. Years of service credit accumulated beyond 20 are calculated into the PF.
  • A member disabled due to an injury or illness that is job related is entitled to a minimum pension benefit of 61.25% of FAS. The PF is calculated as though the member has achieved 25 years of full-time active service with the State Highway Patrol. If the member has accumulated more than 25 years of service, the additional service credit is calculated into the PF.
  • By statute, a member receiving disability pension benefits may be required to provide annual information relative to his/her disability status and employment.
  • All disability pensions are single life annuities.

Survivor Benefits

  • Surviving spouses of retired members, or active members eligible for retirement, are entitled to 50% of the retiree's pension benefit or $900 per month, whichever is greater.
  • Surviving spouses of active members not eligible for retirement receive $900 per month.
  • Surviving dependent children of retired or active members are entitled to $150 per month until age 18 or age 23 if enrolled as a student in certain qualified programs.
  • Surviving spouses and dependent children are, in most instances, eligible for health care benefits. Please contact HPRS for further detail.
  • Survivors of members whose deaths were duty related might be entitled to certain death benefits afforded to police and fire personnel.

Cost of Living Adjustments

  • Each benefit recipient may be eligible to receive a cost of living adjustment (COLA). The amount of COLA is set annually by the Board.
  • The date of the first COLA is the anniversary date for all future COLA increases.
  • The benefit recipient must have been receiving a pension for not less than twelve months.
  • Assuming the other criteria for COLA has been met, the eligibility age is 53 for those members who retired or entered DROP prior to January 7, 2013. For those members retiring or entering DROP on or after January 7, 2013, the eligibility age is 60.

Payment Options

  • Pension checks are electronically transferred between the 20th and 25th of each month.
  • Single Life Annuity – This option pays the highest amount to the retiree by using the FAS and PF system described previously. Pension payments cease upon the death of the member.
  • Joint & Survivor Annuity – This option permits the retiree to defer a portion of the pension benefit to a designated beneficiary after the retiree's death. It results in a lower pension benefit for the retiree during his/her life, but pays a benefit to the beneficiary after the memberís death. Selection of a beneficiary is not limited to spouse or children.
  • Life Annuity Certain & Continuous – This option permits the retiree to select a specified time, 5 to 20 years, and allocate the pension benefits to be paid during that period. Upon the death of the retiree, the beneficiary continues to receive the payments until the completion of the specified period. Upon the death of both the retiree and beneficiary, the estate of the last benefit recipient receives the remaining amount. If the retiree lives beyond the certain period specified, the monthly benefit continues until death.

Partial Lump Sum (PLUS)

  • The PLUS allows a member the opportunity to withdraw cash or roll over into a qualified tax plan from their pension account. The member would receive a reduced monthly pension for life. It is important that the member understands the tax implications if PLUS is selected. Under federal tax laws, lump-sum payments paid directly to you are subject to a mandatory 20% federal tax withholding. In addition, you may be subject to a 10% penalty for early withdrawal. A PLUS payment is also subject to Ohio State income tax.It is recommended that you contact a tax consultant for more information and, if necessary, instructions on how to file a quarterly estimate. To be eligible for the PLUS, upon retirement a member must have attained age 51 with at least 25 years of total service or age 52 with at least 20 years of total service. The lump sum amount designated by the member may not be less than six times the monthly single life pension and not more than sixty times the monthly single life pension. Lump sum payments paid directly to you must be electronically deposited into a banking institution.
  • Note: The PLUS option can be taken in addition to one of the other three options (Single Life, Joint & Survivor or Life Certain & Continuous).

Deferred Retirement Option Plan (DROP)

  • History The DROP plan for HPRS was passed by the Ohio Legislature in March of 2006 and became effective on June 17, 2006. At that time, all active members who qualified were eligible to enter the DROP. Thereafter, any member who achieves eligibility may enter the DROP.

    DROP plans have been operating in public safety pension plans for several years; however, until the mandatory retirement age was increased in 2004 from 55 to 60, a DROP did not seem practical.

  • Eligibility Requirement To be eligible to enter the DROP, a member must have 25 years of service, including credit purchased for prior military service and prior contribution credit with the Ohio Police & Fire Fund, and be at least age 48; OR have at least 20 years of service, and be at least age 52.
  • DROP Operations Upon entering a DROP plan, a member will continue to work in his/her present assignment/location as determined by the Highway Patrol; and receive the appropriate compensation for that rank. The member will also continue to receive any salary increases appropriate for that rank. Instead of receiving a monthly pension benefit, however, the member accrues that benefit in a tax-deferred account until he/she terminates employment with the Highway Patrol. An important fact to remember is that upon entering DROP, a member ceases to accumulate additional service credit. An example is included below that shows the monetary implication of the DROP decision. Another important fact is the member will continue being covered under the employer's healthcare plan while participating in the DROP.
    • A DROP member's employment with the Highway Patrol is unaffected by participating in the DROP. As an active employee of the Highway Patrol, a member is considered an active member of HPRS except for very limited and unique circumstances.
    • Ohio law does consider a DROP member to be "retired" when voting for HPRS board members. For the purpose of contribution rates, benefit eligibility, etc., as a DROP participant, a member is not retired until he/she terminates employment with the Highway Patrol.

