Regardless of where you are in your career, the time to start thinking about retirement and planning your retirement is now! The Member Portal offers members an excellent way to help in your planning. One feature of the portal is that a benefit estimate will be automatically prepared and loaded on to your page. Simply set up an account on the portal and you will gain access to a wealth of information. Also, consider attending one of the regional seminars provided by LOPFI to learn more about your retirement and ask questions.
Approaching Eligibility (Approximately 1 year away from retirement)
If you would like for LOPFI to provide you with a benefit estimate, please send a written request that includes the last 4 digits of your social security number, address and signature. We will provide you an estimate of your monthly benefit based on your projected retirement date and salary history. If you have established reciprocal service, and are currently active with another retirement system(s), you will need to cease employment with all reciprocal systems in order to retire.
Remember that members must first be vested to be eligible to apply for retirement benefits. There are 3 ways to meet eligibility for a full retiement benefit: any age with at least 28 years of service; age 55 with at least 20 years of service; or age 60 with 5 years of service.
A provision for early retirement is available when a member has at least 20 years of credited service and is at least age 50, but younger than 55. In other words, with 20 or more years of credited service, a member may retire as early as age 50; however, the member's benefit will be permanently reduced 1/2 of 1 percent for each month the member is below the age of 55. (This can be combined service, i.e. paid , volunteer, reciprocal, other service credit, and purchased military service).
In addition, members with 25 years of paid LOPFI service can retire at any age. The early retirement reduction does apply, which means a permanent 1/2 of 1 percent reduction for each month the member is younger than the age of 55. Again, this provision requires the member to have 25 years of paid service. Time credited as a volunteer will not allow for eligibility.
Now you're ready to retire
To begin the retirement process you will need to complete and send an Application for Retirement, along with a copy of your social security card and driver's license, as well as copies of these documents for each beneficary named. This form is available on our web site, or we can mail you one. The properly completed application must be received by LOPFI at least thirty (30) days and not more than ninety (90) days before your desired effective date of retirement.
For example: if you would like to retire effective June 1st, please make sure your application is received by LOPFI no later than April 30th, otherwise, your effective date of retirement will be delayed. Using the same June 1st example, if your application was not received by LOPFI until May 4th, your effective date of retirement would be July 1st, not June 1st. Timing is very important!
Once your application for retirement is received and processed
You will receive additional forms required to complete the retirement process. Those forms are: State and Federal tax withholding, Direct Deposit Authorization, and a Benefit Payment Option Form. For guidance with tax withholding, please contact your tax advisor as LOPFI does not counsel on matters of tax withholding. A voided check must be returned with the Direct Deposit Authorization to verify the account information. The Benefit Payment Option Form is where you will choose one of the four (4) benefit payment options: A60, A120, B50 or B75.
OPTION A60 – A 100% monthly benefit payable to the member for life, with the added provision that should the member die before 60 monthly payments have been made, the designated beneficiary will receive the same monthly payments for the remainder of the 60-month period.
OPTION A120 – A reduced monthly benefit payable to the member for life, with the added provision that should the member die before 120 monthly payments have been made, the designated beneficiary will receive the same monthly payments for the remainder of the 120-month period.
OPTION B50 – A reduced monthly benefit payable to the member for life, with the added provision that should the member die before the designated beneficiary dies, the beneficiary will receive a reduced monthly benefit payable for the remainder of the beneficiary’s lifetime in an amount equal to 50% of the monthly benefit the member received. With this option, the beneficiary must be a spouse or a dependant receiving at least 50% support from the member.
OPTION B75 - A reduced monthly benefit payable to the member for life, with the added provision that should the member die before the designated beneficiary dies, the beneficiary will receive a reduced monthly benefit payable for the remainder of the beneficiary’s lifetime in an amount equal to 75% of the monthly benefit the member received. With this option, the beneficiary must be a spouse or a dependant receiving at least 50% support from the member.
Child Benefits
If an active member dies, a benefit may be available to surviving children if eligible. Benefits are payable to a dependent child up to the age of 18 (or 23 if they remain unmarried and a full time student at an accredited secondary school, college, or university). Benefits may continue past the age of 18 (or 23) if a child is deemed physically or mentally incompetent by an Arkansas court of competent jurisdiction or by the board for as long as the incompetency exists.
Disability Retirement
Members must be considered totally and permanently disabled from performing their duties as a police officer or firefighter with their LOPFI covered employer. For a duty-related disability, the disability must have occurred as a result of the performance of the member’s departmental duties as a police officer or firefighter. Further details of the disability procedures are located in LOPFI Board Rule 16 of the Rules and Resolutions.
What about the Deferred Retirement Option Plan (DROP)?
DROP is available for paid service members only and the maximum period of participation is 5 years.
DROP allows LOPFI-covered paid service members, who have attained at least 28 years of paid service or attained at least 20 years of paid service and are age 55, to accumulate a portion of their retirement benefit in a separate account, without terminating employment. Member’s cannot use accrued volunteer service or purchased service towards eligibility to enroll in DROP.
If you enter DROP with 28 years of service credit, 75% of the calculated benefit you would have received had you retired will be deposited into your DROP account. Or, if you enter DROP at age 55 with at least 20 years of service credit, 72% of the calculated benefit you would have received had you retired will be deposited into your DROP account. Under either scenario, you will earn 6% annual interest on the average DROP account balance.
Once you conclude your DROP participation you will receive the full retirement benefit amount that was calculated at time of enrollment in DROP. You will have the option to receive your entire DROP account balance in a lump-sum, roll it over into another investment vehicle, have it annuitized and receive it in a monthly payment along with your regular retirement benefit, or some combination of the three.
Look to the future… Before enrolling in DROP, consider whether or not you anticipate any pay increase(s). Any pay increase would enhance the value of your monthly retirement benefit if you have not enrolled in DROP. Remember, once in DROP, any future pay increases will not change your monthly benefit.
Partial-Annuity and Lump-Sum Option
Any active member who is eligible for an unreduced annuity and was not eligible or did not elect to participate in the DROP, may be eligible to participate in the partial-annuity and lump-sum option.
A member who elects to participate in this option shall, at the time of retirement, be eligible to receive a lump-sum distribution in an amount not to exceed one month of benefit for each completed month of credited service beyond eligibility for an unreduced retirement benefit. The lump-sum shall not exceed an amount equal to 60 months of retirement benefits.
If a member elects to participate in the partial-annuity and lump-sum option, the member's remaining retirement benefit shall be reduced by an amount that is the actuarial equivalent of the withdrawn amount.