Understanding The Alabama Retirement System
The Alabama retirement system is comprised of two separate and distinct departments: the Teacher’s Retirement System, and the Employee’s Retirement System. Here, we will look at both, and compare the differences between the two.
The Teacher’s Retirement System
The Teacher’s Retirement System, or TRS, department of the Alabama retirement system is a defined benefit plan. This means that it provides you with a specific amount at the time of your retirement. Your actual retirement benefit amount is calculated using a retirement formula. These benefits are generally only paid through the course of your lifetime, in monthly installments, as a member of the Alabama retirement system.
It is mandatory that you participate TRS if you are a full-time teachers who is earning at least the federal minimum wage. Your participation in the program is required by the Alabama retirement system throughout the entire length of your employment. A contribution of five percent of your salary is required in the TRS.
After you have given ten years of service as a teacher, you are considered to be vested. This means that, after a ten year period of creditable service, you will have earned enough in service credits to qualify for lifetime benefits from the Alabama retirement system.
The Alabama retirement system offers survivor benefits to qualified beneficiaries. It is imperative that you keep all of your beneficiary information current, that way your survivors will not suffer any loss of benefits should something happen to you. Whenever your circumstances change, such as marriage or divorce, you should always make a point to be sure that your beneficiary information is still current.
The Employee’s Retirement System
The Employee’s Retirement System, or ERS, department of the Alabama retirement system is also a defined benefit plan. It is also mandatory that you participate for the duration of your employment as a full-time employee of the state, as long as you are paid at least the federal minimum wage. The Alabama retirement system requires that you contribute five percent of your salary to the ERS, unless you are a full-time, certified firefighter, correctional officer, or a law enforcement officer, in which case you will be required to contribute six percent of your salary.
The ERS and TRS departments of the Alabama retirement system are very similar. Also offered now to state employees is a deferred retirement option plan, which allows you to retire early once you have accrued a certain number of vested credits, and to receive benefits based on the number of years you served. Plus, you will also receive a lump sum payment, equal to the amount in your Alabama retirement system account.
Whether you are a teacher, a police officer, or any other state employee, the Alabama retirement system is geared toward helping to make your retirement a pleasant one.