PRIVATIZATION - New Rules for State of Indiana Positions
What are the new rules for State of Indiana positions that are privatized?
Senate Bill 340
Summary of Bill: Establishes a process to withdraw state employees from the Public Employees’ Retirement Fund. For members privatized or localized by the State of Indiana (that is, terminated as a result of a lease or other transfer of state property to a nongovernmental entity or a contractual arrangement with a nongovernmental entity to perform certain state functions), provides:
- immediate vesting if the member has worked at least 24 months in a PERF-covered position; retirement benefit is calculated on actual years of creditable service;
- that if the member is within 24 months of normal or early retirement as of the date of the Governor’s notice, the state will purchase the credit needed to reach normal or early retirement.
Effective Date: December 31, 2005 (retroactive).
Questions and Answers
Question: When does this law go into effect?
Answer: This law went into effect on December 31, 2005 (retroactive).
Question: What happens to members who have already received a refund, and would have been eligible for a benefit retroactively?
Answer: Members should call the PERF Call Center at 1-888-526-1687 and speak to a Customer Service Representative for detailed information.
Question: Does this law allow the state to purchase service credit for the member?
Answer: Yes, this law allows the state to purchase up to 2 years of service credit for the member if the member is within two years of being eligible for a reduced or a full pension benefit as of the date of the Governor's notice.
Question: Does this law prohibit a member from purchasing additional service credit?
Answer: No. A member may purchase service credit while still employed in their PERF-covered position according to the guidelines provided in Indiana Code 5-10.2-3-1.2.
Question: How do I buy service?
Answer: PERF has made special arrangements with your Human Resources department to expedite service purchases. Please contact your HR department for assistance.
Question: Is PERF going to pro-actively communicate with employees of the agency affected by the privatization?
Answer: PERF is providing information through the Human Resources departments of the affected agencies.
Question: How is PERF going to communicate with members who have applied for a refund, but the refund has yet to be processed?
Answer: PERF is going to generate a letter to each member informing him/her of the law and give them the option to move forward on the refund, or retract their application. The letter will instruct the member that he/she has 14 days to respond, if no response is received, PERF will process the refund.
Question: A member having more than two years of creditable years of service is vested in their PERF benefit after the privatization. However, prior to being age eligible for a pension benefit, the member takes a refund of their Annuity Savings Account, will that member still be able to draw a pension benefit at a later date?
Answer: No. If a member takes a refund of their Annuity Savings Account, the member forfeits their right to a pension benefit. The PERF benefit has two distinct parts: an Annuity Savings Account and a Defined Pension Benefit (a lifetime monthly check). Taking the Annuity Savings Account prior to retirement or early retirement eligibility will cause a member to lose their monthly retirement check. If a member is vested with less than 15 years of service they must be age 65 in order to be eligible to receive their pension benefit. For a better understanding of PERF benefits, please refer to the Leaving PERF- Covered Employment Fact Sheet which has been provided.
Note: When members leave PERF-covered employment, they remain members of PERF. Members should access their PERF benefit when it is in their best interest to do so.
