TIAA and PERF Retirement Plans

It's important to plan and prepare for retirement throughout your working career. Purdue is an active partner in helping you lay a foundation for your retirement years.

When you become eligible, the University makes a contribution to your retirement program each pay period. Although you are not required to put aside your own funds, tax deferred plans are available for you to use in supplementing your retirement savings. They become an important income source at retirement.

The University provides two primary retirement plans in addition to coverage under Social Security. A defined contribution retirement plan serves the faculty and many administrative and professional employees. Clerical and service staff members and operational and technical assistants participate in the Public Employees’ Retirement Fund (PERF), a defined benefit plan. Some Extension Service staff are covered under Civil Service and PERF.

Defined Contribution Plan Administered by TIAA-CREF

• Participation
If you are a tenure-track faculty member, instructor, or a senior management/professional staff member, you are eligible to have retirement contributions made on your behalf from your date of employment. Generally, administrative, professional, and supervisory staff, continuing lecturers, and Cooperative Extension educators begin participation after three years of continuous service. However, if you have fully-vested, employer-funded contracts in force from a higher education institution (including any you may have in force through previous employment at Purdue), you may be eligible for contributions to be made immediately. If you feel you may be eligible, please complete the form included in the folder pocket of your benefits enrollment kit and contact Staff Benefits at 49-41680.

• University Contribution
In comparison to other colleges in the United States, Purdue makes one of the most generous contributions to employee retirement. Eleven percent of the first $9,000 of budgeted annual pay, and 15 percent of amounts over $9,000, is funded by the University. For academic-year faculty and staff, Purdue contributes 15 percent of salary received during the summer.

During a sabbatical leave or faculty exchange leave with partial pay, the University continues its contribution on the basis of full budgeted salary.

• Plan Description
The defined contribution plan offers a wide range of investment options through Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF). Investment options include guaranteed, fixed income, real estate, and equities. Participants can design the combination of investments that best suits their needs.

For more specific information about the available funds, visit TIAA-CREF’s Purdue-dedicated site.

For more information about investing, contact the retirement section of Staff Benefits of your campus Human Resources office. Or contact TIAA-CREF through its Web site or 1 (800) 842-2776. TIAA-CREF also has a West Lafayette office, which may be reached by calling (765) 463-1152.

• Vesting
Funds are immediately vested. Although Purdue funds the retirement contracts, you retain the accumulation of funds if you change jobs. Many other universities utilize TIAA-CREF. If you move to another participating institution, you will have continuity in your retirement plan.

• Benefit at Retirement
The amount of income you receive at retirement depends upon several factors, such as the size of the accumulation at retirement, your age, and the age of your spouse. The defined contribution plan offers a variety of settlement options to help meet your income needs.

Go to TIAA-CREF Purdue-dedicated Web site.

Go to TIAA-CREF plan document.

Public Employees’ Retirement Fund (PERF)

• Participation
If you are a regular member of the clerical or service staff or an operational or technical assistant (generally, this includes persons working half-time or more in a position expected to last for more than one year), you are covered by the Indiana Public Employees’ Retirement Fund. Your membership in PERF begins immediately upon employment. Please read the PERF materials and complete the forms supplied in the folder pocket of your benefits enrollment kit.

• The University Contribution
The state of Indiana determines Purdue’s contribution required to fund the PERF pension. Of this percentage, three percent is allocated to your Annuity Savings Account and the remaining portion is directed to the PERF Defined Benefit fund.

Although the University does not require that you share in the cost of funding your pension plan, you are encouraged to open a tax deferred annuity to supplement the retirement income provided through PERF and Social Security.

• Plan Description
Two pieces make up the PERF benefit structure:

• The Defined Benefit (pension) and
• The Annuity Savings Account

The Defined Benefit portion of your PERF pension is funded entirely by Purdue at no cost to you. Defined Benefit contributions go into Purdue’s employer account with PERF. Since the Defined Benefit account is a relationship between PERF and Purdue, you will not be asked to make any decisions regarding the management of Defined Benefit contributions. If you leave PERF-covered service and do not become eligible to receive a retirement benefit, you cannot withdraw Defined Benefit funds.

The Annuity Savings Account supplements your Defined Benefit pension at retirement and is an important way to increase your retirement savings. State law requires that three percent of your gross wages be contributed to fund your Annuity Savings Account, and Purdue funds this entire contribution for you. If you leave Purdue employment before becoming eligible to receive a retirement benefit, you may take a distribution of your Annuity Savings Account.

You will receive a quarterly statement from PERF showing your Annuity Savings Account activity and balance. The Defined Benefit portion of your pension plan is not reflected on the statement. For a projection showing what the two portions of your pension together will provide for you in retirement, obtain a retirement estimate. A tool allowing you to estimate your retirement pension is available at the PERF Web site.

Funds contributed to the Annuity Savings Account accumulate in your name during the time you participate in PERF. Members are given the option of directing their savings account money among the following funds:

• PERF Guaranteed Fund
• Money Market Fund
• Bond Fund
• S & P 500 Index Fund
• U.S. Small Companies Stock Fund
• International Equity Fund

The variety of investment funds is intended to offer security while allowing you to benefit from economic trends. More information on the funds, including past performance and investment philosophy, is available at www.in.gov/perf/public/investment_performance_rates.html and www.in.gov/perf/public/asa_option_descriptions.html.

• Vesting
If you terminate your employment with 10 years or more of credited service, you have achieved “vested” status. You will be entitled to retirement benefits no later than age 65. Your savings account funds will earn yearly interest until you receive a retirement benefit or choose to take a refund of the contributions and the accumulated interest. Requesting a refund before becoming eligible for a retirement benefit means that you forfeit your rights to a pension through the PERF program.

If you terminate your employment and have not reached a vested status, you are entitled to withdraw a lump sum payment of the money in your savings account. Nonvested members who leave their monies in PERF will earn interest on those funds for only 10 years.

• Benefit at Retirement
The PERF pension is a “defined benefit” plan. This means that the pension is calculated by using a formula set by law. Your eligibility for retirement benefits is determined by your age and years of creditable service. Normally you are eligible for full retirement benefits at age 65 with 10 or more years of service in a PERF plan.

Individuals who have worked in a PERF-eligible position for 15 or more years are eligible for early retirement benefits.

If you fulfill the requirements for either normal or early retirement under PERF, you are entitled to receive a monthly benefit for life. The amount is based on the average of your five highest years of salary, your years of service, your age at the time of your retirement, and the annuity payout option you select.

To keep the pension income in line with economic changes, the state of Indiana has traditionally passed legislation authorizing a cost-of-living increase each year for PERF recipients.

The annuity savings component is in addition to the PERF pension. The amount of income this fund yields is based on the dollars accumulated, your retirement age, and payout option. Both annuity and lump sum payments are available at retirement.