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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > My Fund > Public Employees > You have two separate benefits with PERF You have two separate benefits with PERF

Your PERF retirement benefits are made up of two separate and distinct pieces - the Defined Benefit Pension and your Annuity Savings Account. Both pieces are funded by separate contributions.

Defined Benefit Pension

Your employer funds your future pension benefits by contributing a specified percentage of your wages to PERF. These funds are invested and go to pay for the lifetime monthly benefit you will receive upon becoming eligible for PERF retirement benefits. Your pension benefit comes at no direct cost to you as a member of the Fund. It amounts to additional value for the work you do.

It is important to understand that these contributions belong to your employer until you become eligible to receive them in the form of a retirement benefit. If you do not become eligible to receive a future pension benefit and choose to leave PERF-covered service, these funds will remain in the employer's account to fund future benefit obligations to others.

Each year, PERF's actuary calculates the appropriate percentage each of our participating employers must contribute on behalf of their employees - our members.

Annuity Savings Account

Your Annuity Savings Account is the second piece of the PERF retirement benefits structure . It is funded by a separate contribution from the Defined Benefit Pension.

Mandatory Contributions

State law requires that 3% of your gross wages (regular and overtime pay) be contributed to PERF to fund your Annuity Savings Account. As employers, local units of government, public schools, and universities are given the option of paying their employees' 3% contributions as part of a wage adjustment; however, not all employers can afford to do so. Each employer has a governing body that makes decisions related to its participation in PERF, including whether or not the employer will pay the 3% contributions on behalf of its employees. Indiana law requires the state of Indiana to pay the 3% contributions for state employees.

Regardless of whether you make the 3% contribution or your employer does on your behalf, those contributions are considered member contributions and are sent to PERF for deposit in your individual Annuity Savings Account. These contributions and accumulated interest credits are refundable to you should you terminate employment prior to becoming eligible for the Defined Benefit Pension. While you are actively employed in a position covered by the Fund, you are not permitted to withdraw funds from your Annuity Savings Account for any reason.

Post-Tax Voluntary Contributions

In addition to the 3% mandatory contribution, you may contribute up to an additional 10% of your compensation out of your after tax wages if your employer participates in the voluntary contributions program.

Like the mandatory 3% contributions, interest and earnings on additional voluntary contributions held in your PERF ASA account will be tax deferred until you either take a distribution of your account at retirement or take a refund. Again, these voluntary contributions will be withheld from your paycheck on a post-tax basis.

Your employer administers this program through the payroll process. If you are interested in participating, please contact your payroll supervisor for further information.

Pre-tax Voluntary Contributions

The Internal Revenue Service has given its approval for the Public Employees' Retirement Fund to begin accepting voluntary contributions from active members on a pre-tax basis subject to certain conditions:

  • Your employer must have elected to participate in this program;
  • You must choose to make a voluntary pre-tax contribution of not more than 10% of your gross wages within 2 years after August 31st after you have reached 5 years of PERF-covered service; and
  • The percentage of each pay period's wages which you choose to contribute CANNOT be changed as long as you work for the same employer in any PERF-covered position. If you leave employment and return to the same employer, your pre-tax contribution will be reinstated. If you work for a different employer, and have not taken an ASA refund, you will be able to make a new pre-tax contribution decision.

Members are urged to consider all the conditions and consequences of pre-tax contributions carefully because of the restrictions about later changes. Consulting with an expert on tax planning is advised. Further details on this option are available here.

This option is open only to active members.