Q1. What are Police Officer and Firefighter (P&F) Units?
A. P&F Units are an additional benefit a Tier One or Tier Two police officer or firefighter (see A-Z guide, Police
for eligibility) may purchase with after-tax dollars. After retirement, the unit account will provide a monthly stream of income, usually for five years, which is partially paid by your employer as long as payments are received by age 65.
Q2. Who qualifies to purchase P&F units?
A. A member qualifies if he or she is a Tier One or Tier Two member of PERS in a qualifying position classified as P&F, defined in Oregon Revised Statutes Chapter 238. Your employer is responsible for the accurate reporting of your job classification to PERS. OPSRP P&F members are ineligible for P&F units.
Q3. When can I purchase P&F units?
A. If you are working as an active member in a P&F position and are younger than 65, you may elect to purchase up to eight units through payroll deductions.
P&F members who plan to retire before purchasing the maximum of eight units will have the option to purchase any remaining units as a lump-sum payment in the 60-day window immediately prior to their retirement. However, this lump-sum purchase option is not available if the member is no longer actively employed in a P&F position or has already reached age 65.
Q4. How much do I have to pay for P&F units?
A. The full cost to purchase eight units of additional P&F benefits is $4,000. You may elect a monthly payroll deduction before age 65. The amounts of the payroll deduction is based on your age when you sign up for P&F units and is based on the actuarial assumed rate of interest. This is currently 7.2 percent, but could change.
Q5. How do I sign up to purchase P&F units?
A. Contact your personnel (benefits) department to make P&F unit purchases through payroll deduction. They will have you complete the Notice of Unit Election form and inform you of the amount that will be withheld each month (based on the number of units you purchase), after receiving the calculated monthly unit cost from PERS.
If no prior payroll deductions for unit benefits have been made, and you are younger than age 60, and still actively employed in a P&F position, you may purchase P&F units in a lump-sum payment within 60 days prior to your effective retirement date. To make a P&F unit purchase immediately before retirement, complete the P&F Unit Purchase Election at Retirement
form and submit it to PERS.
Q6. Does my unit account earn interest?
A. Yes. Your unit account will be credited annually with the same earnings as your regular member account. The amount in your unit account will be shown on your PERS Member Annual Statement.
Q7. Can my unit account be transferred into the variable account?
Q8. Can I withdraw my P&F unit account?
You can only withdraw if you are no longer employed by a PERS-participating employer or a participating employer's controlled group under the federal law.
If you voluntarily withdraw your unit account, you will not be allowed to sign up for P&F units again if you return to a PERS-qualifying P&F position. You can withdraw a unit account without having to withdraw your other member account(s).
Q9. What happens to my P&F unit account if I withdraw my PERS account?
A. Your P&F unit account balance will be involuntarily refunded along with your other PERS account. You would be allowed to sign up for P&F units again if you return to a PERS-qualifying P&F position.
Q10. When can I begin receiving my P&F unit benefit?
A. P&F unit payments may begin on or after the date of your service or disability retirement, but no earlier than age 50.
Q11. How much will I receive from my P&F unit account?
A. Payments are made over a minimum of five years (60 months) unless payments begin after you reach age 60. Generally, each P&F unit purchased provides a $20 monthly benefit if paid for 60 months: $10 from your unit account and $10 from your employer. Eight fully paid-up units provide $160 per month for 60 months. Receiving your P&F unit account over a longer period of time (more than 60 months) reduces the amount of each monthly payment.
Q12. What if my P&F unit account is more than the amount required to fund the maximum benefit when I start my P&F unit payments?
A. Sometimes the earnings credited to unit accounts exceeds the actuarially assumed interest rate and the account balance may be greater than $4,000 when you start your P&F unit payment. You will receive a lump-sum distribution of any amount over $4,000. This payment may be eligible for rollover. You will receive information regarding the rollover of this payment, if applicable.
Q13. What if my unit account at retirement is less than the amount required to fund the maximum benefit?
A. If you are actively employed as a P&F member in a PERS-qualifying position and you are less than age 65, you will be given the opportunity to purchase the remaining balance. If you choose not to make the additional purchase, you will receive a reduced monthly unit benefit based on the balance in your unit account.
Q14. Do I have to start my unit monthly benefit at the same time I retire and, if not, how do I apply for a later payment date?
A. At retirement, you will apply for your units to begin either effective at your retirement date, or on a future date. PERS will automatically start your unit monthly benefit at the time you choose. However, monthly unit benefits will not be paid once you reach age 65. (See question 16.)
Q15. What if I apply for my P&F unit benefits to begin at a future date and later change my mind?
A. You may change the date to begin payments of your unit benefit any time before the issue date of your first unit benefit payment.
Q16. What if I work past age 60?
A. If you retire after age 60 but before age 65, your P&F unit benefit will be paid to you from your effective retirement date to age 65. You will receive increased monthly benefits from your unit account based on the number of months you are to receive your benefit; however, the amount provided by the employer will not exceed $10 per month per unit purchased (maximum $80 monthly benefit for eight units). If you retire on or after age 65, your unit account will be paid to you in a lump sum and would not include an employer benefit.
Q17. Are my P&F unit payments combined with my regular PERS retirement payment?
A. No. Your unit benefit is a separate payment.
Q18. Are my unit benefit payments subject to federal taxes?
A. Your P&F unit benefits are subject to federal taxes. Your unit benefit payments are subject to a 10 percent early distribution penalty if you separate from employment with your PERS employer before the calendar year you reach age 50 and start your P&F unit benefits before age 59 1/2. For further information, we advise you to consult a qualified tax professional or the IRS.
Q19. Are my unit benefit payments subject to state taxes?
A. Your P&F unit benefits are subject to Oregon state income tax if you are an Oregon resident. Non-Oregon residents are not subject to Oregon state income tax. Your benefit may be subject to taxation in the state where you reside.
Q20. What happens to my P&F unit account if I transfer to a position other than a police officer or firefighter?
A. You will be eligible to receive monthly P&F unit benefits at retirement if you are at least age 45 when you leave a P&F position, or if you return to employment as a police officer or firefighter under Oregon Revised Statutes Chapter 238 before the end of five years from the date you transferred to a job classification other than police officer or firefighter. If, at the end of five years, you have not turned 50 or returned to a qualifying P&F position, your unit account, including annual earnings, will be refunded to you at that time.
Q21. What happens to my P&F unit account if I die before receiving my P&F unit benefits?
A. Your unit account will be paid to your designated beneficiary. If your monthly P&F unit payments have started, your remaining unit account balance at your death will be paid to your designated beneficiary. There is no death benefit due from employer contributions.
This Q&A is for general informational purposes only and is not intended to provide legal advice. If there is any conflict between this information and federal law, Oregon law, or administrative rules, the law and administrative rules shall prevail.