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Membership in PERF means you are working toward earning a retirement income. You and your employer may share in paying for this benefit. However, this depends upon how your employer participates in PERF. There are two pieces making up the PERF benefit structure:
This portion of your PERF benefits is paid as a lifetime monthly benefit. It is funded entirely by your employer at no cost to you, and remains an employer asset. When a member applies to receive a retirement benefit, the employer account will be used to fund those retirement benefits. Members who choose to leave PERF-covered service and do not become eligible to receive a retirement benefit cannot withdraw these funds. Since this is a relationship between PERF and employers, you will not be asked to make any decisions regarding the management of pension benefit contributions.
The second part of the PERF benefit structure is the Annuity Savings Account (ASA). It serves to supplement the pension benefit at retirement and is an important way of increasing your retirement savings. However, if you leave covered employment before becoming eligible to receive a retirement benefit, you may take a distribution of your ASA. Within the ASA there are two types of contributions – mandatory and voluntary. The mandatory portion can be paid by the employer, the employee, or shared by both. The voluntary portion is optional and available to members who work for an employer who participates in the voluntary contributions program.
State law requires that three percent (3%) of an employee’s gross wages (regular and overtime pay) must be contributed to fund the ASA.
If you work for the State, a quasi-governmental agency, or a university, the three percent (3%) is paid by your employer before taxes are calculated on your wages.
For all other employers, the three percent (3%) may be deducted from your paycheck, or your employer may pay all or part of this mandatory three percent (3%) contribution. The governing body of the employer makes this decision, and may change it at any time.
Whether deducted or paid by the employer, this is a mandatory contribution to benefit each member of the fund. It is sent to PERF for deposit in your ASA, as mandated by state law. If you are not vested at the time of distribution, the non-taxable benefit will be paid directly to you in a lump sum or you can elect to roll over the non-taxable amount in some cases. If you are vested at the time of distribution, IRS regulations mandate that your non-taxable benefit must be recovered over the life of the pension. A portion of each monthly pension payment will be non-taxable until your entire post-tax voluntary contribution amount has been recovered.
|In general, you become vested in the ASA immediately and contributions are credited to an individual account in your name. However, you can only withdraw funds from your ASA as a distribution when you separate from PERF-covered employment or at retirement. If you are reemployed in a PERF- or TRF-covered position within 30 days from the date of termination, you are not eligible for a distribution. You are not eligible for a distribution from PERF if you are an active member in TRF or vice-versa. If you are no longer in a PERF- or TRF-covered position but are still employed with the same employer, you are not eligible to take a distribution until you have a bonafide separation from service with your employer. Employment on a part-time basis is not considered separation from employment. YOU CANNOT TAKE A LOAN AGAINST YOUR ASA. You must fully separate from your employer in order to withdraw your funds.|
You may also be able to make additional contributions to your ASA if your employer’s governing body has decided, by resolution, to allow payroll deductions for this purpose. The employer can make this decision at any time, and may choose to stop payroll deductions at any time. Voluntary contributions to the ASA must be made through your employer through a payroll deduction. The maximum for all types of voluntary contributions is ten percent (10%) of gross wages in addition to the three percent (3%) mandatory contribution.
Post-Tax Voluntary Contributions
When you make post-tax voluntary contributions, federal, state and Social Security taxes have already been withheld. Your take home pay would be reduced by the total amount contributed. Since these funds have already been taxed, they will not be taxed again; however, it is important to note that any earnings or interest accrued on these funds are still taxable.
If you are not vested at the time of distribution, the non-taxable benefit will be paid directly to you in a lump sum or you can elect to roll over the non-taxable amount in some cases. If you are vested at the time of distribution, IRS regulations mandate that your non-taxable benefit must be recovered over the life of the pension.
A portion of each monthly pension payment will be non-taxable until your entire post-tax voluntary contribution amount has been recovered.
For you to make post-tax voluntary contributions, your employer must simply agree to deduct the amount requested (up to ten percent [10%]). That money is then sent to PERF as a contribution to your ASA. You may choose to stop making post-tax voluntary contributions or change the amount deducted at any time.
