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PERS Education and Retirement Planning

PERS Education and Retirement Planning. Welcome ! PERS One-Year Group Updated: 2/13/2012. Disclaimer. Information may change as the result of administrative, legislative or judicial decisions. Agenda. Individual Account Program Retirement Eligibility Calculation Factors and Methods

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PERS Education and Retirement Planning

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  1. PERS Education and Retirement Planning Welcome ! PERS One-Year Group Updated: 2/13/2012

  2. Disclaimer • Information may change as the result of administrative, legislative or judicial decisions.

  3. Agenda • Individual Account Program • Retirement Eligibility • Calculation Factors and Methods • Review of Estimate of Benefits • PERS Retirement Processes • Health insurance; COLA • Variable after retirement • Working in retirement; Taxes • Review Retirement Forms

  4. Individual Account Program • Effective January 1, 2004 • Member contributions to Individual Account Program (IAP) • No contributions to PERS member account after this date • Retirement forms for IAP and separate retirement forms for PERS • Retirement benefit from IAP and separate retirement benefit from PERS

  5. IAP Retirement • When retire from PERS, must retire from IAP • Retirement date • 1st day of any month • Submit retirement forms within the 90 day period prior to your retirement date • First payment due • Within 120 days of retirement date

  6. IAP Distributions • IAP retirement benefit choices • Lump sum (mailed direct to member) • Installments over 5-10-15-20 year periods, or • Anticipated Life Span Option • Can receive IAP distributions only after separation from PERS covered employment • IAP cannot be used for Trustee to Trustee Transfers

  7. PERS Trustee to Trustee Transfer for Purchases • If eligible to purchase service time • Can use pre-tax dollars from 457 deferred compensation plan, or a 403(b) tax-sheltered annuity • Time limit on purchases • Within the 90 days before retirement date • Transfer form required • PERS: http://oregon.gov/PERS

  8. PERS Data Verification Requests • Must be within two years of earliest service retirement age • Will cover following data elements • Employment/Salary details • Service time • Regular and variable account balances • Final average salary • Unused sick leave (beginning July 1, 2012)

  9. PERS Data Verification Requests • Form required • PERS: http://oregon.gov/PERS • First verification free • Fee for additional verification • Data verification not an estimate • Only provides verification for what will ultimately determine the actual benefit

  10. Online Member Services • You can: • Access your account information • Perform activities related to your account • Produce your own estimate • Link directly to the PERS web site to view FAQs, forms and other information • http://oregon.gov/PERS

  11. PERS Retirement Eligibility • 30 years PERS Total Creditable Service Time OR • Age • Normal retirement • 58 – Tier One • 60 – Tier Two • 55, or 50 + 25 years total service – P&F • Early retirement • 55 • 50 – P&F

  12. The Calculation Factors • Age • Service time • Final Average Salary • Account Balance

  13. Calculation Methods • Full Formula • Service time x final average salary x .0167 • (P&F .0200) • Money Match • Age factor x account balance x 2 • Formula + Annuity (8/21/81) • Service time x final average salary x .01 • (P&F .0135) + Age factor x account balance

  14. Option 1 Calculation Method Comparison • Money Match $ 2,966.64 • Full Formula $ 2,329.10 • Formula + Annuity (Contributions prior to 8/21/81)

  15. The Retirement Estimate: Age and Retirement Data IMA PERSSON 1234 ANNUITY AVE GOLD HILL, OR 97000 Date: 1/30/2012 PERS ID: Member Date of Birth: 8/6/1953 Retirement Date: 7/1/2012 Last Day of Service: 6/30/2012 Termination Date: 6/30/2012 Retirement Age: 58 yrs 10 mos

  16. The Retirement Estimate: Page TwoBeneficiary and Service Time Beneficiary: Olov Year of Birth: 1953 Creditable Service Time: 26 yrs 0 mos Granted Service (disability only): 0 yrs 0 mos

  17. The Retirement Estimate: Page TwoService Time; Member Cost Service Purchases: Prior Service Time: 0 yrs Waiting Time: 0 yrs 6 mos Sick Leave Hours: 0 Forfeited Time: 0 yrs 0 mos Vacation Hours: 0 Full Cost: 0 yrs 0 mos Contract Salary: $0.00 Miscellaneous: 0 yrs 0 mos Contract Hours: 0 Estimated Member Cost: $1,188.61 Total Creditable Service with Purchase(s): 26 yrs 6 mos

