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.
- 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 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 You can transfer accumulated service that has not been withdrawn from another system or you can purchase service time that has been withdrawn.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.
- 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
Cost of Living Adjustments
Partial Lump Sum (PLUS)
Deferred Retirement Option Plan (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.
Assuming a member elects to participate in the DROP, there will be no interruptions in service with the Highway Patrol.
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.
|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
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.