Benefit Overview
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Paul Carlson
Regional Counselor
State of Alaska
Department of Administration
Division of Retirement and Benefits
State of Alaska
Administered Plans
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Defined Benefit Plans
• Public Employees’ Retirement System (PERS)
• Mandatory participation
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Defined Contribution Plans
• Alaska Supplemental Annuity Plan (SBS-AP)
• Mandatory participation
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Deferred Compensation Plan (DCP)
• Voluntary participation
PERS Web Site
 www.state.ak.us/drb
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PERS statutes, handbooks, forms,
Newsbreaks, travel schedules, seminar
registration
Member Services; enroll in Member
Services and open the door to your
account information or to obtain benefit
estimates.
Member Services
Overview of the PERS
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Lifetime Monthly Pension Benefit
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Lifetime Medical Insurance Coverage
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Survivor Options for Your Spouse
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Disability and Death Benefits
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Additional Optional Insurance Plans
A Little Advice
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Whether you are 5 years or 25 years from
retirement, it is never too early or too late
to start planning.
Experts say you will need 80-90% of your
present income to live comfortably in
retirement. Your needs may differ.
What type of plan is
PERS?
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PERS is a Defined Benefit Plan.
• This means your monthly pension benefit is
based on a statutory formula, not on the
contributions you have paid.
What Can PERS Give
You?
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PERS provides a constitutionally
guaranteed set of benefits to you based on
your date of PERS enrollment that cannot
be diminished.
To be eligible to receive many of the
benefits provided by PERS you must be
vested.
What is Vesting?
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Vesting is the completion of 5 paid up
years of membership service in the PERS.
How Service is Credited
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Full time members earn a day
service for each calendar day from
their PERS hire date until a break in
service.
Part time members earn pro-rated
service based on the number of parttime hours worked.
Part-time service accrual cannot
exceed what the full time accrual
would be for the same period.
What does Vesting do
for You?
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It enables you to be eligible for a
guaranteed monthly lifetime pension
benefit at the time of retirement with
health insurance options.
It enables you to apply for a
nonoccupational disability benefit.
It gives you the ability to claim service,
potentially increasing your retirement
benefit.
Disability Benefits
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Occupational disability—if you suffer a
total and presumably permanent disability
caused by your job.
Nonoccupational disability—if you suffer a
total and presumably permanent disability
caused by an injury or illness not related to
your job.
Non Occupational Death
Benefits
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Non vested members or
beneficiaries that are non spouse:
• Lump sum benefit (Account balance,
plus $1,000, plus $100 for each year of
service)
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Spouses of vested members:
• Lump sum benefit or;
• Lifetime 50% survivor benefit with
access to medical insurance.
Occupational Death
Benefits
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Surviving spouse or dependent children
are eligible for monthly benefits and
access to medical insurance.
All other beneficiaries are entitled to the
lump sum payment.
When am I Eligible to
Retire?
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You can be eligible for either a service
based retirement or an age based
retirement, whichever you reach first.
PERS-Four Tiered
System
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Tier I, II, and III members can retire at any
age with 20 years of paid up “Peace
Officer/Firefighter” membership service or
30 years paid up membership service for
“All Other” employees.
PERS-Four Tiered
System
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Tier I: First enrolled in PERS prior to July 1, 1986,
early retirement age 50, normal retirement age 55.
Tier II: First enrolled in PERS on or after July 1,
1986 through June 30, 1996, early retirement age
55, normal retirement age 60.
Tier III: First enrolled in PERS on or after July 1,
1996 through June 30, 2006, early retirement age
55, normal retirement age 60.
Tier IV: First enrolled in PERS on or after July 1,
2006 (Defined Contribution Retirement Plan).
Early Retirement
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Age 50 Tier I
Age 55 Tier II & III
Reduction of 1/2% per month for each
month under normal retirement age
Lifetime Reduction
How will your benefit be
calculated?