The Internal Revenue Service has given its approval for the Public Employees’ Retirement Fund to accept voluntary contributions on a pre-tax basis, as well.
You are urged to carefully consider all the conditions and consequences of pre-tax contributions because making changes later is severely restricted.
The conditions that apply to pre-tax contributions include:
You must choose to make a voluntary pre-tax contribution of not more than ten percent (10%) of your gross wages within two (2) years following the date of August 31st after you have reached five (5) years of PERF-covered service.
The percentage of each pay period’s wages that you choose to contribute pre-tax CANNOT be changed as long as you work for the same employer in any PERF-covered position.
If you leave employment and return to the same employer, your pre-tax contribution must be reinstated.
If you work for a different PERF employer, and have not taken an ASA distribution, you will be able to make a new pre-tax contribution decision, if your new employer has elected to participate.
Your employer could choose to discontinue pre-tax contributions, which would allow you to discontinue making them.
Further details on this option are available here.
The PERF ASA program allows members to actively participate in managing their retirement benefits through self-directed investment options. Mandatory and voluntary contributions to your account are invested according to your choices in one or more of the eight options available through PERF:
You may choose among these options for the first time when you enroll in PERF. You may also log in to your PERF Online account to complete your investment direction election, or call (888) 526-1687 Monday through Friday from 8 a.m. to 8 p.m. EST, except holidays and weekends, to complete your request via phone with a customer service representative. If you do not submit these choices to PERF, all ASA contributions will automatically be invested in a target date fund based on the year you will turn 65. Currently, you have the ability to view daily valuations of your ASA contributions and make daily changes to your investment allocations. The valuation of your ASA account includes a deduction of investment expenses.
You direct PERF to invest a portion of your account (present balance and future contributions) into any or all of the investment funds in at least one-percent (1%) increments. Or, you can invest your current contributions and new contributions separately. This means you can direct both current and future contributions or leave current balances as they are and direct future contributions only. These investment options have grown in number over the years as the INPRS Board of Trustees has added new asset classes to the investment of the overall PERF portfolio.
Quarterly member statements are now electronic. Log on to PERF Online to view your quarterly statement detailing your account balance and interest earnings.
If you would like a paper statement mailed to your home, log on to PERF Online and select the Personal Information tab, Communications, E-mail Address, then Communications Preferences. Or, you can download the Annuity Savings Account (ASA) Quarterly Member Statement Opt-In form from the INPRS Web site.
Statement information is available as long as you have money invested in your ASA – even if you are no longer employed in a PERF-covered position. This is one reason why it is so important to maintain a correct address with the Fund.
The quarterly statement shows how much you have contributed and any change in value to your holdings. For most PERF members, the employer picks up the 3 percent mandatory contributions, which are pre-tax contributions. However, where the employer does not pick them up, the employee pays them as post-tax contributions. The 3 percent is taxed as income and then payroll deducted into the ASA. The earnings on the contributions are tax-deferred until the member takes them out. This is also true for voluntary pre- and post-tax contributions. Tax obligations apply when payment is made to the member as a retirement benefit or an ASA distribution. Many members assume that the amount shown on the quarterly statement is the entire benefit they would receive if they were to retire. It is important to remember the largest portion of retirement income will come from the pension, which is not shown on the quarterly statement. If you would like to calculate your own benefit estimate, go here.
Click on “My Fund,” then click “Public Employees” and scroll down to the “Use the Benefit Calculator” link. Please remember this is only an estimate of your benefit amount.
Members are able to deposit with PERF funds rolled over from any of the following:
These RSA funds may be invested in any of the current investment options except for the Guaranteed Fund. They may be withdrawn at any time prior to retirement. At retirement, these funds may be combined with your pension and ASA as part of your total benefit.
Your employer chose to join PERF. It also chose the positions that are covered under the PERF plan. Therefore, you become eligible for PERF membership when you begin employment in a position your employer chose to cover under the PERF benefits structure.
