Why are there multiple accounts listed on my annual statement?
All Tier One and Tier Two members who have worked in a qualifying position after January 1, 2004, have both a Tier One/Tier Two monthly benefit and an Individual Account Program (IAP) benefit. The balance in your Regular Account shown on your statement will be used to pay for a portion of your monthly benefit; if you chose to contribute to the Variable Account, that balance will also be used and could affect the amount of your monthly benefit. If you participate in the Variable Annuity Program, see this question below. Your Tier One or Tier Two monthly benefit can be paid for your lifetime, and for a beneficiary’s life as well if you choose to add one.
Your IAP account balance is also listed on your annual statement. Your PERS contributions (6 percent of your salary, whether paid by you or your employer) from January 1, 2004, forward have gone into your IAP (contributions you made before 2004 went into your Tier One or Tier Two account). The IAP is then subject to investment earnings and losses and has no guaranteed investment return. At retirement, the distribution you will receive is based on your account balance, which you may choose to roll over into a qualified plan or choose to have the balance paid in installments over various time periods.
How is my Tier One/Tier Two defined benefit (pension) calculated?
PERS uses three methods to calculate a Tier One monthly benefit amount and two methods to calculate a Tier Two monthly benefit amount; members receive the highest monthly benefit that results from these calculations.
For Tier One and Tier Two members, the calculation methods are:
Full Formula Method
For general service members:
1.67 percent × years of accrued service time × final average salary
For police and firefighter members:
2 percent × years of accrued service time × final average salary
Formula Plus Annuity Method (Tier One only, available to those who made contributions before August 21, 1981)
This benefit uses a formula similar to the Full Formula Method to compute the employer portion of your benefit. For general service members, multiply 1 percent of your final average salary by your years of accrued service time. Legislators, police, and firefighters should multiply 1.35 percent of final average salary by years of accrued service time. The total of the calculation will be added to an annuity payment based on your member account balance and life expectancy of people your age.
Your employer matches your member account balance by an equal amount. From that total, a monthly payment amount is then calculated based on life expectancy for people of your age.
Notes and definitions:
Most Tier One/Tier Two members retire under the Full Formula Method. Tier Two members are unlikely to have Money Match result in their highest calculated benefit because their account balances are generally low (due to having fewer years of contributions into the member account before 2004, when contributions were diverted to the IAP).
Accrued service time (also called creditable service, retirement credit, or service credit) is the number of months and years you have worked in a PERS-qualifying position. A “qualifying” position is a position in which an employee performs 600 or more hours of service in a calendar year for a PERS-participating employer or employers. Hours worked with different participating employers in the same calendar year are combined to determine if the 600-hour standard has been met for that year. Under certain circumstances, if you are not employed for the full calendar year, you may earn service time for a partial year with fewer than 600 hours of employment.
One month of service time is earned for each major fraction of a month worked.
Your final average salary is the greater of these amounts:
- your average gross salary earned over the three calendar years in which you received the largest total salary from one or more PERS-participating employers, even if one of those years was less than a full calendar year; or
- one-third of the total salary you received from one or more PERS-participating employers in the last 36 months of active membership.
How can I get a retirement benefit estimate?
You can create an estimate online through your Online Member Services (OMS) account. The online benefit estimator will use the most recent data supplied by your employer(s) to produce an estimate for any future retirement date. You can produce multiple benefit estimates with different retirement dates. This could help you determine if you are on track to meet your retirement goals.
When you are within 24 months of the earliest date you are eligible to retire, you can request a written estimate by submitting an Estimate Request form to PERS. If you need a copy of this form mailed to you, contact Member Services.
Your written estimate will provide information on service time purchases available to you at retirement, which could increase your benefit or provide extra service time to allow you to retire sooner.
We encourage you to get at least one written estimate before your retirement date. Please note that OMS generally will not give purchase information unless a written estimate has been completed. Please also note that any information provided in the estimate is not guaranteed.
These estimates only include your Tier One or Tier Two retirement benefit. You can use the IAP Disbursement Forecaster to estimate your IAP distribution at retirement.
How does my variable account balance impact my monthly Tier One or Tier Two benefit payment?