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Your benefit is calculated using a formula
that includes your average monthly salary
(AMS), a benefit multiplier and your total
years of credited service.
Average Monthly Salary
(AMS)
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All Others Tier I and II: Based on the average of
three highest consecutive years of salary.
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All Others Tier III: Based on the average of the five
highest consecutive years of salary.
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Peace Officer/Firefighter All Tiers: Based on the
average of three highest consecutive years of
salary.
Must work 115 days of credited service in the last
year to include as one of the highest consecutive
years.
Average Monthly Salary
Example
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Payroll Year
2001
2002
2003
Totals
Salary
$36,000
$33,000
$18,000
$87,000
Months
12
11
6
29
• $87,000.00 divided by 29 = $3,000.00 (AMS)
Benefit Formula
(All Others)
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2% x first 10 years and all years prior to 1986 x AMS
2.25% x second 10 years x AMS
2.5% x all years over 20 x AMS
All Others Benefit Formula Example:
Member has $3,000 average monthly salary and 21 years
of service
2% x 10 years x $3,000 = $600
2.25% x 10 years x $3,000 =675
2.5% x 1 year x 3,000 = $75
Total base retirement benefit = $1,350.00 per month.
If you take early retirement or choose a joint and survivor
option this normal benefit amount is reduced.
Benefit Formula
(Peace Officer/Firefighter)
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2% x first 10 years x AMS
2.5% x all years over 10 x AMS
Peace Officer/Firefighter Benefit Formula Example:
Member has $3,000 average monthly salary and 25 years
of service
2% x $3,000 x 10 years = $600
2.5% x $3000 x 15 years = $1,125
Total base retirement benefit = $1,725 per month
If you take early retirement or choose a joint and survivor
option this normal benefit amount is reduced.
Medical Insurance
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Tier I: System paid major medical coverage for
retiree and eligible dependents at retirement.
Tier II: System paid major medical coverage at age
60 or at any age if you retire with 25 years of peace
officer/firefighter membership service or 30 years
of all other membership service, if you take an agebased early retirement before age 60 and desire
coverage you must purchase and pay full premium
until age 60.
Tier III: Must have 10 years of service to receive
Tier II medical benefits, otherwise must pay full
medical premium as long as coverage is desired.
Optional Plans
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Dental-Vision-Audio (DVA)
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Long Term Care (LTC)
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Optional Life (for participating members)
How Can I Increase My
Benefit?
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Higher Salaries
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Work Longer
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Claim Eligible Service
• Active military service
• Temporary service with a PERS employer
• Worker’s Compensation leave without pay
Indebtedness
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An indebtedness is established when you
claim service or are reinstating previously
refunded service.
You may elect to pay your indebtedness
with a pre or post tax payroll deduction.
Periodic monthly payments (post tax).
Lump sum payment (post tax).
A pre-tax transfer from a qualified plan.
• Pre-tax transfers will no longer be accepted for
refunded service after July 1, 2010.
Take a lifetime actuarial reduction on your
retirement benefit.
How much is paid to
PERS?
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Peace Officer
7.5%
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Firefighters
7.5%
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All Others
6.75%
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Alternate Option
(school district)
9.6%
Contribution Account
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Only your contributions show in your
account.
Your account accrues 4.5% interest.
Any indebtedness payments you have
made are part of your contribution
account.
Employer Contributions are NOT part of
your account.
Refunding Contributions
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Employee contributions and interest only.
Must be terminated a minimum of 60 days
before refund is issued.
A refund forfeits all rights to benefits
including retirement and insurance
eligibility.
Refunding Contributions
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20% federal withholding if paid directly to
you.
If you are under age 59 1/2, you may be
required to pay an additional 10% early
withdrawal tax penalty.
Pre-tax contributions are rollover eligible.
Social Security
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If you work in a position that does not pay
into social security, and have less than 30
years of qualifying Social Security
earnings, you may be subject to the
Windfall Elimination Provision which will
reduce your Social Security benefit.