For a position to be PERF-covered, making you eligible for membership, the position must be:
|*After retirement, Social Security is the largest source of income for most elderly Americans. More information on Social Security benefits is available online here.|
After your employer enrolls you in the fund PERF will open an ASA in your name and you will formally become a member. Once PERF receives contributions, you will receive a welcome packet detailing your membership information. The packet will include instructions for you to register for a personalized PERF Online account (a passcode will be mailed to you); here, you can designate beneficiaries, update your address, and make fund allocations for your ASA. If you do not make ASA allocations, your contributions will default to a target date fund based on your estimated year of retirement.
You immediately begin saving for your retirement when you become a member of PERF. After enrollment, you may name a beneficiary to receive the assets remaining in your ASA after you pass away. You may name one or more individuals, a trust, estate, or other legal entity, such as a charity. If you designate more than one primary or contingent beneficiary for your ASA, benefit shares may be allocated in percentage increments. If no beneficiary is named, any assets would pass to your estate.
|As long as you have assets with the Fund, it is critical that you keep PERF informed of any changes to your name, address or beneficiaries. You can most easily update your address and beneficiary information by registering for PERF Online here. Changing your name, address or beneficiaries with your employer will not update that information with PERF. You will need to contact PERF separately to update your personal information.|
Beneficiaries – You may change the beneficiary of your ASA at any time before you retire. You may do so by registering for PERF Online and using the View or Change Beneficiary function. You can also download the Change of Beneficiary form here.
The importance of reporting any change of beneficiary cannot be overemphasized. Failure to make changes could result in payment being made to a named beneficiary who is no longer your choice to receive your ASA balance.
Address/Name – The address on file in PERF’s records is the only contact information we have for you. If you leave PERF-covered employment, you may be eligible to receive a distribution of your ASA. Therefore, you must report any change of address directly to PERF in a document that includes the following:
A change of address can be easily submitted via PERF Online once a member has registered. Change of name requests must be submitted only in writing and accompanied by the appropriate legal documentation such as a court order, divorce decree, or marriage license.
Indiana law prevents assigning PERF benefits. Accordingly, PERF cannot honor any divorce decree which requires it to pay anyone other than you or your named beneficiary. In order to be consistent with the laws governing PERF, and in order to satisfy Indiana’s domestic relations laws, divorce decrees should order you (or your legal beneficiary) to make payments to an ex-spouse rather than ordering PERF to make such payments. In addition, Indiana law prohibits PERF from garnishing your benefit for child support payments.
Qualified Domestic Relations Orders (QDRO’s)
Under state law, benefits in the Fund are exempt from any legal process. Exceptions to this rule include action by the Internal Revenue Service (IRS) and forfeiture for taking from an employer. QDRO’s do not apply to PERF. Even though they are the product of federal legislation, which normally supersedes state law, they do not apply to PERF since it is a governmental plan exempt from the QDRO requirements.
Vested status in PERF means you have at least ten (10) years of creditable service in PERFcovered employment. You will be entitled to full pension benefits when you meet these age and service requirements:
You do not have to work for the same employer and the jobs do not have to be for ten (10) consecutive years, in order to reach vested status. A total of ten (10) years in any combination of PERF – and/or Teachers’ Retirement Fund (TRF) – covered positions for which an employer makes contributions qualifies as creditable service for vesting purposes.
You become vested for the ASA immediately.
You receive service credit for each period of continuous employment in a covered position. In addition, you may be entitled to service credit during military service and certain types of leave.
A school corporation employee who works the full school term or contract period for a position will receive credit for one year of service. Otherwise, service credit for school corporation employees will be granted for actual time worked.
Service credit will be granted in monthly increments. One month of service credit will be awarded for each month that a member works at least one day and contributions are submitted.
If you retire with service in both PERF and the Indiana State Teachers’ Retirement Fund (TRF), you will be asked to choose from which fund you would like to retire. You will receive a single, combined benefit from that fund. When you complete your final service, your pension will be calculated on the basis of combined creditable service between the two funds. In the event of overlapping service, you may not receive service credit in both plans at the same time. Any annuity will be computed on the basis of total amounts credited to both accounts.
