The following information is for Tier One/Tier Two members only.
Employer funds (pension money)
The employer account (from which pension benefits are paid) is a part of the member’s PERS
entitlement* but is separate from the member’s PERS account. Therefore, if employer funds
are to be awarded to an alternate payee, it must be specifically stated in the court order
Also note that employer funds will not be paid until they become due or payable to the
member. If the award does not include employer funds, that also must be stated in the court
order or forms. If a person refunds their PERS account or the member account is in
loss of membership, no employer funds will be paid.
*An entitlement differs from a benefit. Where employer accounts are concerned, employers
pay a rate to PERS based on payroll. While the money employers pay is used to fund
pensions, it is not earmarked to individual members. So while your employer may pay PERS
money and it will help fund your retirement benefits, it is not specifically yours.
Time of establishment of separate account before retirement
An account established in the alternate payee’s name will earn interest until benefits are
paid. The alternate payee can elect to begin receiving benefits when the member reaches
earliest retirement age regardless of when the member actually retires. However, the
alternate payee cannot elect a retirement date earlier than the first day of the month
following the month in which he or she files an application with PERS (must be on or after
the effective date of the court order). An alternate payee with a separate account cannot
participate in the variable annuity program.
Time of establishment of separate account at retirement
Decrees may allow for the alternate payee’s award to be based upon a percentage or specified
dollar amount (under a ratio method) based on a member’s actual retirement. Under this
method, the alternate payee receives payment at the same time the member retires under
service retirement or disability retirement, as provided for in the court order or forms. A
separate account will not be established in the name of the alternate payee until payout to
the member occurs.
Under this award, the court order or forms must include earliest eligibility language and
that the alternate payee may have a separate account at retirement eligibility or at the
time the benefits become due and payable to the member.
Alternate payee benefit options
Alternate payees with separate accounts will be able to select one of five benefit payout
options independently of the member’s choice. The law does not allow joint and survivor
annuity options for alternate payees. Benefits will be annuitized based on the age of the
alternate payee to determine payment amounts and to establish reserves. An alternate payee’s
separate account benefit will be determined using the Money Match calculation method.
Alternate payees are not allowed to cancel benefits after the first check is processed.
The five alternate payee options available are:
Option One — This is a straight life benefit. Monthly benefits are paid
for the alternate payee’s lifetime. No benefit of any kind is payable to anyone after the
death of the alternate payee.
Refund Annuity — This benefit is paid for the alternate payee’s lifetime.
The existing account balance of the alternate payee at the time the alternate payee begins
receiving benefits will be reduced each month by the amount of the “annuity” portion of
the alternate payee’s monthly benefit. Upon the death of the alternate payee, the
alternate payee’s designated beneficiary will receive a lump-sum payment of any remaining
account balance. Under this option, the alternate payee’s beneficiary may be changed at
any time. Usually, after nine to twelve years, no remaining account balance is available
to pay to a beneficiary.
15-year Certain — This benefit is payable for the alternate payee’s
lifetime. If the alternate payee dies before receiving 180 payments, the remainder of the
180 payments will be paid monthly to the alternate payee’s beneficiary. Once 180 payments
have been made, all beneficiary benefits will stop. Under this option, the alternate
payee’s beneficiary designation may be changed at any time.
Lump-sum Option One — Under this option, the alternate payee’s account
balance can be paid in a lump sum in one payment or in up to five annual installments. The
alternate payee also may receive a monthly pension check for employer funds if employer
funds were awarded in the court order. A lump-sum payment may be rolled over to another
qualified plan or an individual retirement account or annuity.
Total Lump Sum — A one-time payment of member dollars is awarded to the
alternate payee, plus a matching amount from the employer. There is no monthly benefit
under this option and no cost-of-living increases.