Changes affect retirees of PERS and TRS Plan 1; and active members of PERS, SERS and TRS Plan 2 and 3
The Legislature passed a law this year to end gain sharing after a final distribution on January 1, 2008. The legislation provides new benefits that may apply to you, depending on your retirement system and plan.
New benefits for Plan 1 retirees of Public Employees’ Retirement System (PERS) and Teachers’ Retirement System (TRS): If you’re a PERS or TRS Plan 1 retiree, you will receive an additional Uniform Cost of Living Adjustment (COLA) increase July 1, 2009 in addition to the Uniform COLA increase caused by the January 1, 2008 gain sharing event. Both increases are permanent and will be adjusted by three percent each July.
New early retirement benefits for Plan 2 and Plan 3 members of PERS, TRS and School Employees’ Retirement System (SERS) Next summer, if you’re at least age 55 and you’re a PERS, TRS or SERS member with 30 years of service, you can retire early with lower reductions to your benefit (see the chart below). You may even be able to retire early with no reduction to your benefit.
For example: Currently, if you’re an active member with 30 years of service who has reached age 62, your benefit is reduced by 9 percent to represent the difference between your age at retirement and age 65. The new law allows you to retire at age 62 without a reduction in your retirement benefit.
This new benefit becomes effective for PERS Plan 2 and 3 members beginning July 1, 2008, and for TRS and SERS Plan 2 and 3 members beginning September 1, 2008.
It’s important to note that if you retire under the new lower reduction factors you cannot return to work for a public employer – without forfeiting your pension – until age 65. This includes any work you perform under a personal service contract, as a temporary or project employee, or under any other similarly compensated relationship with a public employer.
New Plan Choice benefits for Plan 2 and Plan 3 TRS and SERS members first hired July 1, 2007 or after You have 90 days to make a choice between Plan 2 and Plan 3 if you’re first hired – or if you first establish membership – on or after July 1, 2007 (previously, new hires were placed into Plan 3). Once you make a choice, you cannot change it.
The law also contains a provision on what would happen if a court were to overturn the legislation. If a court decides the repeal of gain sharing is invalid, the current reductions for early retirement will once again apply. Also, any new benefits will no longer be valid.
July 2007/Legislative Edition