  18. Full-Cost Purchases • Senate Bill 711 – military service • Senate Bill 665 – teaching time • Costs • Present cost of future benefits • Provides service time at high average cost

  19. Member Cost • After-tax contributions in member account • 1099 R • Member cost is not taxed again in retirement

  20. The Retirement Estimate: Page Two Salaries High 3 Years Last 36 Months Year Salaries Year Months Salaries* 2009 $65,938.58 2012 6 $31,530.72 2008 $67,530.11 2011 12 $62,244.97 2006 $62,307.32 2010 12 $61,865.12 $195,776.01 2009 6 $34,507.78 $190,148.59 *includes projected salaries Average monthly salary: $5,438.22

  21. The Retirement EstimatePage Three: Account Information Regular Variable Total Current account balance: $139,709.23 $25,850.46 $165,559.69 Projected account balance at retirement: $156,841.63 $29,031.28 $185,872.91

  22. The Retirement EstimatePage Three: Benefit Options and Amounts Option 1 Calculation Method Comparison: $2,966.64 Money Match $2,329.10 Full Formula Formula + Annuity

  23. Tax RemedyHB3349 or SB656 • The greater of either... • HB 3349 • Benefit increase • Based on service time prior to October 1, 1991 • SB 656 • Based on service time if hired prior to July 14, 1995 • Maximum 4% increase

  24. Retirement Benefit Options • First twelve options pay member lifetime monthly benefit unless the Option 1 benefit is $200 month or less. • If Option 1 benefit is $200 month or less • No monthly benefit • Lump sum payment equal to actuarial value of benefit

  25. The Retirement Estimate: Page ThreeBenefit Options and Amounts No Purchase With Purchase Option 1 $3,048.14 $3,055.64 Refund Annuity $3,013.13 $3,020.55 Option 15 C $2,956.85 $2,964.13 Option 2 $2,767.71 $2,774.52 Option 2A $2,737.24 $2,743.97 Option 3 $2,901.84 $2,908.97 Option 3A $2,883.54 $2,890.63

  26. The Retirement Estimate: Page ThreeLump Sum Benefit Options and Amounts No Purchase With Purchase Lump Sum Option 1 $1,466.58 $1,484.36 Lump Sum Option 2 $1,331.65 $1,347.81 Lump Sum Option 2A $1,316.99 $1,332.95 Lump Sum Option 3 $1,396.18 $1,413.12 Lump Sum Option 3A $1,387.38 $1,404.21 Total Lump Sum $381,921.38 $382,898.19

  27. Retirement Option Choices • Option 1 • Maximum monthly benefit • No beneficiary • Refund Annuity and 15 Year Certain • Member may choose multiple beneficiaries and change them at any time • Beneficiary benefits are limited • Refund Annuity: Nine – Eleven years • 15 Year Certain

  28. Retirement Option Choices • Joint Survivorship Options • One beneficiary • 60 days to change the beneficiary • Options 2 and 2A • Full survivorship options • With 2 and 2A, and a non-spousal beneficiary, see the PERS website for possible benefit adjustments. • Options 3 and 3A • Half survivorship options

  29. Lump Sum Options • Projected account balance • One through five annual installments • Interest credited on unpaid balance • Options 1, 2, 2A, 3 and 3A provide lifetime monthly benefit

  30. Total Lump Sum • Distribution of your PERS account with employer match • No monthly benefit paid • One through five annual installments • Interest credited on unpaid balance

  31. The Retirement Estimate: Page FourAssumptions used in Projection • Account Balance: • Regular Projected at 8% • Variable Projected at 8% • Job Classification: • Retirement Job Class 01 • Salary Projections: • Salary Projected to increase 0% annually

  32. Purchase Documents Waiting Time and Forfeited Time • Time Limit on Purchase(s) • During the 90 days before retirement • Not on or after retirement date • Mail purchases to: PERS PO Box 2127 Portland, OR 97208-2127