    Assuming a member elects to participate in the DROP, there will be no interruptions in service with the Highway Patrol.

    • The member will continue to work, draw a salary, and receive benefits.
    • The member's monthly gross retirement benefit will be accrued to a tax-deferred account.
    • The member will continue to make a monthly employee contribution to HPRS which will also accrue to the tax-deferred DROP account. This contribution is set at 10% of pay.
    • The contributions in the DROP account will accrue interest at a rate set by the Retirement Board.

    The minimum participation period in DROP depends on age. It is either three years for those entering before age 52 or two years for those entering at age 52 or older. A member may participate in the DROP for up to 8 years, or until he/she reaches age 60, whichever comes first. If a member discontinues DROP participation before the minimum number of years, the member will receive the total amount of DROP contributions, less accumulated interest, but he/she will not have access to those funds until the minimum participation period has been met.

    Special provisions have been made for those eligible for disability retirement. If a member is injured or becomes ill as the result of a job-related cause while participating in the DROP plan, he/she will be able to withdraw all DROP contributions, including accumulated interest; OR the member may request to have the disability calculated as though he/she continued in active service without participating in the DROP. If the disability results from a non-job-related cause, the member may withdraw all DROP contributions, including accumulated interest.

    In the event a member dies while participating in the DROP, the proceeds of the DROP account will be paid to the surviving spouse or the estate. A surviving spouse is also entitled to a survivor benefit equal to 50% of the member's pension benefit or $900/month, whichever is greater.

    When a member terminates service with the Highway Patrol, the total accumulation in the DROP account will be distributed as allowed by the Internal Revenue Service. Currently, the IRS provides for lump sum and partial lump sum payments, monthly payments, or rolling over the contributions into a tax-qualified plan (Deferred Comp, IRA, etc.) Provided the minimum DROP participation period has been met, a direct distribution to a DROP participant is taxed as ordinary income and is not subject to an IRS penalty.

    If entry into the DROP was prior to January 7, 2013, a member is entitled to COLA, if it is authorized by the Board of Trustees and provided the member is at least 53 years old and has been retired for at least one year.

Examples

A 48 year old trooper with 27 years of service and a FAS of $60,000/year decides to enter the DROP. Remember once DROP is elected, a member can only stay eight years, or in this case, age 56.

FAS = $60,000

Pension calculation = $39,150 at age 48 (65.25%)

  • Year 1 = $39,150 +$6,000 (employee cont.) + int.
  • Year 2 = $78,300 + $12,000 + int. + any addt'l employee contribution
  • Year 3 = $117,450 + $18,000 + int. + any addt'l employee contribution
  • Year 5 = $195,750 + $30,000 + int. + any addt'l employee contribution
  • Year 8 = $313,200 + $48,000 + int. + any addt'l employee contribution

If this trooper stayed the entire eight years, at age 56 he/she would accumulate $361,200 + interest + additional employee contributions if raises are received. In addition, the trooper would still be receiving a paycheck from the Patrol.


The same trooper decides not to enter the DROP but retires at age 51 with 30 years of service and a FAS of $62,000 (this assumes a raise has occurred.)

FAS = $62,000

Pension calculation = $44,175 at age 51 (71.25%)

DROP accumulation = 0


Some Observations

    What is the difference between the two examples? You should consider the additional pension benefits over your expected lifespan vs. the accumulation of the separate DROP account and future interest/investment income you will receive.

    The Trooper in the DROP example accepts a lesser annual pension benefit but accumulates a separate account that can be liquidated or reinvested in a tax-deferred investment. Any salary increases/job reclassifications/promotions that occur during the DROP period do not increase the annual pension benefit.

    The Trooper in the non-DROP example accumulates a greater annual pension but does not establish a separate account. Any salary increases/job reclassifications/promotions that occur during the additional three working years will increase the annual pension benefit.

    The trooper in DROP will accumulate approximately $135,450 + interest in the first three years. The trooper who did not enter DROP would receive $5,025 more annually in pension benefits. If the DROP trooper retired after three years and rolled over his/her DROP account to Deferred Comp., even at 3% interest, he/she would accumulate approximately $4,100 of interest income in the first year alone. The difference between the additional pension benefit for the non-DROP trooper compared to the DROP trooper is only $925/year. But remember, the DROP trooper still has an original DROP amount of $135,450.

    This is a simplistic example; each memberís circumstances will be different. When considering DROP or other retirement plans, please contact HPRS to help guide you in making the best decision for you and your family.

    To estimate your pension benefit or DROP benefits, please go to the secure Participant Login area. Once logged in, the calculator buttons will appears on the lower right of the page. If you are not already registered with a user ID and password, please click here.

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