Public Employees Retirement System

Background

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

PERS investments, including the IAP, are managed by the Oregon State Treasury (OST) under the direction of the Oregon Investment Council (OIC). The OIC's mandate is to achieve the highest total investment returns for the IAP, which includes the Oregon Public Employees Retirement Fund (OPERF), at an appropriate level of risk.

Beginning in 2018, each PERS member is now invested in an age-based IAP T​arget-Date Fund (TDF)​. Each of the IAP TDFs will continue to have some money invested in OPERF.

No change to member contributions to the IAP

Six percent of your salary, whether paid by you or your employer, continues 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 changed?

On September 20, 2017, the OIC decided to change the investment strategy of the IAP. Beginning in 2018, IAP accounts shifted from a one-size-fits-all investment format to customized IAP Target-Date Funds (TDF) designed by the OIC specifically for Oregon public employees. 

Members are invested in an IAP TDF 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 younger members, with the goal to reduce risk and potential losses for everyone, especially those who are near retirement.

The first member annual statement that reflects this change will be the 2018 statement, to be distributed in May 2019. 2018 Member Annual Statements will include a special insert with information about the OIC investment strategy change.

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 may expect to retire and begin withdrawing from your account. 

A target-date fund adjusts its investments over time. If you are 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 the process happens automatically.

Did 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-based benefit.

What IAP Target-Date Fund am I in?

There are a series of nine IAP TDFs plus the Retirement Allocation Fund.

Each PERS member with an existing IAP account is invested in a single IAP TDF based on a five-year range of birth years.

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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.

Can I change my investments in the IAP?

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

Oregon Revised Statute 238A.050(3) gives the OIC 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.

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

If you are in your early working years, the emphasis on the fund is on growth, in order 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.

Does this investment strategy change impact PERS' earnings crediting process?

No.

As was the case before IAP Target-Date Funds, when a member retires, withdraws, or dies, an IAP payment is made based on the member's total IAP account balance at the time PERS processes a payment. Each IAP TDF has a current monthly earnings rate, which is credited at the time a payment is processed.

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

How does this change impact me at retirement?

All payment options 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, or over your anticipated life span.

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 does 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, your IAP account balance is placed in the “Retirement Allocation Fund.” Payments are 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 OIC.

Oregon Revised Statute 238A.050(3) gives the OIC 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.

Why is my investment mix different from my co-worker, neighbor, or spouse?
Each PERS member is invested in a single IAP TDF based on their birth year. The investment mix for each fund is different, so if you do not share the same birth year range with someone, then your investment earnings will probably be different.
Where can I view performance data for the IAP TDFs?

Performance data is available through the OST at Oregon.gov/IAP.

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

Target-date funds spread money across many different investment types to make up the fund. This gives you access to a variety of asset-class opportunities including stocks, bonds, and other diversifying 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.

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.

Your 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.​

For more information

For more information about the IAP Target-Date Funds, visit Oregon.gov/IAP

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 or PERS.Member.Services@state.or.us. Representatives are available Monday-Friday 8:30 a.m. to 5 p.m. (Pacific Time).

Questions or comments about PERS investments may be directed to the Oregon State Treasury at iap.comments@ost.state.or.us.

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​Updated April 2019

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