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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > Investing > Investing 101 > Investment Education Investment Education

1) There are two separate benefits with PERF and TRF

Defined Benefit (Pension)

The pension is the first piece of the PERF Hybrid plan and TRF benefits. This benefit is not available to PERF ASA Only plan members. It is funded by your employer. These funds are invested and pay for the lifetime monthly benefit you will receive once you're eligible for retirement benefits. This benefit comes at no direct cost to you.

These contributions belong to your employer until you become eligible for a retirement benefit. If you leave PERF or TRF-covered service before you are eligible for a pension benefit, these funds will remain in the employer's account.

Annuity Savings Account (ASA)

Your ASA is the second piece of the PERF Hybrid plan and TRF benefits, and the only benefit in the PERF ASA Only plan. It is separate from the defined benefit. The ASA is yours from day one and, unlike the pension benefit, you can control how the funds are invested.

2) Self-Directed ASA Investment Options

A required 3 percent of your wages must be contributed to fund your ASA. In both the PERF Hybrid and TRF plans, the amount can be paid by your employer, you or shared by both.

If you chose the PERF ASA Only plan, the required 3 percent contribution is paid by the employer.

You may distribute your ASA contributions among these investment options.

  • Guaranteed Fund (not available for PERF ASA Only plan members) - Low risk level
  • Stable Value Fund (not available for PERF Hybrid plan or TRF members) - Low risk level
  • Money Market Fund - Low risk level
  • Fixed Income Fund - Low to moderate risk level
  • Inflation Linked Fixed Income Fund - Low to moderate risk level
  • Target Date Funds - A range of low to high risk profile levels
  • Large Cap Equity Index Fund - Moderate to high risk level
  • Small/Mid Cap Equity Fund - High risk level
  • International Equity Fund - High risk level

 

3) Risk tolerance

An investment's potential for loss at any given point in time is known as its risk. Risk tolerance is how comfortable you are with the account value rising and falling with the markets. If you cannot afford to lose money, even in the short term, you should consider less risky options (i.e. a stable value investment fund). If you are more concerned with growing your account value over time and keeping pace with inflation, you may want to invest in moderate to high risk options (i.e. stock and bond funds). Small company stocks tend to fluctuate more than large company stocks but have historically performed the best, and bonds vary less than stocks because of their steady stream of income. Over the long term, stock prices generally move up and provide higher returns than bonds or more stable investments.

Take the Risk tolerance quiz.

Risk levels

Funds are considered low risk when they have relatively small changes in the value of investments. This offers potential slow, stable growth.

Moderate risk funds have moderate changes in the value of investments. This offers potential long-term growth.

Funds classified as high risk have significant changes in the value of investments. This offers potential maximum, long-term growth.

4) How should I invest my ASA?

It is important to consider three things:

  1. Risk tolerance, or how comfortable you are with the account value rising and falling with the markets.
  2. Age, which may help determine risk tolerance. Younger members may be able to afford to take on more market risk since stock losses can be made up over time. Members closer to retirement may want to allocate more in stable value investments that provide regular income.
  3. Portfolio diversification –  the concept of spreading contributions among different types of investments to reduce overall risk.

Please keep in mind that INPRS is unable to provide investment advice and recommends contacting a trusted financial advisor or planner.

 

5) Determining Your ASA Allocation

This section provides basic investment concepts to help you decide how to invest your ASA.

Investing 101 Fact Sheets

Investment Fund Fact Sheets

You may have additional questions about how you should allocate your investments after reading this information. INPRS is unable to provide investment advice and recommends contacting a trusted financial advisor or planner.

6) Making Investment Elections

Whether you are a member of the Public Employees' Retirement Fund (PERF) or Teachers' Retirement Fund (TRF), you can access your account online:

Both sites provide account management tools and resources.

Watch this tutorial to learn how to use the site and prepare for retirement. Or, get started quickly by using the ASA asset allocation how-to fact sheet here.

7) What to consider/plan for retirement

Whether retirement is years away or right around the corner, there is a lot to consider before retiring. Here is a list of things to think about and help you to prepare for this important chapter of your life.

  • Know all your benefits, including Social Security, at http://www.ssa.gov/ or call your local Social Security office.
  • What does it cost you right now to live each month? This may grow significantly at retirement. Will your income from all sources cover your projected expenses?
  • Will you have new or recurring expenses, such as car payments, medical bills and home repairs. You might want to take care of some of these before you retire.
  • Do you have other investments? When will the funds be available? What are your withdrawal options and tax implications?
  • How much will you be required to pay in income taxes?
  • Choose a retirement date that fits your goals. Be sure to consider how much time there will be from your last paycheck to your first benefit payment.

 

8) Additional retirement planning resources

INPRS

EBRI Choose to Save® Program*

*Developed by the Employee Benefit Research Institute (EBRI) and its American Savings Education Council (ASEC) program, Choose to Save® utilizes the power of the media to promote the idea that saving today is vital to a secure financial future. - http://www.choosetosave.org/about/

Other resources