For example: Tom serves as a school teacher during the day in a TRF-covered position. He drives a snow plow in the evenings in a PERF-covered position. Tom has accounts with both TRF and PERF. Even though he is a member of both funds, at retirement his service is reconciled so that he is only granted one day of service credit for the concurrent service in PERF and TRF.
Generally, someone who serves in a position covered by another governmental plan is excluded from participating in PERF during the time they are serving in the other position.
For example: Lindsay serves as a firefighter in a 77 Fund-covered position for the City of Carmel. She is also a council member for the Town of Fishers. Because of her membership in the 77 Fund, she is excluded from membership in PERF.However, if a member of another governmental plan terminates or retires from that plan, and then employs in a PERF-covered position, he/she can participate in PERF.
Members who served in the United States armed services are eligible for PERF service credit equal to actual military service if they meet all of the following conditions:
Members may also be eligible for service credit if the provisions of the federal Uniformed Services Employment and Re-employment Rights Act (USERRA) cover their military service. The conditions for USERRA eligibility are:
According to the Heroes Earning Assistance and Relief Tax Act of 2008 (HEART), if a member dies while performing qualified military service, the member’s survivor may be entitled to a survivor benefit.
You may purchase additional service credit that can be used toward the calculation of the pension benefit if you have worked in a similar position(s) in another state, have worked for a quasi-state agency before it became PERF-covered or have prior military service or are vested in PERF and/or TRF. All service may be purchased in increments of one month. The purchase cost of additional service is calculated on your age, years of service, and salary. Minimum service requirements may apply. If you separate from service and withdraw your ASA before vesting, the cost of the additional service plus interest will be returned to you. If you separate from service and re-employ in a PERF- or TRF-covered position at a later date, you can repurchase the service at the service purchase cost recalculated at the time of repurchase. Download this form here.
If you are vested, you may purchase an additional one year of service credit for every five years of actual accrued service. For example, if you have fifteen (15) years of service, you would be allowed to purchase an additional three (3) years of credit. Your retirement benefit would be calculated using a total of eighteen (18) years. The cost to purchase this service depends upon your age, years of service, and salary. Payment for this purchase can be made in a lump sum or annual installments amortized over five years. Download this form here.
State law provides for the purchase of out-of-state service credit with the PERF if you meet the following qualifications:
Download this form here.
Active PERF members who served in the United States Armed Forces and were honorably discharged may purchase up to two (2) years of military service credit at actuarial cost. This is in addition to any other military service credit that is granted by law to members. Download this form here.
You may make the purchase of service after you have been in the Fund for a period of one (1) year. To determine the cost of purchasing this military service, contact PERF by phone or register for PERF Online and use the service credit purchase calculator.
You may not use any purchased service for vesting purposes. Therefore, to become eligible to retire and receive the pension benefit, you still must have ten (10) years of actual PERF-covered service. The additional purchased service will be used in the calculation of your retirement benefit. More information regarding PERF’s process for purchasing service can be found in 35 IAC 1.2-3-13.
Fewer and fewer employees stay with the same employer their entire career. Even if they do, situations often arise that force them to take time away from their positions. You may take certain types of leave from a covered position and still earn or retain service credit. A leave of absence does not qualify as a bona fide separation from service.
You should be certain to speak with your employer about any leave and ask them to contact PERF. Also, check with PERF to find out how your leave will affect your creditable service and eligibility.
You may be entitled to service credit for unpaid leaves of absence totaling six (6) months or less during any four (4) consecutive years. Your employer must approve this leave and a copy of the grant of leave of absence should be filed with PERF within ninety (90) days after the leave commences. Contact PERF for further information.
Family and Medical Leave Act (FMLA)
You may also receive credit for up to twelve (12) weeks of leave taken during a calendar year under the Family Medical Leave Act (29 USC 2601, et seq.). If this leave is in addition to the six (6) months of unpaid authorized leave in a four-year period, it is considered creditable only for vesting and for the purpose of determining eligibility and not for calculating benefits.
You are entitled to up to one (1) year of service credit for Adoption Leave.
During a paid leave of absence, employer and employee contributions will be made and creditable service will be granted.