Changes to PERF benefits announced: Guidelines for interactions with employees eligible to receive retirement benefits
The Indiana Public Retirement System (INPRS) has released information about changes to PERF retirement benefits that were approved during the recent legislative session. The changes announced affect clerical, service and operations/technical staff who retire after Aug. 31, 2014.
The PERF retirement benefit has two parts, the basic pension and the annuity savings account, or ASA. The funds in the ASA upon retirement can be rolled over to another account, cashed out, or can be used to add to the monthly pension amount the employee receives. Beginning October 1, 2014 there will be a change in the calculation for “annuitizing”, or adding the funds to the monthly pension. INPRS will be making gradual changes to move toward calculating at market rates. The first step will be an interest rate decrease from 7.5% to 5.75%. From a simple view, this means that the amount an employee will receive if they annuitize the funds will be less starting in October.
In light of the change, your employees may be more likely to come to you with questions. As a supervisor, there are some subjects that require caution and discretion, and retirement-related discussions certainly qualify. Asking when, why and how an employee might retire is a sensitive topic that merits some basic guidance. Your staff may naturally look to you for help as they consider their employment situation. Here is some basic background information to help you deal with situations in your area.
Conversations about retirement dates, plans to retire and benefit eligibility should be left between Human Resources and the employees. As a supervisor, you are not in a position to provide meaningful information regarding this very personal decision. Providing incorrect or misleading information to the employee could be deemed coercive and, therefore, a potentially unlawful employment practice. This is particularly problematic if an employee relies on the misinformation to make a retirement decision. Human Resources is in the best position to counsel and direct employees to available resources to address their health and retirement plans as well as the impact of their retirement on other university benefits. Supervisors are strongly discouraged from engaging in retirement conversations except to direct the employees to helpful information.
What can I do?
Faculty and staff of all ages should be encouraged to learn about their retirement benefits and make plans that are in their best interest. You can help by:
- Flexing schedules to allow your staff to participate in university sponsored retirement education sessions or to visit an HR or Fidelity benefits counselor is beneficial.
- Directing your staff to the new Retirement Readiness website. It is a Purdue -specific site dedicated to helping faculty and staff think through the planning and preparation for retirement. It has basic information about retiring from Purdue, checklists and resource links.
- If you are approached about questions related to re-employment or any circumstances out of the ordinary, please make sure you contact your Employee Relations or campus HR representative to discuss since there are often other considerations that must be considered.
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