Starting her teaching career with Indianapolis Public Schools in 1986, retired teacher Kristin Compton dedicated her talents to students in grades 1-4. While second grade was reportedly her favorite, Kristin also wore many hats in science education. She served as the lead teacher at Cold Spring’s Learning Garden and the Foss Science Curriculum. Kristin also pursued additional opportunities to advocate for science education by presenting on behalf of the Hoosier Association of Science Teachers and leading STEM summer camps at Marian University.
When it came time to retire, Kristin was ready to add more flexibility to her schedule, even though she cherished her time in the classroom.
“I wanted to do whatever I wanted to do when I wanted to do it! I was also looking forward to spending more time with my parents and my in-laws; [three of the four of them are in their mid-90s.] I also wanted to spend more time outdoors!” Kristin says.
When she neared age 55, Kristin knew that she’d soon be eligible for the Rule of 85 option for retirement. Members of the PERF and TRF Hybrid Plans can apply for full retirement once they are at least 55 and their age and years of service combined equal 85. Kristin attended an INPRS workshop to prepare for her retirement, a move she wholeheartedly recommends to prospective retirees.
In 2018, Kristin reached her retirement dream and did so with 32 years of service. Since then, her original retirement plan is panning out well, combining the recreational activities she loves like kayaking and visiting national parks, along with taking on part and full-time roles that suit her interests.
“I worked part-time at a vineyard, a golf course, and a lawn and garden nursery. I also stepped back into the classroom as a substitute teacher, and currently, I'm a Kindergarten Assistant at St. Simon the Apostle,” she shares.
One of the great things about retiring with an INPRS benefit is that you don’t have to be retired from all work. Unlike Social Security benefits, INPRS retirees can take on full and part-time roles without impacting their benefit payment.
Retirees are encouraged to begin receiving their pension benefits as soon as they are age and service eligible and will be no longer active in a PERF or TRF position, especially if they’ve left public service and achieved eligibility while working elsewhere. INPRS can only provide retroactive benefits for six months prior to a member’s retirement date. So, if a member didn't apply for their benefits as soon as they were eligible, they likely have lost out on earned benefits.
Conversely, retirees are not required to decide what to do with their defined contribution account (DC account) upon retirement. Retirees can keep their money with INPRS, initiate a rollover to another qualified plan, withdraw the balance, purchase an annuity, or enroll in systematic withdrawals. However, retirees who have not tapped into their DC account before age 72 may be subject to required minimum distributions under IRS rules.
Today, Kristin is living her retirement dream, has traveled to many national parks with her family, and spends more time with her parents and in-laws. Her favorite thing about retirement thus far has been being outside as much as possible, likely just barely beating out the direct deposit of her pension benefit every month.
INPRS would love to hear your retiree story. Submit yours by emailing us at Info@inprs.in.gov and include your work history, what you’ve been up to in retirement, and a few photos for a chance to be featured in an upcoming newsletter.
Learn More About 13th Checks and COLAs
Managing income in retirement can be a challenge, especially as inflation impacts your budget for essential expenses. INPRS knows that the lifetime guaranteed pension benefit you receive each month provides some comfort, but its consistent amount does little to keep up with inflation. For many years, retirees receiving defined benefit payments from the Public Employees Retirement Fund, the Teachers’ Retirement Fund, the State Excise, Gaming, and Conservation Officer Fund, and Legislator’s Defined Benefit Plan have been granted a 13th check based on legislation passed by the Indiana General Assembly. A cost-of-living adjustment (COLA) had not been approved since 2009. The one-time allocation of a 13th check or lifetime benefit increase through a COLA had been funded by each fund’s assets, using contributions from employers which included assumptions for future COLAs. This system worked for many years, but the Indiana General Assembly wanted more accountability in the funding and usage of these post-retirement benefits.
Each fund’s assets are used to pay earned benefits specifically for it’s members. This fund contains the balance of employer contributions and investment returns that allow INPRS to fulfill its promise to pay earned benefits. Previously, an assumed COLA cost was built into the PERF Hybrid, TRF Hybrid, EG&C, and LE DB plan rates paid by the employer. This practice of assuming a future increase presented a risk that post-retirement benefit increase amounts would be larger than assumed.
After years of conversation on the matter, in 2017 the Interim Study Committee on Pension Management Oversight of the Indiana General Assembly began discussions with INPRS on how to reduce this risk while providing a reliable, safe method of administering COLAs and 13th checks that limited the risk to each fund’s ability to pay the basic promised benefits under each fund. After many discussions, the idea of a separate account dedicated specifically to the collection of funds to support the administration of COLAs and 13th check was proposed as new legislation.
In the 2018 legislative session, four Supplemental Reserve Accounts (SRAs) were established to administer post-retirement benefit increases and one-time distributions for PERF Hybrid, TRF Hybrid, EG&C, and LE DB plans. Funded by contributions from the Hoosier Lottery and supplemental contributions paid by employers, the SRAs are savings accounts dedicated to protecting the purchasing power of INPRS retirees’ monthly benefits. INPRS determines these supplemental contributions by balancing out each fund’s expected cost for their post-retirement increases and statutory limits on the amount that can be collected. Each year, the Hoosier Lottery makes a contribution to this account. In fiscal year 2021, employer contributions to the SRAs totaled approximately $28.5 million and the Indiana General Assembly provided a one-time contribution of $50 million from the state’s General Fund.
