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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > Employers > Employer Handbook > PERF Employer Handbook: Benefits PERF Employer Handbook: Benefits

Overview

The PERF benefit has two parts:

  1. an employer-financed pension, and
  2. an annuity funded by the employee and/or the employer

The employer-financed pension is the larger part of the retirement benefit. Using a formula set by law, the employer pension is based on the employee’s:

  • creditable service
  • average annual compensation consisting of the highest 20 calendar quarters,*
  • average salary, employer-paid employee contributions (in the quarters used in calculation), and any additional payments made at the time of termination, up to $2,000 (for example, pay for unused sick or vacation days, severance, etc.),
  • report of all additional payments at retirement, although only up to $2,000 is used in the benefit calculation, and
  • multiplier of 1.1 percent.

*NOTE: The highest 20 calendar quarters do not have to be consecutive, but they must be in groups of four consecutive calendar quarters.

The Annuity Savings Account supplements the pension. Beginning with the first day of employment, PERF-covered employees are required by state law to contribute three percent of gross wages (regular wage and overtime pay only) to the Annu­ity Savings Account. Gross wages are typically the amount noted as an employee’s wages on the W-2 form. Indiana law permits local units of government and universi­ties to pay their employees’ three percent contributions as part of a wage adjustment. If local government units and universities elect to pay the three percent contributions for employees, their governing body must make that decision and forward a copy of their resolution to do so to PERF. The resolution must include the effective date of the three percent employer-paid contribution.

Any contributions totaling $1,000 or less received after the final date on which the member’s retirement benefit is processed, and if the member has not reemployed, may be paid directly to the member.

Retirement Benefits

Eligibility Requirements

An employee’s eligibility for retirement benefits is determined by two factors:
  • age
  • creditable service

Normal Retirement with a Full (unreduced) Pension

Members will become eligible for normal retirement with a full pension if they are in one of the following three categories:


Category One:
  1. age 65, and
  2. have 10 or more years of creditable service under PERF

Category Two:

  1. age 60, and
  2. have 15 or more years of creditable service under PERF

Category Three:

  1. age 55, and
  2. their age at retirement plus total years of creditable service under PERF equal 85 or more.

Following are examples of the age and years of service that qualify a member for full (unreduced) retirement benefits:


 Age

 Service

 65

 10 Years

 60 through 64

 15 Years

 59*

 26 Years*

 58*

 27 Years*

 57*

 28 Years*

 56*

 29 Years*

 55*

 30 Years*

* If a member’s age or years of service is a combination of years and months, the Rule of 85 still applies. For example, a member is 55 years and 3 months old and has 29 years and 9 months of service. The combined total of age and years of service equals 85. However, the member may not be under age 55 to qualify for full benefits.

Early Retirement with a Reduced Pension

Employees will qualify for early retirement with a reduced pension if they are not in categories 1, 2 or 3 (above) for normal/unreduced retirement and:

  1. are between the ages of 50 and 60, and
  2. have 15 or more years of creditable service under PERF.

If the member is entitled to early retirement with reduced benefits, the following chart shows how the pension part of the benefit is reduced according to the mem­ber’s age:


 Retirement Age

 Percentage of Pension

 59

 89%

 58

 84%

 57

 79%

 56

 74%

 55

 69%

 54

 64%

 53

 59%

 52

 54%

 51

 49%

 50

 44%

*Percentages of pension are based on the full age (year and months) of the member at retirement. For example, a member who is 50 years old and 6 months would receive a pension of 46.49%. Whole number years above are provided as a guideline. See IC 5-10.2-4-5 for the reduction calculation.

Age 70 and 20 or More Years of Service under PERF


If an employee is age 70 and has 20 years of creditable service, he/she can begin receiving retirement benefits while continuing to work in a PERF-covered position. A member who chooses to begin receiving monthly retirement benefits while working in a PERF-covered position will not earn additional service towards retirement.

Elected Officials


Under Indiana law, a person in an elected position who becomes age 55 and has 20 or more years of creditable service can begin receiving retirement benefits while continuing to work in that elected position covered by PERF. A member who chooses to begin receiving monthly retirement benefits while working in a PERF-covered po­sition will not earn additional service towards retirement, however, he/she may elect to make additional contributions to the Annuity Savings Account.

Retirement Counseling


Employees within three years of being eligible to retire should receive the latest Retirement Benefit Workshop mailer, which contains workshop dates and locations around the state of Indiana. Potential retirees may visit these workshops for information and assistance in filling out the retirement application. This information also may be found on PERF Online.

For those employees considering retirement, the PERF brochure Bridge to Retirement is an essential tool that offers a checklist starting at 24 months from retirement.

To receive an estimate of benefits instantly, log into PERF Online and click “Estimate Retirement Benefit.”

