Educational Retirement Act FAQs

• "What Kind of Retirement Plan is the ERA?”
• “Who is eligible to participate in the ERA plan?”
• “Who is not eligible to participate in the ERA plan?”
• “How do I enroll in the ERA plan?”
• “How much do I contribute to the ERA plan? How much does UNM contribute to the ERA plan?”
• “What if I am already retired from ERA…can I come back to work?”
• “Do I have access to my investments under the ERA plan?”
• “When can I retire under the ERA Plan?”
• “What qualifies as service credit under the ERA plan?”
• “How much does it cost to transfer credit to the ERA plan? How long do I have to do it after I am hired at UNM?”
• “How much will I get when I retire under ERA?”
• “What happens if I leave UNM before I qualify to retire?”

“What Kind of Retirement Plan is the ERA?”

The ERA is a defined benefit retirement plan. Under the Internal Revenue Service code it is considered a 401(a) retirement plan. Defined benefit retirement plans are designed to give members who qualify for benefits a lifetime income source for the retiree and, if they choose such a benefit, for a beneficiary. Both the member and employer contribute a percentage of earnings towards retirement throughout the career of the individual.

Return to Top

“Who is eligible to participate in the ERA plan?”

You become an ERA member when you begin employment with an ERA covered employer. When you become a member of the ERA, an account is established in your name with your Social Security number as the account reference.  Membership in the ERA is a condition of employment.  Employees who have an appointment percent of 25% or greater, and work for one of the following entities, are required to be members of the ERA:

• Public schools (including charter schools)
• Universities
• Junior colleges
• Technical and vocational institutions
• New Mexico Boys’ and Girls’ Schools New Mexico
• School for the Deaf
• New Mexico School for the Visually Handicapped
• Youth Diagnostic Center
• Regional Co Operatives
• New Mexico Activities Association

Return to Top

“Who is not eligible to participate in the ERA plan?”

If you are a substitute teacher, an intern, or work less than a 25% appointment, you are NOT eligible to participate in the ERA.

Return to Top

“How do I enroll in the ERA plan?”

All UNM employees are automatically enrolled in the ERA defined benefit retirement plan upon hire into a position greater than 25% appointment. Participation in the ERA retirement program is a condition of employment.

Return to Top

“How much do I contribute to the ERA plan? How much does UNM contribute to the ERA plan?”

For employees with annual wages over $20,000, employees contribute 9.4% (effective July 1, 2009) of their gross earnings on a pre-tax basis. The employer contribution is 10.9% (effective July 1, 2009) of gross earnings. For employees with an annual wage of $20,000 or less, employer contributions are 12.4% of gross earnings, and the employee’s tax-deferred contribution is 7.9% of gross earnings.

Return to Top

“What if I am already retired from ERA…can I come back to work?”

Yes.  The Return to Work (RTW) Program allows all educational retirees (not just teachers) to return to work.  There are two options under the RTW program. 

Option one allows any retiree without application to the Educational Retirement Board (ERB) to return to work with an ERA covered employer at any time.  The restrictions for this option state, the employee may earn up to $15,000 or an amount calculated under the 25% or less appointment provision, whichever is greater without affecting retirement benefits.  The salary is calculated on a fiscal year basis (July 1 through June 30).  The employer makes the determination of whether a position equals 25% appointment.  The appointment salary is based on what the employee would make if he/she were working full-time and is not related to the employee’s salary prior to retirement.

If the member exceeds the established limits in a fiscal year, he or she shall be considered to be removed from retirement status and shall forfeit the retirement benefits starting on the first day of the month in which cumulative earnings exceed $15,000 or the 25% appointment provision.  It is the member’s responsibility to monitor his/her earnings from an ERA sponsored employer so that he/she does not exceed the maximum earnings.

Option two allows a retiree to return to work after taking a 12 consecutive month layout from any kind of work for an ERA covered employer and receiving approval from the Education Retirement Board (ERB) in Santa Fe.  The layout must be in the 12 months immediately preceding the return to work date.  Employees who retired before January 1, 2001, and are current employees (substitutes, contractors, .25 FTE) may return without any layout period.  The re-hired RTW employee continues to receive ERA pension benefits but does not earn service credits toward future retirement benefit improvement.  With approval from the ERB in Santa Fe, earning restrictions do not apply under this option.

For more information about the Return to Work Program, please visit http://www.nmerb.org/ or read the Return to Work Guidelines at http://hr.unm.edu/documents/benefits/2008/ReturntoWorkGuidelines.pdf 

Return to Top

"Do I have access to my investments under the ERA plan?”