Members who elected to participate in the Variable Annuity Program initially chose a percentage (25, 50, or 75 percent) of future contributions to be directed to their variable account. The variable account can have earnings or losses. Each person has a different proportion of his/her contribution into the variable account and therefore has a different level of earnings or losses over time. If you choose to remain in the Variable Annuity Program after retirement, the variable annuity portion of your retirement benefit will increase or decrease annually based on the performance of the variable fund.
As of January 1, 2004, you cannot contribute or transfer funds to the variable account, as contributions are now made into the IAP, and you cannot change the percentage of your past contributions.
Can I transfer out of the variable account?
You can request a One-Time Variable Transfer to move all funds out of your variable account into your regular Tier One or Tier Two account before retirement by submitting the One-Time Variable Transfer: Active or Inactive Members form to PERS. You must meet age and eligibility requirements listed on the form, and PERS must receive your election form by December 31 of the year the request is made. The transfer becomes effective January 1 following the year in which PERS receives your request, regardless of when the form is received.
The election to transfer your variable account is irrevocable. If you make this transfer, you no longer participate in the variable account, and you will not receive a variable annuity at retirement.
You also will have the opportunity at retirement to transfer all the money in your variable account into your regular account. For more information, click here.
If you instead continue to participate in the Variable Annuity Program during retirement, PERS will adjust the variable portion of your monthly benefit every February 1. The adjustment is based on earnings or losses for the 12-month period ending October 31 of the prior year.
How is interest applied to my account?
Earnings crediting for the previous year is usually determined in March of the following year. Tier One regular accounts receive the assumed earnings rate (7.5 percent for 2016). Tier Two and IAP accounts receive earnings based on investment returns minus administrative expenses. Tier Two and IAP accounts are subject to earnings or losses. For 2016 earnings crediting, click here.
Can I choose where my account is invested?
No. The Oregon PERS Fund (OPERF) is managed by the Oregon State Treasury under the direction of the Oregon Investment Council. OPERF investment returns are posted monthly. More information on the fund and a complete list of investment information is available under the Actuarial/Financial section of the PERS website.
How do I update my beneficiary?
You can contact Member Services to confirm your beneficiary on file.
You can update your beneficiaries at any time by submitting new beneficiary forms to PERS. Any new designation form you submit will supersede your previous designation. To update your Tier One/Tier Two account beneficiary, please submit the Pre-Retirement Designation of Beneficiary form to PERS. If you have worked for a PERS-covered employer after January 1, 2004, please also submit the IAP Pre-Retirement Designation of Beneficiary form to PERS if you want to update your Individual Account Program (IAP) beneficiary.
I no longer work for a PERS employer. Can I withdraw my money?
You may withdraw your PERS accounts if you:
- have stopped working for all PERS-covered employers for at least one calendar month following the month of your separation,
- are not eligible for PERS retirement, and
- submit a completed Member Account Withdrawal Application.
The amount of your withdrawal(s) will be the total of your Tier One/Tier Two and/or IAP account balance(s) at the time of withdrawal. You cannot withdraw just one account; you must withdraw them all and terminate your membership in PERS.
Withdrawals do not include an employer match of dollars. By withdrawing your account(s), you forfeit all membership rights and future benefits provided by PERS.
If you withdraw prior to reaching age 59 1/2, you may be subject to an additional income tax penalty.
If you are vested, withdrawing your member account(s) forfeits your eligibility for Tier One/Tier Two monthly benefits or a lump-sum payment at retirement.
For more information, see the Withdrawal/Inactive Member Information page of the PERS website.
Where can I get more help?
Our Member Services team is happy to answer any questions about your PERS retirement benefits and can be contacted via phone, Monday through Friday, 8:30 a.m. – 5 p.m., at 888-320-7377; online; or by email at Customer-Service.PERS@state.or.us.
PERS also offers group education sessions that provide information on membership, benefits, and retirement. These sessions are for members at any stage in their careers and are held around the state. Your employer can also request a group session to go over PERS benefits by contacting Member Services or the Employer Service Center. See the full schedule, including opportunities to attend presentations with financial planning information, on the Tier One/Tier Two Education Presentations page of the PERS website.
When you are within 90 days of retirement, you can also attend a Retirement Application Assistance Session (RAAS). This one-hour, one-on-one appointment with a PERS staff member provides an opportunity to have your retirement application reviewed and notarized at no cost. The staff member will answer any questions you have about the retirement process. Please note that a RAAS is not a counseling session to help you make a decision to retire.