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How can I increase my retirement account?
There are, essentially, two ways you can increase your retirement account: by making additional voluntary contributions to your Annuity Savings Account, and purchasing additional service credit. You can learn more about purchasing additional service credit by clicking on this link. This section is devoted to the contributions to your Annuity Savings Account.
Your Annuity Savings Account is completely separate from the Defined Benefit Pension, and has a separate set of payment options. Unlike the pension benefit, you are immediately vested in your Annuity Savings Account and may elect to withdraw your contributions and subsequent interest/earnings at the time you leave PERF-covered employment. However, remember that if you are vested for the Defined Benefit Pension, there are serious consequences to withdrawing your Annuity Savings Account prior to retirement.
The Annuity Savings Account is funded by a separate contribution from the pension, as well. There are two types of contributions for the Annuity Savings Account - mandatory and voluntary contributions – as described below. Contributions are made through the payroll process and are submitted to PERF by the employer.
Mandatory Contributions to Annuity Savings Account
For members of the PERF Hybrid plan, state law requires that 3 percent of your gross wages (regular and overtime pay) be contributed to PERF to fund your Annuity Savings Account. Local units of government, schools, and universities are given the option of paying their employees' 3 percent contributions as part of a wage adjustment. If local government units, schools, and universities wish to pay the 3 percent contributions for their employees, the employer’s governing body must make that decision. Indiana law requires the state of Indiana to pay the 3 percent contributions for state employees.
Regardless of whether you make the 3 percent contributions or your employer does on your behalf, those contributions are considered member contributions and are sent to PERF for deposit in your Annuity Savings Account. These contributions and accumulated interest credits are refundable to you should you terminate employment prior to becoming eligible for the Defined Benefit Pension. You are not permitted to withdraw funds from your Annuity Savings Account for any reason other than a distribution when you separate from PERF-covered employment or as a distribution or rollover at retirement.
Voluntary Contributions to Annuity Savings Account
Members of PERF may contribute up to an additional 10 percent of their compensation, on top of the mandatory 3 percent contribution, into their Annuity Savings Account. Like the mandatory 3 percent contributions, interest and earnings on additional voluntary contributions will be tax-deferred until you take a distribution of your account at retirement or separation from PERF-covered employment. Your employer administers this program through the payroll process. If you are interested in participating, please contact your payroll supervisor for further information.