Rules were developed to help protect the balance of the SRAs and the future benefit increases for INPRS retirees. Established in state statute, the balance of the SRA must be able to fund the entirety of any new benefit increase or one-time payment. If there are any shortfalls from prior benefit increases, those shortfalls must be filled in before a new one can be granted.
During legislative sessions where the state budget is set, the Indiana General Assembly considers the SRA’s ability to support a COLA or 13th check. If the SRA’s balance is insufficient to supply an increase, none is granted. If the balance of the SRA can pre-fund the request, the change goes through the legislative process and, if approved, is administered by INPRS in accordance with the law. Any post-retirement benefit change or adjustment must be the same form of benefit for each fund.
COLAs and 13th checks offer different benefits for retirees. COLAs are a guaranteed, lifetime benefit increase that can be built upon with future COLAs. COLAs also increase survivor benefits that may be payable after a retiree dies. A 13th check is a one-time additional benefit payment whose amount is determined by years of service. Retirees with a greater number of years of service could receive a larger payment from the 13th check than that of a COLA. Conversely, a member with a larger monthly benefit could receive a COLA that, over time, exceeds what they would have otherwise received from a 13th check. In any case, a COLA is a permanent adjustment to the retiree’s monthly benefit amount while a 13th check is a one-time bonus with no guarantee of issuance in the future.
It's important to acknowledge that each retiree’s ideal scenario is unique. Current age, years of service, and benefit amount lead to situations of varying benefits. While the establishment of the SRAs and the guidelines which drive their use cannot fulfill every INPRS retiree’s preferences, it does protect the retirees’ best interests in the long term.
So, what can INPRS retirees do to influence the decisions made regarding their benefits? While the funding mechanism and rules regarding the SRAs are clear, the conversation about how the money is used, either by issuing a one-time 13th check or providing a permanent monthly benefit through a COLA, begins with the Indiana General Assembly.
INPRS exists to serve the dynamic needs of its members, retirees, and employers. As fiduciaries, it is our duty to prudently manage the member assets entrusted to our care so we can deliver promised benefits to Indiana’s hardworking public servants. When granted approval by the Indiana General Assembly and with the necessary funding in the SRAs, we will efficiently distribute COLAs and 13th checks to the fullest extent of the law.
How and when to change beneficiaries
On your PERF account, you may name either single or multiple beneficiaries to receive your DC benefits if you die while in active service. You may allocate benefit shares in percentage increments if you designate more than one beneficiary. In lieu of a named individual, you may designate a trust, estate, or other legal entity, such as a charity, as your beneficiary.
After you have become a member, you may change your beneficiary or update their address by using the following options:
- Log into myINPRSretirement.org. You will be given instructions to register if you have not already done so. If you have log in access, you may change your beneficiary, or their address, at any time before retirement.
- Request a change of beneficiary in writing. Print out this form if you're a PERF Hybrid plan member or this form if you are a PERF My Choice plan member. You may also request this form from INPRS. Fill it out as instructed and return it to us.
- Ask your employer to help you make these changes, either online or by mail.
- You may not make any beneficiary changes over the phone.
Failure to make changes could result in payment being made to a previously designated beneficiary who is no longer your choice to receive your DC balance. PERF is required by law to pay any benefits owed to the beneficiary on record at PERF at the time of your death. Properly completed beneficiary charges received after the date of death may be accepted provided there has not already been a death benefit distribution.
Legislative changes coming July 1, 2022
Be sure to keep an eye out for upcoming legislative changes coming July 1, 2022, that may affect you. Stay tuned to see these changes posted under our newsletters section here! https://www.in.gov/inprs/publications/newsletters/
Ready to do something with your INPRS Defined Contribution account? Here are your options:
If you still have an active INPRS defined contribution (DC) account, you have the option to keep it with INPRS, roll it over, withdraw it, or annuitize all or a portion of your balance.
To initiate a request for a distribution, you can log in to your INPRS online account. You may also call (844) GO-INPRS to begin a distribution request with a member advocate.
For more information and to verify your eligibility to withdraw your DC, view pages 37 & 76 of the Member Handbook.
Voya Financial: How Americans are coping with prolonged uncertainty
Did you think the pandemic would last this long? We are all different and each find ways of coping with long-term stress in both healthy and unhealthy ways.
According to Stress in America™ One Year Later, A New Wave of Pandemic Health Concerns a report by the American Psychological Association ¹, the uncertainty of the panademic has taken its toll. It’s about how this past year has seriously affected people’s mental and physical health with changes to sleep, alcohol use, weight, mental health issues, worry about the economy and personal finance. While thinking about the changes can be overwhelming, there are things you can do to improve your world.
Read more here.
Source: Voya Financial