Retiring Presented by Kevin Wenndt Senior Retirement Benefits - PowerPoint PPT Presentation

For Members Retiring Presented by Kevin Wenndt Senior Retirement Benefits Officer

IPERS is… • The largest public retirement system in Iowa – 2,100 employers – public schools, cities, counties, state government, state universities, State Board of Regents – Over 346,000 total members – Over 108,000 retirees • 61- Average age pension starts • Average of 22 yrs of service • $16,000 annual pension amount

Who belongs to IPERS? Membership Status Active Members Grouped by Major Employers

How does it work? Lifetime Retirement Contributions from Benefits, Active Members Disability Benefits, and Employers are Death Benefits and paid in. Refunds are The IPERS Trust Fund paid out. The IPERS Trust Fund must be used for the exclusive benefit of members and their beneficiaries.

Contributions Can be adjusted +/- 1% each year based on the Actuarial Evaluation

Interest 2015 Interest = 1.99% Interest Rate 2014 – 1.65% 2011 – 2.03% 2013 – 1.28% 2010 – 2.64% 2012 - 1.34% 2009 – 3.61% Established each Jan 1 st based on current $1000 CD rate plus 1%

Account Value • IPERS Investment Amount = Contributions + Interest – Contributions are based on gross wages

Vesting • Entitles the member to: • Monthly retirement or disability benefit •A portion of employer’s investment if refund is taken • Required for a service purchase 8

What Is “Vesting”? Vested status is obtained after: • 28 quarters (7 years) of reported wages, or • When wages are reported in the same calendar year age 65 or older is attained 9

Active Member Death Benefit • Sole beneficiary has a choice – Monthly benefit – Actuarial Lump Sum Death Benefit • No beneficiary, multiple beneficiaries or estates can only receive the – Actuarial Lump Sum Death Benefit Members Age 61 Investment amount = $33,473.41 Avg. Income $36,652.81 Actuarial Present Value = $132,866 Yrs. of Service 21.75 Lifetime Monthly Benefit = $846 Sole Beneficiary Age Paid over 25 yrs = $253,800 36 yrs. old (this is a child) The child is now the same age as the parent was at death – 61

How Your Benefit is Determined The IPERS Formula – Your Age – Your Years of Service – Your Highest Five Years of Salary (average)

The IPERS Formula Multiplier Salary X (Based on Your Years of Service) (Your Highest 5-Year Average ) • Each year worked earns 2% of the 60% payable for the first 30 years. • 1% for a maximum total of 65% payable for each additional year after 30. • Early retirement reduction applied if retiring before normal retirement .

Early Retirement Age Reduction Reduce 3% a year for portion of service through 06/30/12 • From nearest normal retirement eligibility (rule of 88; rule of 62/20; age 65) As of July 1, 2012 Reduce 6% a year thereafter • From age 65 13

Normal Age • Age 65 • Age 62 with 20 or more years of service • Rule of 88 (years of service + age) • Receiving social security disability or railroad disability – Must be vested if applying for disability benefits under the age of 55

Estimated payout • Retirement at age 55 with 33 years of service, $35,000 average wage. (rule of 88) • Lifetime monthly benefit of $1,837.50. • Amount paid over life expectancy of 25 years equals $551,250. • Most members investment is recovered within 2-3 years after retirement.

Plan Early - 3 to 5 years out • Request estimates from IPERS before deciding on a retirement date. – Call or Go online to get estimates • IPERS Website: www.ipers.org • Phone: 1-800-622-3849 • Working a little longer could increase benefits significantly. • May be eligible to retire earlier.

facts to remember! • Working any time in a month makes you ineligible for benefits that month • You can get a paycheck in the same month you start IPERS payments

Maximizing Years of Service • Free credit – Leaves of absence • Granted prior to July 1998 • Requires verification from employer – Active military duty • Entered military as an IPERS-covered employee and returned to IPERS employment within one year of discharge • Submission of DD214 form required

Service Purchases Beginning 01/01/16: Purchasing will take place only during the retirement process. Increased accuracy of cost • Reduced risk of under- or overpaying • Request an official cost quote when you apply for retirement benefits. Application for Service Purchase • 19

