Purdue University Retirement Plans
It's important to plan and prepare for retirement throughout your working career. Purdue is an active partner in helping faculty and staff lay a foundation for retirement.
The University offers a variety of retirement plans in addition to coverage under Social Security.
- Benefits-eligible faculty and many administrative and professional staff members participate in Defined Contribution Plans.
- Benefits-eligible clerical and service staff members and operational and professional assistants participate in the Public Employees' Retirement Fund (PERF), a Defined Benefit plan.
- All staff are eligible to contribute to Voluntary Savings plans to help save for retirement.
Note: Some Extension staff members are covered under Civil Service and PERF.
Defined Contribution Plans
The Defined Contribution Plan directs retirement savings to each faculty or staff member's own individual account. Accumulations grow as University and employee contributions are credited. Investment earnings are also added to the money in the account.
In 2009, the Retirement Plan Review Task Force made recommendations that shaped the current program administered by Fidelity Investments. A University Retirement Plan Committee meets regularly to review how the components of the Defined Contribution Plan are performing in relation to goals established for the program.
Prior to January 1, 2011, Purdue's Defined Contribution Plan has been administered by TIAA-CREF.
Defined Contribution Eligibility
- Benefits-eligible tenure-track faculty, instructors, and senior management/professional staff members, are eligible for University-funded retirement contributions upon date of employment. The University provides a contribution equal to 10 percent of budgeted annual pay plus 10 percent of any summer salary for academic-year faculty and staff to the Purdue University 403(B) Defined Contribution Retirement plan. This serves as the base plan for these staff groups.
- Benefits-eligible administrative and professional staff, continuing lecturers, and cooperative extension educators begin participation after three years of continuous service. However, staff who have fully-vested, employer-funded contracts still in force from a higher education institution (including any from previous employment at Purdue), may be eligible for contributions to be made immediately. If you feel you may be eligible, complete the request form or contact Staff Benefits at 49-41686. Upon completion of the three-year waiting period, the University provides a 10 percent contribution to the Purdue University 403(B) Defined Contribution Retirement plan. This serves as the base plan for these staff groups.
- Eligible faculty and staff members as described in #1 and #2 above also participate in the Purdue University 401(a) Profit Sharing Plan. This plan requires a mandatory employee contribution of 4 percent. Staff members hired 1/1/2011 and after who have the three year waiting period will begin participation in this plan upon hire. This serves as the mandatory plan for these staff groups. (The 10 percent University funded contributions will begin once the three year waiting period has been satisfied.)
- All faculty and staff who receive a regular paycheck are eligible to contribute voluntarily to the Purdue University 403(b) Voluntary Retirement Savings plan and/or the Purdue University 457(b) Deferred Compensation plan. Contributions can be made to these plans by designating a percent of gross pay from 1 percent to 85 percent. Contributions to the plans can be started, increased or decreased at any time at www.plan.fidelity.com/purdue.
Note: All contributions must comply with annual IRS retirement limits.
Vesting
Funds in all defined contribution plans are immediately vested.
Benefit at Retirement
The amount of income you receive at retirement depends upon several factors, such as the size of the accumulation at retirement, and the age of the employee and spouse. The defined contribution plan offers a variety of settlement options to help meet your income needs.
More detailed plan information such as investment options, fund performance, on-line enrollment, etc. is available on Fidelity's website.
Mandatory 401(a) Plan (Fidelity)
Faculty and staff in the following positions participate:
- Tenure-Track Faculty
- Instructor
- Senior Management/Professional
Contributions will begin from your date of employment.
For employees currently serving a three-year waiting period in one of the following positions, contributions will begin after your three-year waiting period ends:
- Administrative
- Professional
- Supervisory
- Continuing Lecturer
- Cooperative Extension Educator
Contribution Amount
Four percent of your annual budgeted salary, plus any summer salary for academic-year faculty and staff, will automatically be deducted from your pay.
Plan Description
The 401(a) mandatory plan offers a wide range of investment options. For specific information about the available funds, visit Fidelity's Purdue-dedicated site.
Vesting
Funds in all defined contribution plans are immediately vested.
Benefit at Retirement
The amount of income you receive at retirement depends upon several factors, such as the size of the accumulation at retirement, and the age of the employee and spouse. The defined contribution plan offers a variety of settlement options to help meet your income needs.
Defined Benefit Plan
Defined Benefit Plans Eligibility
- Benefits-eligible clerical and service staff members, and operations/technical positions are covered by the Indiana Public Employees' Retirement Fund (PERF). University-funded contributions begin immediately upon employment.
- Benefits-eligible police officers and firefighters are eligible for the Police Officer's and Firefighters supplemental pension plan, administered by TIAA-CREF.
PERF Plan Description
The PERF Retirement Plan is made up of two parts:
- The Defined Benefit (pension) and
- The Annuity Savings Account
The state of Indiana determines annually the level of Purdue's contribution required to fund the PERF pension. Of this percentage, three percent is allocated to the Annuity Savings Account and the remaining portion is directed to the PERF Defined Benefit fund.
The Defined Benefit portion of your PERF pension is funded by Purdue. Defined Benefit contributions go into Purdue's employer account with PERF. 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. State law requires that three percent of your gross wages be contributed to fund the Annuity Savings Account-Purdue funds this contribution for you. Staff who separate service from Purdue before becoming eligible to receive a retirement benefit, may take a distribution of the Annuity Savings Account.
Quarterly statements are distributed from PERF showing the Annuity Savings Account activity and balance. The Defined Benefit portion of your pension plan is not reflected on this statement. However, an annual statement is provided that reflects both the annuity savings account and the pension benefit amounts. For a projection showing what the two portions of the PERF pension together will provide for you in retirement, employees can obtain a retirement estimate. A tool allowing individuals to estimate their retirement pension is available at the PERF website.
Funds contributed to the Annuity Savings Account accumulate in the participant's name during the time of participation in PERF. Members are given the option of directing their annuity savings account investments to a number of options.
The variety of investment choices is intended to offer security while allowing participation in economic trends. More information on the investment options, 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
Employees who separate from service with 10 years or more of credited service, have achieved vested status. This entitles participants to a retirement pension benefit no later than age 65. The annuity savings account funds are separate from the vesting rules and will earn yearly interest until settled into a retirement benefit or until taken as 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.
Separation
Separation from employment prior to reaching vested status entitles the participant to withdraw a lump sum payment of the money in the annuity savings account. However, requesting a refund before becoming eligible for a retirement benefit means forfeiting rights to a pension through the PERF program.
Nonvested members who leave their monies in PERF will generally continue to earn interest on those funds for a maximum of 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. Normally participants 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.
Individuals who fulfill the requirements for either normal or early retirement under PERF, you are entitled to receive a monthly benefit for life. The monthly benefit amount is based on:
- the average of the participant's highest five years of salary,
- years of service,
- age at the time of 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 account component is in addition to the PERF pension. The amount of income this fund yields is based on the dollars accumulated, age at retirement, and payout option selected. Both annuity and lump sum payments are available at retirement.
Police Officer's and Firefighter's Pension Plan
Benefits-eligible police officers and firefighters participate in the Police Officer's and Firefighter's Supplemental Pension Plan along with participation in either the Defined Contribution or Defined Benefit plan. Participation in the plan begins immediately upon employment. Police Officers and Firefighters make a three percent of base pay contribution every pay period to the pension plan. This plan is designed to supplement benefits payable from the Defined Contribution and/or Defined Benefit retirement plans described above.