Public Employees Retirement System

All PERS members actively employed since 2004 have an IAP, which is invested by the Oregon Investment Council

Want to know more about the IAP Target-Date Funds? Read this two-page summary or review the questions and information below.

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General information

All PERS members who have worked in a qualifying position after January 1, 2004, have two components to their PERS retirement: a monthly pension benefit (Tier One, Tier Two, or Oregon Public Service Retirement Plan [OPSRP]); and an account balance-based benefit (the Individual Account Program [IAP]).

PERS investments, including the IAP, are managed by the Oregon State Treasury under the direction of the Oregon Investment Council. The council’s mandate is to achieve the highest return possible on investments, including on the Oregon PERS Fund (OPERF/“PERS Fund”). Some investment returns from the PERS Fund help pay for members’ monthly pension benefits.

Through December 2017, members’ IAP funds will be invested as part of the PERS Fund. Each year, earnings or losses from investment returns are credited to member IAP accounts.

What’s new

On September 20, 2017, the Oregon Investment Council made the decision to change the investment strategy of the IAP (effective close of business December 29, 2017). While the modification is taking place at the end of 2017, the first member annual statement that will reflect this change will be the 2018 statement, to be distributed spring of 2019.

Member contributions to the IAP: Nothing is changing

Six percent of your salary, whether paid by you or your employer, will continue to be placed into your IAP. At retirement, you may be able to roll over your IAP balance into a qualified plan or take payments over various time periods. The payment you receive from your IAP will be based on your account balance – contributions plus investment earnings or losses over time. The IAP has no guaranteed investment return.

IAP investment model: What’s changing?

On September 20, 2017, the Oregon Investment Council decided to change the investment strategy of the IAP. Effective at the close of business on December 29, 2017, the balance in member IAP accounts will be transferred to a custom IAP Target-Date Fund that corresponds with their birth year and an approximate retirement age of 65. These target-date funds are intended for members in all stages of contributing for retirement and are designed to provide a greater growth allocation for young members, with the goal to reduce risk and potential losses for everyone, especially those who are near retirement.

Prior IAP earnings crediting rates are available online.

What are Target-Date Funds?

A target-date fund typically has a date in its name – this is called the fund’s “target date.” The target date is the approximate year you expect to retire and begin withdrawing from your account. A target-date fund adjusts its investments over time. If you’re in your early working years, the emphasis of the fund is on the growth of your retirement account balance. As you move toward retirement, the investments of the fund gradually evolve, becoming more conservative to help protect against market fluctuations – and it all happens automatically.

Do I have to take any action?

No action is required on your part.

Will this investment change affect my pension benefits?

No. This investment change has no impact on your pension benefit. This investment change impacts the investments in your IAP only – your account balance-based benefit.

How many target-date funds are there?

There are a series of nine IAP Target-Date Funds plus the IAP Retirement Allocation Fund.

 IAP TDF Birth Year Chart

Will I be invested in more than one target-date fund?
No. You will be invested in a single target-date fund based on your birth year and an approximate retirement age of 65.
What IAP Target-Date Fund (IAP TDF) will I be in?

Each PERS member with an existing IAP account will be invested in a single IAP Target-Date Fund based on a five-year range of birth years. Please note that the “target date” in no way dictates when you have to or will be eligible to retire (see normal retirement age eligibility for Tier One, Tier Two, and OPSRP members); the date is based on an approximate retirement age of 65.

 IAP TDF Birth Year Chart

What if I don’t want to be in the target-date fund?

All contributions to your IAP, whether made by you or your employer, are invested on your behalf by the Oregon Investment Council.

Oregon Revised Statute 238A.050(3) gives the Oregon Investment Council discretion to invest IAP assets differently than PERS Fund pension benefit assets. Members have not participated in the direction of investments since inception of the IAP, and will be assigned to IAP TDFs based on their birth year.

When will this change occur? How will it impact me?

Effective at the close of business on December 29, 2017, all IAP funds will be invested in age-based IAP Target-Date Funds.

During the 2018 calendar year, if a member retires, withdraws, or dies, an IAP payment will be based on the member’s total IAP account balance at the time PERS processes the payment. Beginning in 2018, each IAP TDF will have a current monthly earnings rate, which will be credited at the time a payment is processed.

