Rumors we have heard
Posted on November 2, 2023
Rumors. They sure can be wild at times. At DRS, it’s not unusual for us to speak with customers who have heard a rumor that, as it so often turns out, is not exactly accurate.
Some of the rumors we hear include:
- DRS administers health insurance coverage.
- Not true. DRS may deduct health care premiums from your pension, but those premiums are determined by your retiree health care provider. Health Care Authority manages Public Employees Benefits Board (PEBB) retiree insurance coverage.
- My contributions to my pension plan are like a 401(k) that I will get when I retire.
- If you are a Plan 3 member, your contributions are directed to investments you select. Once you are separated from a DRS-covered employer, you can choose to either leave your contributions in the plan or withdraw them. This is separate from your pension, which is a defined benefit funded by your employer. For more, visit our Plan 3 overview.
- If you’re a Plan 2 member, your pension is a defined benefit based on your years of service credit and your average final compensation. For more, visit our Plan 2 overview.
- I can take a loan from my pension contributions.
- You cannot take a loan from the contributions you make to any DRS-administered retirement plan, however you can withdraw funds after you have separated from a DRS-covered employer. Also, you cannot take a loan from the Deferred Compensation Program. If you are a DCP participant, there are certain situations that allow for unforeseen emergency withdrawals from your DCP account.
- My pension benefit is based on the last five years of my career.
- If you are a Plan 2 or Plan 3 member, your AFC or Average Final Compensation is calculated on your highest five years of earnings, which isn’t necessarily your last five years.
- If you’re a Plan 1 member, your benefit is generally based on your highest two years of earnings, but this varies by plan. Check the DRS Plans page for your plan’s rules.
- You don’t need to get to a round number of years to see the increase to your benefit. DRS prorates retirement service credit by month, so a person with 24 years and 11 months would get nearly the same benefit as someone with 25 years.
- True
- Years of service are not the same as calendar years. Just because you reached your 20-year anniversary with your employer, that doesn’t necessarily mean you have 20 years of service credit.
- True
- You cannot use the Purchase of Service Credit annuity to become vested or to become eligible for the 2008 ERF.
- This one is true. While you can increase your pension by purchasing up to 60 months of service credit at the time you retire, you cannot purchase service credit in order to become vested or eligible for retirement. You can find out more about purchasing service credit within each plan guide. Get started here.
- DRS has an ‘80/30’ Rule. When my age and my years of service credit equals 80 and I have at least 30 years of service, I’m eligible for an unreduced benefit.
- Not true. There are no “80/30” or “Rule of 85” or “Rule of 90” pension laws. Each plan has specific requirements for retirement eligibility. You can find out about your plan’s rules on the DRS Plans page.
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