As an Oregon public employee, the Oregon Savings Growth Plan (OSGP) may be an option you have to save more for retirement. Learn more about OSGP in this introductory video.
If you are a Tier One, Tier Two, or Oregon Public Service Retirement Plan (OPSRP) member who has worked in a qualifying position since January 1, 2004, you have
two parts to your PERS retirement benefit:
- A
pension, which may provide you with a lifetime monthly benefit that is designed to only replace a portion of your working salary. For example, the maximum salary replacement for an OPSRP member with 30 years of qualifying service is 45% — or less than half. And if you work fewer than 30 years, the percentage shrinks.
- An
Individual Account Program (IAP) account, which is designed to supplement your pension by providing an additional source of income during your retirement. Your IAP account balance is built over time by monthly contributions from you or your employer, plus any earnings or losses on those contributions. The monthly contribution is fixed at 6% of your salary unless you meet a
monthly salary threshold. If you meet the threshold, a portion of this 6% is redirected to the
Employee Pension Stability Account (EPSA), which will be used to help fund part of your pension benefit.
You may wonder if your pension and IAP will provide you with enough income in retirement. While the answer can depend on your personal finances and lifestyle choices, keep in mind that retirement industry experts now recommend that you save at least 10% to 15% of your pre-tax income for retirement.
So, how can you save more for retirement — and with possible tax advantages?
You could open an individual retirement account (IRA) with an investment firm, try investing
on your own, and/or take advantage of a number of savings options with your bank or credit
union.
Another option is to enroll in the
Oregon Savings Growth Plan (OSGP) through the
state of Oregon, if your employer participates in OSGP. OSGP offers account-based, voluntary
pre- and post-tax retirement savings options.
The
Oregon Investment Council
(OIC) evaluates and picks the investment fund options available within OSGP. OIC is the same
group that oversees the investments that fuel your PERS’ pension and IAP. Under Oregon and
federal law, OIC members act as fiduciaries. That means they make investment decisions with
the best interests of PERS members like you in mind.
The standard monthly contribution amount for your PERS IAP is set by state law at 6% of a
member’s salary.
However, members who have a portion of their IAP contributions redirected from their IAP
account to their EPSA can opt to offset the redirected amount by making voluntary
contributions to their IAP. Even with the voluntary contributions option, your total monthly
contribution to your IAP employee account is limited to 6% by law. (Read more:
Tier One/Tier Two,
OPSRP.)
Another thing to note about your IAP is that your investment choices are limited. By default,
your IAP is automatically invested in a
target-date fund (TDF) based
on your year of birth. However, you do have the
option to change your default TDF
based on your risk tolerance.