11-06-2023 Council Work Session Packet

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can receive a benefit is 55, but this will result in a lower monthly benefit because you will be receiving a pension from PERA over a longer period of time. Service— The longer you are employed in public service, the greater the benefit. After you are enrolled in PERA, you earn one service credit for each month in which you worked and were compensated. Once you have earned enough service credits to be vested (60 credits for members hired after June 30, 2010) you qualify for future lifetime benefits. High-five average salary—This is the 60 consecutive months during which your earnings are the greatest. Typically, this is the five years just prior to retirement. etirement benefits For members just entering public service in the Coordinated Plan, the formula looks like this: (1.7% x Years of Service) x High-5 Salary = Annual Retirement Benefit As an example, 30 years of service would result in a benefit of 51 percent of your high-five salary at full retirement age. MY PERA can provide you with esti- mates of your future benefits at any retirement age. Disability benefits You may be eligible for benefits from PERA if you are unable to work, not just at your job, but any job because of a physical or mental disability. That is, Welcome! Whether you are a new or return- ing member, we are pleased to have you participate in the Public Employees Retirement Association (PERA). As a Coordinated Plan member of PERA, you are part of Minnesota's largest public pension plan. Today the Association serves over 160,000 public employees from approximately 2,100 cities, coun- ties and school districts across the state. We cur- rently pay benefits to over 90,000 retirees, disabled members and survivors of deceased members. ERA is a traditional pension plan Recognizing the need for a retirement program for employees of county and local governments, the Minnesota Legislature created PERA in 1931, four years prior to the creation of Social Security. Unlike most retirement plans today, traditional pension plans like PERA—also known as defined benefit plans—provide you with the security of a lifetime benefit. PERA is a tax qualified plan under Section 401(a) of the Internal Revenue Code. As a result, your federal and state taxes on PERA contributions are deferred to the time of withdrawal. Because PERA is a tax-qualified plan, there may be limits on the amount you can contribute tax deferred to an IRA. You should contact the IRS or a qualified tax advi- sor to find out what the limits are for you. ligibility Your employer enrolled you in PERA after determining you qualified for membership. Membership is required for employees who are expected to earn a minimum of $5,100 in a year ($3,800 for school employees) unless their posi- tion is excluded by law. As a Coordinated Plan member, you and your employer contribute a percentage of your gross salary to the Association. In turn, PERA invests these contributions to fund benefits for our mem- bers. Go to MY PERA at www.mnpera.org to check details of your contributions and member- ship data. While contributions and investment earnings are critically important to the long-term funding of the Association, they do not determine the value of your individual benefit. Instead, your benefit is based on a formula that takes into consideration three factors: Age— The closer you are to full retirement age, the larger the monthly benefit you will receive. While there are exceptions, full retirement age is typically age 65 to 66 for Coordinated mem- bers. The earliest age at which most members you must be totally and permanently disabled and unable to engage in any substantial gainful activity. You become eligible for disability bene- fits once you are vested with the Association— after three or five years of service, depending on when you first entered public service. lternatives for survivors PERA also provides survivor (death) benefits for families of members who unfortu- nately die before receiving a retirement benefit. Survivor benefits follow a simple succession. Should you die, any survivor benefits due would first go to your surviving spouse. If there is no spouse, benefits would then be payable to any dependent children. Finally, if there are no sur- vivor benefits due, the balance in your account, plus interest, would be distributed to your ben- eficiaries. If we have no listed beneficiaries, the funds would be paid to your estate. (A form for changing your beneficiary(ies) can be found on our website in Forms & Publications.) If you leave before retirement If you terminate public employment after you have become vested (five years of service if hired after June 30, 2010), you can leave your contributions with PERA and qualify for a pen- sion any time after reaching retirement age. (Continued on reverse side) PERA: Just the Basics To learn more about PERA, visit us at www.mnpera.org. Your individual information is always available by registering for MY PERA. 290