Unless an exception exists, federal law prohibits the Public Employees’ Retirement Fund from making dis­tributions from the Fund prior to “separation from employment.” Generally, uninterrupted service in any capacity or re-employment that, in effect, is a continuation of em­ployment, prevents PERF from making distributions to the employee. Therefore, unless the member meets the requirements for permissible in-service distributions, the employee should not apply for retirement benefits if he/she will continue un­interrupted employment in any capacity (full-time or part-time, in a PERF-covered position or a position not covered by PERF) in any agency or department of his/her current employer.

Completing the Retirement Application


The Retirement Application, as well as step by step instructions, is available on PERF Online. The application should be submitted no later than 90 days before the planned retirement date to ensure timely receipt of benefits.

Generally, if members submit their application 90 days before their retirement date AND the employer submits to INPRS their final day worked and wage information, members can expect their first pension check one to two months following their retirement date.  If members annuitized their funds, they can expect their monthly annuity payment to begin two to three months after their retirement date.

Check for these common employee errors on the application:

  • Elected more than one option, and
  • Did not include a copy of birth certificate and, for Options 30, 40 and 50, a copy of beneficiary’s birth certificate

Choosing a Survivor Beneficiary

If your employee selects any of the joint with Survivor Benefit Options (30, 40 or 50), he/she can name only one person as beneficiary. If an employee selects Option 30 or 40 and their beneficiary is not their spouse, certain age restrictions apply and the member should contact PERF. An employee who selects retirement option 10, 61 or 71 may name more than one beneficiary. If an employee names multiple benefi­ciaries, any benefits due upon the employee’s death will be distributed in pro-rata amounts to the named beneficiaries. The beneficiary under options 10, 61 or 71 may be a person, trust, estate, or other legal entity.

Check for these common employee errors on the application:

  • Did not fill in the beneficiary’s name, Social Security number, relationship to employee, date of birth, and phone number

Members with questions about completing this form should contact PERF, toll-free, at (888) 526-1687.

Additional Materials


As a part of their retirement packet, members receive the following forms:

NOTE: Benefit payments are distributed via direct deposit.

Disability Benefits

Eligibility Requirements


Employees are eligible to apply for disability benefits if they:

  • have five or more years of creditable service under PERF before the termination of salary, or employer provided income protection benefits (disability insurance), or leave under the Family and Medical Leave Act (FMLA), or worker’s compensation benefits,
  • are determined by the Social Security Administration to be disabled, and
  • are receiving salary, or employer provided income protection benefits, or are on leave under the Family and Medical Leave Act (FMLA) as of the onset date established by the Social Security Administration.

Upon application, the employee must provide PERF with a Social Security Award Letter for disability (this letter must include the onset date for the disability). If an employee who is denied Social Security benefits wins an appeal of a Social Security disability determination, the member must send a copy of the Administrative Law Judge’s decision (this must include the onset date for the disability) along with the Social Security Award Letter.

To each of the qualified applicants, PERF will send the following materials:

NOTE: Benefit payments are distributed via direct deposit.

In addition to these materials, PERF will enclose a Request for Estimate of Benefits form. The employee who wants an estimate of benefits must send this completed form to PERF before submitting the disability application.

Completing the Disability Application


The Disability Application is very similar to the Retirement Application. To apply for disability benefits, the member must submit the following:

  • PERF Disability Application
  • Social Security Award letter that lists disability onset date, copy of member’s birth certificate and, if options 30, 40 or 50 are chosen, a copy of beneficiary’s birth certificate
  • Employers must enter a Last Day in Pay and a Last Check Date for the member in ERM.

Employees will be entitled to receive PERF disability benefits for as long as they con­tinue to be eligible for Social Security disability benefits. According to Indiana law, the employee’s disability benefits will begin on the first day of the month following the date on which the employer-employee relationship no longer exists or the date of disability as determined by the Social Security Administration, whichever is later.

Effective July 1, 2008, Indiana law states that the disability benefit cannot be less than $180 per month unless the employee elects to receive either a lump sum payment of the Annuity Savings Account or chooses an option other than Option10. Also, PERF will use the normal retirement factor (100 percent) in calculating the pension for the disabled member.

Disability Alternatives


Members who are eligible for early retirement and have on file with the PERF Board a copy of their application for Social Security disability benefits may file for early retire­ment and retain their right to PERF disability benefits if the Social Security request for disability is approved. When members notify the PERF Board that they qualify for So­cial Security disability benefits, PERF will stop the early retirement benefits and begin the monthly disability benefits.

Guidelines for Re-employment of Retired Members

NOTE: All PERF retirees subsequently employed in a PERF-covered position must be enrolled in the Fund and the employer must begin reporting wages and making the employer contributions to the Fund.


There is no earnings limitation for PERF retirees who return to covered employment. A reemployed retiree must continue to make contributions unless he or she retired as a Millie Morgan (in-service retirement) retiree.

Retirement Eligible Members Age 70 Years and 20 Years of Service

Members who are at least 70 years of age and have 20 or more years of service may elect to begin receiving retirement benefits and continue to serve in their PERF-cov­ered position. If the member elects to receive retirement benefits, he/she does not have to continue to make contributions to the PERF Annuity Savings Account but may elect to do so. Depending on the employer's resolution, an employer who is picking up employee contributions may be required to pay the employee’s three percent contributions. In any event, no additional credit­able service will be accrued once benefits begin.

