Rules for state employees terminated due to privatization

What are the rules for state employees who are privatized?

Indiana Code 5-10.3-6-8.9 

For members who are state employees and whose positions are privatized by the state of Indiana (that is, determined by the governor to be 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:

  1. 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;
  2. 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.

Frequently Asked Questions 

Q: When did this law go into effect?
A: This law went into effect on Dec. 31, 2005.

Q: Does this law allow the state to purchase service credit for members whose positions are privatized?
A: Yes, this law allows the state to purchase up to two years of service credit for members if they are within two years of being eligible for a reduced or a full pension benefit as of the date of the governor's notice.

Q: Does this law prohibit a member from purchasing additional service credit?
A: No. A member may purchase service credit while still employed in his or her PERF-covered position according to the guidelines provided in Indiana Code 5-10.2-3-1.2.

Q: Members having more than two years of creditable years of service are vested in their PERF benefit after privatization. If, prior to being age eligible for a pension benefit, a member takes a distribution of his or her Annuity Savings Account, will he or she still be able to draw a pension benefit at a later date?
A:  A member who is vested and has separated from employment in a covered position for at least 30 days may withdraw his or her Annuity Savings Account (ASA) and retain his or her pension benefit. See Indiana Code 5-10.2-3-6.5 for certain restrictions.