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Department of Employee Trust Funds
April 24, 2009 (updated)
What is My Minimum Core Annuity Amount?
In light of this year’s -2.1% Core Fund annuity adjustment
(the first-ever decrease), retirees have been asking for clarification
about the minimum amount to which their Core and Variable annuities
can be decreased. When you retired, the Notice of Final Retirement
Annuity Calculation you received from the Department of Employee
Trust Funds (ETF) indicates how much your annuity was at that time
and breaks down the amount of your monthly payment in the Core Fund
and Variable Fund (if applicable). These amounts can increase or
decrease annually, due to Core and Variable Trust Fund investment
gains.
It is important to remember that, by law, your Core annuity can
never be reduced below the finalized amount when it began. Only
Core annuity dividends granted in previous years can be reduced.
However, for retirees participating in the Variable Fund, there
is no limit to how much their Variable annuities can be reduced.
A prolonged period of poor stock market performance could result
in the Variable portion of a retiree’s annuity being reduced
below the original amount.
I am retired and still participate in the Variable
Fund. If I cancel participation in the Variable Fund and my Variable
annuity is transferred to the Core Fund, what is the minimum amount
to which my annuity can be reduced if there are Core annuity decreases?
The new minimum amount to which your annuity can be decreased
is the combined total of the finalized amount of your Core annuity
when it began, plus the amount of your Variable annuity at the time
it transfers to the Core Fund.
Once your Variable cancellation becomes effective and your Variable
annuity transfers to the Core Fund, the Core annuity adjustments
are applied to your total annuity each year. If there are Core Fund
annuity decreases, your total annuity can never go below your new
minimum annuity amount.
Upon request the Department can provide the finalized amount of
your Core annuity when it began. However, if you cancel Variable
participation your new total guaranteed minimum annuity amount cannot
be determined until your last Variable annuity adjustment has been
calculated.
Detailed information about how a guaranteed minimum annuity amount
is calculated can be found in Annuitants Inquire About Minimum Fixed
Annuity Amount Guarantee, an article on page 5 of the May 2003 Trust
Fund News. Here is a link to that newsletter.
RESOURCES
For more information about the Variable Fund, including how to
cancel participation and the options available, consult these and
other valuable ETF resources located in the Variable Information
menu on ETF’s Internet site. These include the following:
Note: If you are unsure about your finalized core annuity amount,
contact ETF.
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