SERP is a unique plan developed by Keenan & Associates exclusively for schools and community colleges. The plan is designed to be qualified under Section 401(a) of the Internal Revenue Code and uses major insurance carriers to underwrite the policies. SERP's objective is to encourage employees age 55 and older to retire earlier than anticipated.

SERP works by providing an attractive incentive to employees while taking into consideration the district's financial constraints in funding the plan.

Incentive for Employees

Monthly Income -- A properly designed SERP plan encourages early retirement by providing employees with a monthly income which begins at the time of retirement and supplements their regular STRS or PERS benefits.

Predetermined Benefit Level Alternatives -- The level of benefit payment and distribution alternatives are predetermined by the district in consultation with Keenan & Associates. (Alternatives include survivor benefits.)

Proven Effective -- SERP has proven attractive to employees. With proper benefit incentives and enrollment, participation among eligible employees can be as high as 33% to 40%.

Potential Savings for the District

Salary Differential -- When a mature employee retires, the district usually recognizes savings in the differential between the retiree's salary and that of a replacement employee.

Flexible Funding Mechanism -- Funding of SERP can be achieved through the use of a Future Premium Immediate Annuity (FPIA) which has the following advantages:

• Funding is spread over a period of years (1 - 5) to match the district's normal cash flow
• The level of funding is guaranteed once the plan is implemented
• Benefits to the employees begin when the district submits the first premium payment.

For an in-depth overview of the SERP program, click this link to download a PDF version of the Keenan Approach.