Benefit estimates received from social
security do not include the offset, it must
be specifically requested.
Contact SSA for more information. (1-800772-1213) / www.ssa.gov
SBS-Annuity Plan
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Mandatory Defined Contribution plan, account
balance is the benefit.
Immediately 100% vested in employee and
employer contributions.
6.13% Employee Contribution per pay period.
6.13% Employer Contributions per pay period.
Employee controls investment
Participants must be terminated from employment
for 60 days before they can access account.
SBS-AP Distribution
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May leave funds in account after
termination.
Must commence minimum distribution by
age 70-1/2.
Cash-in account balance.
Rollover to other qualified plans.
Partial lump sum payouts, remaining
balance stays invested.
Term certain annuities.
SBS-AP Distribution
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Single Life Annuity
Life Annuity with period certain payment
2 joint and survivor options available
Lump sum and Annuity payments are fully
taxable and may be subject to penalty
Can now transfer funds from other
qualified retirement plans, such as an IRA
or 401(k), into the SBS-AP
Deferred Compensation
Plan
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Voluntary Defined Contribution plan, account
balance is the benefit.
Immediately 100% vested.
$50.00 per month minimum.
$16,500.00 per year maximum (2009) higher
maximum if over age 50.
Employee controls investment.
Payment options include cash withdrawal, periodic
or annuity payment or rollover to a qualified plan.
Taxes are due when you receive the money.
DCP Payments
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Must be terminated from employment 60
days (may be waived).
All payments are fully taxable - no early
withdrawal penalty.
Rollover eligible (caution: other provisions
then apply, including early distribution
penalty).
May leave funds in account after
termination (must take account at age 70
1/2).
DCP Participation
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No specific enrollment period, enroll
anytime.
Request an enrollment packet from the
division or on-line at www.state.ak.us/drb.
Increase contribution by cashing leave.
Use the catch up provisions
Investing Your
Contributions
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Recognizing that not all participants are
investment experts, your retirement
system has contracted with Great West
Retirement Services as well as their
wholly owned subsidiary, Advised Assets
Group, LLC, to provide a suite of
investment services to participants.
New participants are automatically
enrolled in the Alaska Target Trust Fund
which Corresponds to the member’s
anticipated retirement date.
Reality Investing Options
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Managed Accounts: Do-It-For-Me Investor. AAG
Coordinates with an independent financial advisor
to choose an investment strategy from the options
offered by the plan based on your finances, goals
and life circumstances.
AAG monitors your account and adjusts
investments as needed to reach your goals.
Advice: Help-Me-Do-It Investor. If you like to chart
your own investment course, but want to draw on
expert advice, AAG will provided advice services at
your request.
Reality Investing Options
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Guidance: Do-It-Myself Investor. Free
online access to Investment Option Detail
sheets, calculators and market
information.
Reality Investing Costs
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Managed Accounts: Annual fees
based on balance of accounts;
.50% accounts less than $100,000
.40% for next $150,000
.30% for next $150,000
.20% for balances over $400,000
Charged quarterly
Reality Investing Costs
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Advice: $25.00 annual fee, billed
$6.25 per quarter.
Guidance: Free
Participants may opt in or out of any
of these features during the year.
How can the Division of
Retirement help me?
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Benefit Education
How to maximize your PERS benefit by
purchasing service credits.
How benefits work in conjunction with
other State, Federal, and other employer
benefits.
Health benefit options at retirement.
Payment options for SBS-AP and DCP at
termination or retirement.
Information on taxes and penalties for
early withdrawal.
Helpful Hints
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Remember to keep your beneficiary
designations current.
If you have been married and divorced
during your PERS covered employment, you
must submit court certified copies of your
divorce decree and property settlement to
the division.
Conclusion
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Thank you for attending. Please complete
the seminar evaluation located in each of
your folders.
If you need further assistance please
contact the Division of Retirement and
Benefits at:
• PO Box 110203
• Juneau, AK 99811-0203
• 1-800-821-2251