  33. Health Insurance and Retirement • Enrollment opportunities for PERS Sponsored Health insurance • At retirement • At Medicare enrollment • Any time, with at least 24 months of continuous employer group coverage • Other options • Employer sponsored plans (ORS 243.303) • COBRA • Portability and individual plans • Spouse’s employer plan

  34. PERS Sponsored Health Insurance: Additional points • Eligibility • Retirees • Spouses and dependents • Of current or deceased retirees • Of deceased member eligible to retire • Subsidies may be available • RHIA: At Medicare eligibility • RHIPA: State of Oregon employees • Requirements for subsidy eligibility • Total PERS-covered service time • PERS group health insurance program

  35. Retirement: Date; Forms; and Your Employer • Retirement date • 1st of any month • Based on age or service time • Submit the retirement forms • Within the 90 day period prior to your retirement date • Resign all PERS-covered positions • Employer providesinformation to PERS

  36. Retirement Forms • Call PERS Customer Service for a retirement package or download the forms from PERS website • PERS mails you notice soon after receipt of your retirement forms

  37. First Monthly Check Issued • Within 92 days of retirement date • Estimated payment or actual payment • Retroactive

  38. Notice of Entitlement • Notice of Entitlement • Option changes possible within 60 days of first benefit check or receipt of NOE, whichever is later • Dispute Notice • 240 days from the later of: • Date first actual payment is made • Date Notice of Entitlement is provided to the member

  39. Cost of Living Adjustment (COLA) • An annual adjustment payable August 1st • Up to 2% of the July gross benefit • 2% is the maximum increase • July 1st retirement • Last date to retire in any year, and receive the COLA for that year

  40. VariableAnnuity • Variable Dollars At Retirement • Number of units • Variable Annuity Unit Value • Set annually (11/1 - 10/31) • Variable Annuity Income • Part of benefit • Based on unit value

  41. Account Balance - $100,000 $50,000-R $50,000-V Fixed Annuity Variable Annuity $500 $500 Variable Annuity Example Initial Benefit $100,000 Fixed Pension $1,000 + 500 + 500 $2,000 $1,000

  42. VARIABLE ANNUITY EXAMPLE Year 2: 11/1-10/31 - Variable = 18% Variable Per Cent = 18% - 8% = 10% Var. Change = $500 x (10%) = $50 Benefit = $1000 + $500 + $550= $2050

  43. VARIABLE ANNUITY EXAMPLE Year 3: 11/1-10/31 - Variable = 0% Variable Per Cent = 0% - 8% = - 8% Var. Change = $550 x (-8%) = - $44 Benefit = $1000 + $500 + 506= $2006

  44. Working after PERS Retirement • For a Private-sector employer • No employment limit • For Oregon PERS-participating Employers • 1039 hours/calendar year limit • Exceptions exist • Only for normal retirement (age or service time) • Review exceptions on http://oregon.gov/PERS • PERS and Social Security benefit: • Higher of 1039 hrs/calendar year or Social Security limit.

  45. Tax Considerations • Monthly benefit • Subject to state and federal taxes • Oregon residents • Subject to Oregon and federal tax • Non-Oregon residents • Federal tax only; no Oregon tax • No withholding for any other state

  46. Member Resources • Websites and E-mail link for PERS website • PERS: http://oregon.gov/PERS • PERS Insurance: http://pershealth.com • IAP account: https://iap.csplans.com • Toll-free telephone number • PERS • 1-888-320-7377 or 503-598-7377 • PERS Insurance • 1-800-768-7377 or 503-224-7377 • PERS and financial education • http://oregon.gov/PERS

  47. More Resources • Attend additional PERS presentations • PERS: http://oregon.gov/PERS • Individual meeting • Retirement Application Assistance Session • Within 90 days of retirement • PERS: http://oregon.gov/PERS • 1-888-320-7377 or 503-598-7377

  48. Thank you for attending this presentation!

  49. Police and Fire Units • Background • Purchase (8 Units) • Read Pre-Retirement Guide • Employee cost = $4,000 • Employer match = $4,000 • Benefits • $160 per month from age 60-65 • Less if over more than 60 months • No COLA increases • Separate unit application forms

  50. Surviving Spouse Benefit - P&F • Benefit • 25% of Refund Annuity benefit OR • 25% of Option 1 benefit (Lump Sum) • Beneficiary • Surviving spouse OR • Dependent children under 18

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