Service Purchase Options • Refunded IPERS service • IPERS employment not previously covered • Other public system(s) • Active duty military time not eligible for free credit • Leave of Absence • Non-Qualified Service (Air Time) • IPERS Buy-up Credit Conversion • Buy back Credit

How Much Will It Cost? • Submit a Service Purchase Application, available at the IPERS website, www.ipers.org • Actuary calculates service purchase cost. • IPERS will mail cost letter giving you the cost per quarter and the entire purchase cost. • Cost quotes are valid for six months. Remember, completing the Application for Service Purchase does not mean you are obligated to purchase service.

Monthly Benefits: How to Begin • Must terminate all IPERS employment unless age 70 • Must be age 55 or older – Unless vested and eligible for IPERS or Social Security disability benefits – Sheriffs and deputies can retire earlier • Must complete an application for monthly benefits

First Month of Entitlement – At age 70 – termination not required – First month after termination of employment • if at least age 55 or • retiring under disability provision – Must have properly complete application on file – Benefits paid last business day of month

Monthly Benefit Options • Six options – Lifetime monthly benefit to member – Different death benefit provisions • Option choice cannot be changed once benefits are paid.

Option One • Guarantees a lump sum payment at death. • Death benefit is designated in thousand dollar increments from the min. of $1000 to the highest thousandth of investment amount. • Multiple beneficiaries can be designated. • Beneficiary designations can be changed at any time.

Option Two Option Three • Lump sum if any • Highest monthly balance of payment with no investment death benefit remains

Option Five • Death benefit only if member dies prior to receiving 120 payments. – Sole beneficiary to receive remainder on monthly basis. – Multiple beneficiaries eligible for Commuted Lump Sum payment only or the present value of any future benefits payments remaining. • Beneficiary designation can be changed at any time.

Definitions • Beneficiary – Can be one or more than one person – Can be changed at any point in retirement – Receives a lump sum • Contingent annuitant (CA) – Can only be one person – That person can NEVER be changed – Receives a monthly benefit

Option Four & Six • Contingent annuitant will receive a lifetime monthly benefit at death of member – Will receive 100%, 75%, 50% or 25% of member’s benefit payment • Percentage designated by member at retirement

Option Four & Six • Option 4 - If contingent annuitant precedes member in death, the monthly payment does not change. • Option 6 - If contingent annuitant dies first, member’s monthly payment will increase to option 2 benefit amount. If the member dies before recovering their investment, the balance will be paid to a beneficiary.

Taxes • Subject to federal and state income tax. – post taxed contributions are recovered over member’s life expectancy – can be withheld from monthly benefit payment • 1099R mailed each January. • For detailed tax information, contact the IRS for publication 575 or consult a tax advisor

Bona Fide Retirement • No employment with an IPERS covered employer for 1 calendar month – Cannot have any agreement oral or written to return to Any IPERS employer. • No IPERS covered employment for an additional 3 months or for a total of 4 calendar months – Get your 4 th IPERS check before returning

Reemployment Guidelines • Applies to IPERS covered employment only – $30,000 earnings limit under age 65 • Your Benefits are reduced 50 cents for each dollar earned over the limit – No limit after age 65 • Benefits maybe recomputed upon termination – Possible monthly benefit increase, or – Lump sum payment of the combined member/employer investment • Know the Social Security earnings limits

IPERS Website

IPERS Website By clicking on each event you get a page with the details of each event.

IPERS Member Self-Serve

New Member Self Service Section

IPERS Contact Info. General Inquiries Address: 515-281-0020 or 1-800-622-3849 7401 Register Drive 7:30 a.m. – 5 p.m. CT, Monday – Friday Des Moines, IA 50321 Fax: 515-281-0053

Thank You! Presented by Kevin Wenndt Senior Retirement Benefits Officer E-mail: kevin.wenndt@ipers.org Phone: (515) 281-0036 Toll Free 1-800-622-3849 Website: www.ipers.org