The annual earnings crediting process will not change under the new IAP investment methodology. Starting in 2019, the PERS Board will adopt a final earnings crediting rate for each IAP TDF for calendar year 2018. In spring 2019, members will receive annual statements that will reflect 2018 investment returns for their IAP TDF. IAP account balances on IAP.Voya.com will be updated around the same time.

How do target-date funds benefit me when I am young?

Target-date funds that are furthest away from their target dates are primarily invested in stocks, private equity, real estate, and other alternatives that emphasize the earnings potential needed to build your retirement account balance over the long term.

How do target date funds benefit me as I approach retirement?

As you move closer to retirement, your fund automatically adjusts to a more conservative mix of investments to help preserve your account balance while reducing the potential for large losses near retirement.

How will this change impact me at retirement?

All payment options will remain the same. When you retire, you can receive your IAP account balance as a lump-sum payment or installment payments over a 5, 10, 15, or 20-year period.

If you choose to receive the entire IAP account balance as a lump-sum payment, you may choose a cash distribution, or roll into a traditional or Roth IRA, an eligible employer plan, a 457 deferred compensation plan, the Oregon Savings Growth Plan, or another qualified plan.

How will this change impact current retirees receiving IAP installment payments?

If you are currently receiving IAP installment payments, or choose to receive IAP installment payments at retirement, then under the new IAP TDF investment strategy, your IAP account balance will be placed in the “IAP Retirement Allocation Fund.” Payments will be made on the periodic basis that you have selected. 

If a retired member dies before all installment payments are completed, their beneficiary is entitled to receive the remaining installment payments, and may choose to receive the remaining balance in a lump-sum payment.

What if I want to invest more aggressively at an older age or more conservatively at a younger age?

All contributions to your IAP, whether made by you or your employer, are invested on your behalf by the Oregon Investment Council.

Oregon Revised Statute 238A.050(3) gives the Oregon Investment Council discretion to invest IAP assets differently than PERS Fund pension benefit assets. Members have not participated in the direction of investments since inception of the IAP, and will be assigned to IAP TDFs based on their birth year.

Why is my investment mix different from my co-worker, neighbor, or spouse?
Each PERS member is invested in a single Target-Date Fund based on their birth year. The investment mix for each fund is different, so if you don’t share the same birth year range with someone, then your investment earnings will probably be different.
When will performance data be available for these new funds?

The first performance data will be available after January 31, 2018. Keep in mind that PERS only credits IAP accounts on an annual basis, so most members will not see any investment returns until spring 2019 (reflecting calendar year 2018 returns).

How often can I check my IAP account balance?

You can check your IAP account balance any time at IAP.Voya.com, however, earnings (or losses) are only applied to accounts on an annual basis, typically in spring.

With the transition to IAP TDFs, most members will not see a change in calendar year 2018. Your 2017 member annual statement, which will be mailed around May 2018, will include your IAP account balance as of December 31, 2017 (which is before your assets were transferred to the IAP Target-Date Funds).

The 2018 member annual statement, mailed in spring 2019, will reflect the IAP investment return for your specific IAP TDF. Account balance information will also be updated at this time on IAP.Voya.com.

Members who retire, withdraw, or die in calendar year 2018 will have appropriate IAP TDF earnings credited to their accounts.

How will the target-date fund assets be invested?
Visit www.Oregon.gov/IAP for specific fund information such as fact sheets and fund profiles.
How is the mix of investments determined?

With a target-date fund, your money is spread across many different investment types that make up the fund. This gives you access to a variety of asset-class opportunities including stocks, bonds, and other diverse asset classes – all in one strategy. The objective for each retirement fund is to achieve the highest total return over time combined with an appropriate level of risk that is consistent with its asset mix. Target-date funds that are furthest away from their target dates invest primarily in stocks, emphasizing the growth potential you need to build assets over the long term.

As you move closer to retirement your fund adjusts to a more age-appropriate investment mix reducing your risk exposure.

Investments in target-date funds are not guaranteed against loss of principal. Your account value can be less than the original amount you contributed – including at the time of the fund’s target date.

>> Reminder: You will not need to take any action because of this change.

For more information

Visit www.Oregon.gov/IAP for specific information about PERS investments. You may also access your IAP through IAP.Voya.com.

Questions about retirement benefits may be directed to PERS Member Services at 888-320-7377. Representatives are available Monday-Friday 8:30 a.m. to 5:00 p.m. (Pacific Time).

Questions about PERS investments may be directed to Oregon State Treasury, Investment Division at 503-431-7900.