INPRS Providing Employee Retirement Benefits Indiana Township Association
INPRS Providing Employee Retirement Benefits Indiana Township Association Annual Education Conference 1 One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
What we’ll discuss today § The two retirement plans offered by PERF § Characteristics of each plan § Comparison of the two plans § How to get additional information 2 One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
PERF Hybrid Retirement Plan One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
PERF Hybrid Plan Benefits Defined Benefit (Pension) • Lifetime benefit - must meet eligibility • Funded by employers • Contributions not held in an individual account • Formula calculation used to determine benefit • Benefit determined by age, salary, service, and retirement option chosen Full Vesting Occurs at 10 years of service Annuity Savings Account (ASA) • Mandatory 3% contribution • Always belongs to you / fully vested • No loan or hardship withdrawals available One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
Defined Benefit (DB or Pension) Normal Retirement Eligibility 1. Age 65 with 10 or more years of creditable service; 2. Age 60 with 15 or more years of creditable service; 3. Rule of 85: Minimum age 55, age plus years of service must equal 85 or more. (For example: age 55+30 yrs = 85; or age 58+29 yrs = 87. ) One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
PERF Hybrid Plan Benefits Defined Benefit: DB or Pension Lifetime Benefit Beneficiary and Survivorship Options Defined Contribution: DC Annuity Lump Sum Withdrawal Rollovers One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
My Choice: Retirement Savings Plan One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
My Choice: Retirement Savings Plan Benefits Structure Fixed contributions Variable rate contributions § Mandatory 3% fixed contribution § Always belongs to you/fully vested § No loan or hardship withdrawals available § Funded by the employer § Amount received is determined by years of participation Variable 3% One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
My Choice: Retirement Savings Plan Vesting in variable rate employer contribution % Vested After 20 % 1 full year 40 % 2 full years 60 % 3 full years 80 % 4 full years 100 % 5 full years Note: Immediate 100% vesting on mandatory (3%) contribution. 9 One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
My Choice: Retirement Savings Plan Benefits § Lump Sum § Purchase a lifetime annuity § Rollover to another financial company One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
My Choice: Retirement Savings Plans Employer Contributions to Members Plan Mandatory 1 Voluntary Match 2 Normal Cost 3 State Employees 3% n/a 3. 4% Local Government Employees 0% to 3% 0% or 50% 0% to 4% 1. Mandatory 3% must be paid by the employer, employee or shared by the employer and employee. 2. If employer is participating in voluntary contributions, employee may contribute up to 10% of gross wages. 3. Variable % set annually by INPRS board. Equal to the % of payroll needed as an annual contribution to the PERF DB plan to fund projected benefits. • Employer is also required to pay the supplemental rate which funds the unfunded liability in the PERF Hybrid plan. Employers pay this amount to INPRS, not the employee’s ASA. 11 One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
My Choice vs. Hybrid Plan q My Choice Retirement Plan q q 0 -4% Normal Cost 7. 2% Supplemental Cost 3% Mandatory Contribution 0 -50% employee matching contributions q Hybrid Retirement Plan q q 4% Normal Cost 7. 2% Supplemental Cost 3% Mandatory Contribution No employee matching contributions One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
Investment Options § § § § Money Market Fund Stable Value Fund Fixed Income Fund Inflation-Linked Fixed Income Fund Large Cap Equity Fund Small/Mid Cap Equity Fund International Equity Fund Target Date Funds: 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060. Default fund for new members. NOTE: Allocations must be made in whole increments of 1% or more among the investment options. Your total for all fund investments must equal 100%. Allocations can be changed daily online by using PERF Online or by calling toll-free (844) GO-INPRS. One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
Defined Benefit vs. Defined Contribution Type Description Benefit Formula (PERF) Benefit duration Who Manages Investments? Who is at Financial Risk? Defined Benefit Specifies how much you will receive at retirement 1. 1% x Avg. High 5 Yr. Salary x Yrs. Service Guaranteed for life Investment Professionals Employer Defined Contribution Specifies how much will be contributed toward your retirement Contributions x investment gains or losses Until the money runs out. Employee / Member Employee (Purchasing an annuity is an option) 14 One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
Defined Benefit vs. Defined Contribution Type Employee Pros & Cons Defined Benefit • Guaranteed benefit at retirement • No control over how the money is invested • Longer vesting period • Not very portable Defined Contribution Employer Pros & Cons • Confidence that longer-term employees will receive a sufficient benefit at retirement • Minimal employee education needed • No control over contribution rates • Control over how the money is invested • More control over contribution rates • Shorter vesting period • Significant ongoing employee education needed • Portable • No guaranteed benefit at retirement • Hope, but not confidence, that employee will have a sufficient benefit at retirement 15 One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
Defined Contribution Plans Participating Employers ** * Mandatory contributions paid by either the employee or employer equal 3% of the employee’s gross wages. ** Applies only to those with an employment start date of Jan. 1, 2017 or later. AFSCME members may choose between My Choice or PERF Hybrid. All others are enrolled in My Choice plan. One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov 16
INPRS Contact Information Web site: www. inprs. in. gov e-mail: questions@INPRS. in. gov Phone: (844) GO-INPRS (toll-free) Mailing Address: INPRS One North Capitol, Suite 001 Indianapolis, IN 46204 Follow us on social media: One North Capitol, Suite 001 | Indianapolis, IN, 46204 | (844) GO-INPRS | www. inprs. in. gov
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