PERS Update
While we have been primarily focusing on the impacts of COVID-19 in recent newsletters, we wanted to reach out with some updates, reminders and thoughts about PERS.
PERS is beginning to mail out 2019 statements this week. These are important to keep track of, as they only send reports annually. As you receive these, please check on three items: your birthdate, years of service and the IAP fund you are invested in. Your birthdate is used to determine the default investment for your IAP. Your years of service are used to calculate your pension and if they are incorrect, we can help you work with PERS to get them corrected. The IAP fund should be a target year near the year of your 65th birthday.
The PERS offices are closed due to the public due to the COVID-19 virus, but staff are available by phone and email. While we don’t know the long-term impact yet of the virus on the financial markets, or the speed at which the recovery will occur, it is very likely that we will start to hear and read about the possibility of changes to PERS. When there have been significant market declines in the past, the unfunded liability has become a focus in the papers and in the legislature. If any bills are discussed during the next legislative session, we will keep you as updated as best we can.
As a reminder there are two components of Senate Bill 1049 (passed in 2019) that will go into effect on July 1st. The first item is that you will be able to change the IAP fund you hold. As mentioned, before you are currently in a target date fund based on your age 65, but if you would prefer to be more or less aggressive you will be able to make that adjustment. We would be happy to discuss what may fit your situation best. Secondly, the contribution amount to the IAP account will be reduced. Tier 1 & 2 members’ contribution will be reduced by 2.5% to 3.5%, and OPSRP members contributions will be reduced by .75% to 5.25%. PERS will allow you to ‘make up’ the contribution amount, but that will be with after tax dollars. You may want to consider increasing or starting contributions to a retirement plan if you would like to receive a tax benefit like you currently get for your IAP contributions. Again, we are happy to help you decide what might best for your situation.
If you are considering retirement this year, we encourage you to request a written estimate from PERS. This estimate will provide you with some important information. First, it will have an accurate benefit amount, more so than estimates made on the website. Secondly, for Tier 1 & 2 you will see the impact and cost of the buyback (OPSRP members are not eligible for the buyback). You will also receive a form that is necessary to complete the buyback. As always, when you are ready, we are here to discuss the various benefit options and will help you complete all the forms for retirement.
We thank you for your continued support, and if we can help in any way or if you have questions on PERS or other topics please let us know.