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(through Sept. 30, 2016)
INPRS selected MetLife as its future provider of member annuities. Read the full release here.
Rates are set quarterly and annuitizing your Annuity Savings Account (ASA) is optional. Attend one of our workshops to learn more.
Benefit estimate calculators with the current annuitization rate can be found here.
See: How is the rate set?
Remember, you’re not required to annuitize ASA funds with us, and many PERF and TRF retirees do not. Before retirement you decide how to invest your ASA. At retirement, you may choose to annuitize your ASA funds, roll them over to another plan, or take the funds as a lump sum payment.
Quarterly annuity market rate changes won’t affect you if you don’t convert your ASA funds to an INPRS annuity, nor does it affect current retirees and benefit recipients who previously annuitized their ASA funds with us.
The Indiana General Assembly has set annuitization rates as noted below.
UPDATE: Beginning Jan. 1, 2017, INPRS will use the same rate-setting methodology, but without the 4.5 percent floor. See: "Why the change?"
What company will provide future member annuities for INPRS?
MetLife will be the future provider of member annuities for INPRS.
When will this change become effective?
The change is expected to be effective April 1, 2017, with a contract finalized by Jan. 31, 2017.
How did this change come about?
In 2014, the Indiana General Assembly passed House Bill 1075 which set a glide path toward market rate annuities and allowed the INPRS board to move to a third party provider in January 2017.
How is this change beneficial to INPRS?
Employers and taxpayers are protected from the risks of managing the annuity program internally.
What do we know about MetLife?
MetLife serves over 3,000 public sector organizations across the country and has a deep understanding of the unique needs of the public sector. Over one-third of state governments across the U.S. offer MetLife group insurance or annuity benefits.
Will the use of an outside annuity provider impact the pension benefits of current or future retirees?
No. An outside annuity provider affects only retiring members who choose to annuitize the money they’ve saved in INPRS Annuity Savings Accounts (ASAs). TRF and PERF members are in the “hybrid” pension plan which includes both a pension and separate ASA.
What will MetLife’s annuity rate be?
MetLife will offer annuities at a group rate, which may often be better than the retail rate available elsewhere. Also, MetLife has certified that the group rate will be no lower than a “Guaranteed Floor” rate, which will be established yearly.
What will the new rate be beginning Jan. 1, 2017?
The Indiana General Assembly set an annuity rate to be calculated at the market rate or 4.5 percent, whichever is greater through Dec. 31, 2016. Beginning Jan. 1, INPRS will use the same rate-setting methodology, but without the 4.5 percent floor.
What is an annuity?
An INPRS annuity is a set amount of money paid to you if you convert your ASA account into a monthly benefit payment.
Am I required to convert my Annuity Savings Account into an annuity payment when I retire?
No. Converting ASA funds to an annuity from us is an option, not a requirement. The goal of annuities is to provide a steady stream of income during retirement.
The quarterly market rate equals 1.5 percent plus an average* of the 10-year U.S. Treasury yield, rounded to the nearest 100th percent.
Assuming a 10-year U.S. Treasury yield of 1.87 percent
Market Rate: 1.5 percent + 1.87 percent = 3.37 percent
Because this rate is lower than 4.5 percent, the annuity rate would be 4.5 percent.
*The average is determined using the last five business days of the two preceding quarters. You can get more details from our Dec. 12, 2014 board meeting minutes, here.
If I annuitize my ASA account, how do you calculate my monthly benefit?
Working with our actuary, we consider several factors, including:
An outside provider will have a similar approach.
How can I estimate the future value of an annuity?
Predicting a future market rate for annuities is as difficult as forecasting next year’s mortgage or car loan interest rates. However, there are some helpful resources. Try our benefit estimate calculator if you’re near retirement. To learn more, see Information Regarding Annuities.
What is my last day at work if I want to annuitize at a particular market rate?
You probably consider your retirement day to be your last day in pay status, or the last day you work. We use a different date. Your retirement date is the first of the month following your last day in pay status.
