1) There are two separate benefits with PERF and TRF
Defined Benefit (Pension)
The pension is the first piece of the PERF and TRF Hybrid plan benefits. This benefit is not available to My Choice: Retirement Savings 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.
Defined Contribution (DC) Account
Your DC is the second piece of the PERF Hybrid plan and TRF benefits, and the only benefit in the My Choice: Retirement Savings Plan. It is separate from the defined benefit. The DC is yours from day one and, unlike the pension benefit, you can control how the funds are invested.
Watch this video for more information:
2) Self-Directed DC Investment Options
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.
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.
Check out this video about more investing terms you should know.
4) How should I invest my DC?
It is important to consider three things:
- Risk tolerance, or how comfortable you are with the account value rising and falling with the markets.
- 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.
- 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.
Learn about the difference between stocks, bonds and commodities in this video:
5) Determining Your DC Allocation
Whether you are a member of the Public Employees' Retirement Fund (PERF) or Teachers' Retirement Fund (TRF), you can access your account online here. myINPRSretirement.org provides account management tools and educational resources for members, like this investing quiz.
Learn the basics about your DC account investment options with these easy-to-read fact sheets:
Investing 101 Fact Sheets
- What Are My Options for Directing My Defined Contribution Account?
- Powerful Options to Create a Well-Rounded Retirement
- What are Target Date Funds and which Target Date Funds are Offered at INPRS?
- What's the Expense Ratio?
Investment Fund Fact Sheets
- Fixed Income Fund
- Inflation Linked Fixed Income Fund
- International Equity Fund
- Large Cap Equity Index Fund
- Money Market Fund (For TRF this option is only available with RSAs)
- Small/Mid Cap Equity Fund
- Target Date Funds*
- Stable Value Fund
*Our Target Date Funds are getting a refresh! Watch details about the changes to these investment fund options in this video.
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.
7) What to consider/plan for retirement
Whether retirement is years away or right around the corner, there's a lot to consider before retiring. This video includes information to help you make a plan for your retirement to prepare for this important chapter of your life.
8) Additional retirement planning resources
Fund at a Glance Fact Sheets
- PERF Hybrid Plan at a Glance
- PERF My Choice: Retirement Savings Plan at a Glance (for State of Indiana employees)
- My Choice: Retirement Savings Plan at a Glance (for political subdivision employees)
- TRF Hybrid Plan at a Glance
- TRF My Choice Plan at a Glance
EBRI Choose to Save® Program*
- Ballpark E$timate® (How much should you save for retirement?)
- Maximizing Your Company Savings Plan Brochure
- Online financial calculators (for everything from auto insurance to retiree healthcare)
- Retirement Personality Profiler
*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/