Retired Members Who are Elected or Appointed to an Elected Position Covered by PERF

Indiana Law, IC 5-10.2-4-8.2 provides that if a member of PERF is receiving retirement benefits and is elected or appointed to an elected position covered by PERF, the mem­ber must elect either to continue or discontinue retirement benefits while the elected position is held. This election is irrevocable and must be in writing.

If a member elects to continue retirement benefits, no creditable service will be ac­crued for service in the elected position. The member does not have to make contribu­tions to his Annuity Savings Account as required in IC 5-10.2-3-2 but may elect to do so. If a member elects to discontinue retirement benefits, he/she must make the contribu­tions to the Annuity Savings Account and creditable service will be earned for service in the elected position. This 30-day waiting period applies to retirements effective July 1, 2008.

NOTE: Notwithstanding all other rules, if a member retires effective July 1, 2008 or later and is then re-employed in a PERF or TRF-covered position within 30 days of the date on which the member’s retirement benefit begins, regardless of age, benefits will be stopped. The member will be treated as having never retired, and employee and employer contributions will be due while re-employed. Also, a PERF member's application for retirement benefits is void if the member has an agreement, formal or informal, prior to retirement, with a covered employer to become re-employed in a covered position.


Upon the second retirement, a new benefit will be calculated in addition to the prior benefit. The retiree will be paid the original benefit plus a benefit based on his/her new service and “High 5” salary.

What You Need to Do as a PERF Employer

  • You will need to report the employees’ wages on each payroll’s report and make any necessary contributions.
  • If you pay your employees’ mandatory three percent Annuity Savings Account contributions on their behalf, you will need to determine whether your resolution requires you to do this for those retirees who elect to continue the contributions.

IMPORTANT NOTICE

Unless an exception exists, federal law prohibits PERF from making distributions from the Fund prior to “sepa­ration from employment.” Also,
35 IAC 1.2-6-6 states that if a member terminates employment and becomes re-employed in a PERF-covered position within 30 days from the date of termination, the member is not eligible for the distribu­tion of his/her contributions and accumulated interest.

Generally, uninterrupted service in ANY capacity or re-employment that, in effect, is a con­tinuation of employment, prevents PERF from making distributions to the employee. Therefore, unless the member meets the requirements for permissible in-service distributions, the employee should not apply for a distribution if intending to become re-employed in a PERF-covered position with ANY employer within thirty (30) days from the date of termination, or if continuing uninterrupted employment in any ca­pacity (full-time or part-time, in a PERF-covered position or a position not covered by PERF) in any agency or department of their current employer. Also, a PERF member's application for retirement benefits is void if the member has an agreement, formal or informal, prior to retirement, with a covered employer to become re-employed in a covered position.

To receive a distribution, members can log in to their PERF Online accounts to initiate the request for distribution. Members may also call (888) 526-1687 to initiate their distribution requests via phone with a customer service representative.

Survivor Benefits Before Retirement

Eligibility Requirements

The employee’s surviving spouse or surviving dependent may be entitled to survivor benefits:

  • If that employee had 15 or more years of creditable service or had 10-14 years of creditable service and was at least 65 years old, or
  • If the member dies while not employed in a PERF-covered position and while eligible to receive benefits but before applying for those benefits.

If the employee has been married for at least two years before his/her death, the sur­viving spouse is entitled to a survivor benefit. When there is not an eligible spouse, the survivor benefit is divided between all surviving dependents under the age of 18 (or older if the dependent(s) are permanently disabled). If there is neither a surviving spouse nor surviving dependents, then a survivor benefit will not be paid.

Regardless of whether there is a survivor benefit due upon the death of a member, the Annuity Savings Account will be paid to the beneficiary or beneficiaries designated on the Membership Record or Change of Beneficiary form.

Procedures for Handling a Member’s Death Before Retirement

If a member dies before retirement, either the employer or the deceased member’s family must send a copy of the death certificate to PERF.

As the employer, you should refer any written inquiries regarding death benefits to PERF. Then PERF will confirm the beneficiary on record and assist that beneficiary with the claim filing procedure.

It will not be necessary for you to maintain a supply of the different PERF forms used in the event of a member’s death before retirement. PERF will send the appropriate claim form and related documents to the beneficiary.

Distribution of Member Contributions Before Retirement

If an employee is not eligible for either retirement or disability benefits, has termi­nated employment, and has not been rehired in another PERF-covered position, he/she is entitled to receive a distribution of the Annuity Savings Account. Those funds consist of:

  • three percent contributions made either by the employee or on his/her behalf by the employer;
  • pre- and post-tax voluntary contributions; and
  • accrued interest and earnings

To receive a distribution, members can log in to their PERF Online accounts to initiate the request for a distribution. Members may also call (888) 526-1687 to initiate their distribution requests via phone with a customer service representative.

Section eleven: Reporting Procedures for the Employer