Example: If your last day in pay status is in September, your retirement date will be Oct. 1.
|Month of Last Day in Pay Status||Retirement Date||Market Rate Effective|
|January||Feb. 1||January - March|
|February||March 1||January - March|
|March||April 1||April - June|
|April||May 1||April - June|
|May||June 1||April - June|
|June||July 1||July - September|
|July||Aug. 1||July - September|
|August||Sept. 1||July - September|
|September||Oct. 1||October - December|
|October||Nov. 1||October - December|
|November||Dec. 1||October - December|
|December||Jan. 1||January - March|
If I annuitize my ASA when I apply for benefits, what rate do I get? Is there an application deadline?
If we receive your benefit application with annuitization decision within six months of your effective retirement date, you’ll get the annuitization rate in effect as of that date.
Remember, your retirement date is the first day of the month after your last day in pay. Your last day in pay status is usually the date most people think of as their retirement day, including any specific days you are paid while not at work, such as vacation time.
If I defer annuitizing my ASA/RSA* until after I have started receiving benefits, what rate can I expect?
If you wait to annuitize your ASA/RSA, you’ll get the active rate on the date we get your election form.
*RSA = Rollover Savings Account (money from another plan you have rolled into your PERF or TRF account)
If I roll funds over from a qualified plan and those funds arrive after my annuity payment has started, what annuity rate do I get?
If your rollover funds arrive after your annuity payment starts, your annuity will be recalculated based on the rate you already have. The rollover won’t change your rate. If you plan to annuitize rollover money as part of your retirement, you must tell us in writing as part of your retirement application.
INPRS is changing the way it calculates annuities beginning Jan. 1, 2017. The legislatively mandated floor of 4.5 percent INPRS currently uses in its calculation will expire at the end of 2016. This means your monthly annuity amount could be lower if you annuitize Jan. 1, 2017 or later.
Without the floor, INPRS would currently be calculating annuities at 3.34 percent. The table below shows examples of what the difference in monthly annuity payments could be once the floor rate expires.
|Total annuitized amount||Approximate difference* in monthly benefit payment|
*Approximate difference when calculating monthly annuity payment with the current 4.5% rate vs. the 3.34% rate noted above. Estimates are made for a single-life, immediate fixed annuity for a 65 year old annuitant with a 20-year life expectancy.
This change has no impact on the calculation of your pension benefit. It impacts only those members who wish to convert their Annuity Savings Account (ASA) funds to a monthly benefit, called an annuity, through INPRS. INPRS will continue to administer your ASA until you choose what to do with it: annuitize, roll it over into a qualified account, or withdraw your balance.
If you are retired from an INPRS covered position and still have an annuity savings account (ASA) with us or are planning on retiring soon, you should consider your annuity options. Here’s what you need to know:
If you are planning on retiring soon and wish to take advantage of the rates ending Dec. 31, 2016, your last day in pay must be Nov. 30, 2016 or earlier. You must also be retirement eligible by Dec. 1, 2016.
If you have already retired from INPRS and have not annuitized your ASA and would like to do so now, you must complete your application for post-retirement payment of your ASA balance. INPRS must receive your application before Dec. 30, 2016 for you to take advantage of the 4.5 percent legislative floor. You should submit this paperwork well in advance of this date in order to ensure you receive the rate you want.
As soon as April 1, 2017, INPRS will no longer provide annuities, but will work with MetLife to provide competitive fixed-rate annuities. This is good news for INPRS, taxpayers, and members alike. By partnering with MetLife, INPRS members will have the advantage of receiving MetLife’s “Best Price” on their fixed-rate annuity products and oftentimes a higher annuity rate than what is available on the retail market. MetLife will offer an additional protection through a “guaranteed floor” that will be established yearly. The payouts from MetLife’s “Best Price” model and INPRS’ Annuity Rate have been comparable through time, but have exhibited differences depending on the investing environment.
If you have questions, INPRS is here for you. If you’re ready to retire or annuitize, contact us at (888) 286-3544 or schedule a workshop or appointment with one of our retirement counselors. Please register for a workshop or appointment, here.
Remember, you are not required to purchase an annuity with your ASA funds; 60 percent of members do not. And, if you wish to annuitize, you may do so through the provider of your choice.