No. Because the ERA plan is a defined benefit plan, the contributions made by both the employee and employer are not set aside in individual investment contracts in the employee’s name. The investments are owned by ERA and are used to fund the liability for the ERA retirement program.

Return to Top

“When can I retire under the ERA Plan?”

In order to receive a full ERA retirement benefit, you must meet one of the following criteria:

• Rule of 75: when your age plus the number of years of earned service credit equals 75, or
• Age 65 if you have a minimum of five years of earned credit, or
• 25 years of earned or a combination of 25 years of earned and allowed service credit (“25 and Out Provision”).

Return to Top

“What qualifies as service credit under the ERA plan?”

Service credit under the Educational Retirement Act may be either “EARNED” or “ALLOWED”.

EARNED service is credit for employment with an administrative unit in New Mexico.  Members who leave covered employment immediately prior to entering into active service in the United States military are granted up to 5 years of earned service credit for time spent in active duty if they return to employment with an ERB employer within 18 months of discharge.  There is no cost for this earned service credit.  When members have accrued five or more years of earned service credit, they may terminate employment, leave their contributions in the retirement fund, and retire either

• When their age and years of “earned service credit” (see above) add to the sum of at least 75, OR
• At age 65, OR
• 25 years of earned or a combination of 25 years of earned and allowed service credit (“25 and Out Provision”), whichever is sooner.

ALLOWED service is for employment outside the state of New Mexico and service in the United States Military (other than that describe above). The following options describe the allowed service that may be purchased into your ERA retirement:

• Out-of-state employment in a public or accredited private school or institution of higher learning in a state or territory of the United States
• US Military Dependents School
• Federal Educational Service in New Mexico
• New Mexico Private School experience: The school must be accredited by the State Department of Education or an accreditation agency approved by the state
• Members engaged in the United States Military*
• Members engaged in the Commissioned Corps of the Public Health Service

*Military service must be purchased within 3 years of the initial date of employment.  A maximum of 5 years of military service can be purchased.
 
Allowed service credit is included in the computation of the member’s retirement benefit and is also included in determining retirement eligibility in the “25 and Out” retirement provision. However, it is not included in determining eligibility for retirement under the “Rule of 75”.

When allowed service credit is purchased, the member and former employer are required to provide verification of the allowed service credit sought. The forms to purchase out-of-state service, private school, military, or BIA service are available on the ERA website.

Return to Top

“How much does it cost to transfer credit to the ERA plan? How long do I have to do it after I am hired at UNM?”

The cost to purchase allowed service is based on actuarial cost.  This cost ranges from approximately 18% to as much as 68% of current full time earnings for each year of service purchased. Contact the NMERA (www.nmerb.org) office for an estimate of the cost to purchase allowed service credit. If purchasing military service, the purchase must be made within three years following the initial date of employment. The cost is 10.5% of annual salary for all years of covered employment.  There is no time-limit on the purchase of qualified allowed service other than the military service restriction of 5 years noted previously.

Return to Top

“How much will I get when I retire under ERA?”

The annual benefit is equal to 2.35% of the average of the five (5) highest consecutive years of salary multiplied by the number of years of service (earned and allowed credit). This benefit may be reduced by the election of an option which guarantees continuous income to a surviving beneficiary. The benefit may also be reduced if the member has less than 25 years service and is less than age 60.
For a calculation of the benefit for a specific date(s), please contact the NMERA office at 888-1560 (Albuquerque) or (505) 827-8030 (Santa Fe).

Return to Top

“What happens if I leave UNM before I qualify to retire?”

Members may withdraw their contributions only when they terminate covered employment at UNM prior to qualification under the rules of ERA. Employer contributions are not placed in the member’s account and are not refundable to a member upon termination.

Upon termination, you may make application for a refund and/or roll-over of your contributions at the UNM Payroll Department.  You will receive interest on those monies that have been on record for at least one year.  The Unemployment Compensation Amendment of 1992 requires a mandatory 20% withholding of federal taxes on refunds unless the funds are transferred to another custodian or agent using a direct rollover. You have one of the following three options:

• Direct refund,
• Direct roll-over, OR
• Direct partial roll-over.

If you do not rollover the refunded monies into another custodian or agent account using direct rollover (e.g., an IRA), contributions may be subject to a 10% penalty for withdrawal on your income taxes if you are under the age of 59½ .

Return to Top