Public Employees' Retirement System Plan 1 (PERS 1) is closed to new participants. The Department of Retirement Systems (DRS) provides plan information in its PERS Plan 1 Member Handbook.
PERS 1 is 401(a) defined-benefit plan. You and the University contribute money that funds your retirement income and, upon retirement, you will receive your retirement benefit based on a formula which includes your years of service credit and average final compensation. Here is how it works:
- Your future monthly retirement benefit is determined by a formula, and has no relationship to the amount that you or the WWU contributed to the plan.
- You contribute 6% of your gross salary. Deductions are pre-tax. The employee contribution amount is set by state law.
- The WWU contribution rate is 7.07% of gross eligible wages (effective July 1, 2011). The employer contributions fund future benefits only are not credited to your account and cannot be withdrawn.
- All contributions are held in the PERS 1 Retirement Trust Fund, and invested by the Washington State Investment Board.
- Should you leave University employment without retiring, you can either leave your contributions in the plan to later begin a PERS 1 retirement benefit, or withdraw your own contributions plus interest (as set by law).
PERS 1 benefits are based on a formula—see "Calculating Your PERS 1 Retirement Benefits" below. The key to that formula is earning "service credit" for the time you are enrolled in PERS 1. There are two ways to earn service credit: month by month, or over an annual basis.
Month by Month
Month by month service credit is earned as follows:
- Up to 69.9 hours = 1/2 month service credit
- 70 or more hours = one full month service credit
At an institution of higher learning such as WWU, you may receive 12 service credit months for the "school year" (i.e. September 1 – August 31) if you:
- Are employed in an eligible position; and
- Earn compensation during at least nine months of the school year; and
- Have at least 630 hours of compensated employment during the period September 1 through August 31.
Note: If you earn compensation in fewer than nine months of the school year, you will receive service credit based on the number of hours compensated each month.
Average Final Compensation
Your average final compensation is the average of your 24 consecutive highest-paid service credit months.
Revised Code of Washington (RCW), Chapter 430, Laws of 2009
Enacted on July 26, 2009, for compensation earned during the 2009 – 2011 fiscal biennium, the average final compensation used to calculate a retirement benefit will not be affected by salary reductions if that reduction is due to a reduction of hours, voluntary leave without pay or temporary furloughs if the action is based on the employer’s effort to reduce expenditures.
Monthly retirement income = 2% x service credit years x average final compensation ÷ 12 months
Suppose you retire at age 60 with 29.5 years of service credit and an average final compensation of $2,500 per month. Your monthly retirement benefit will be $1,475, calculated as follows:
2% x 29.5 years x $2,500
2% x 29.5 years = .59
.59 x $2,500 = $1,475
This calculation results in the standard single-life only benefit. It will be different if you choose to continue benefits to a survivor upon your death.
- The amount of service credit that will count towards your benefit is limited to 30 years (or a 60% benefit),
- If you are a member of more than one State of Washington retirement plan, you may be able to combine service credit from all the plans to qualify for retirement. For more information about this portability, contact the Department of Retirement Systems (DRS).
- You may receive up to five service credit years for time in the U.S. armed forces that interrupted your PERS 1 membership. If you have 25 PERS 1 service credit years, you may be eligible to receive credit for military time that did not interrupt PERS 1 membership.
- Disability retirement and survivor benefits are available if you meet the requirements.
Enrollment in PERS 1 is automatic upon eligibility and confirmation of past PERS 1 employment. You should keep your beneficiary designation up to date by contacting the Department of Retirement Systems (DRS).
If you leave PERS 1 eligible employment before you retire, you have a few choices regarding your PERS 1 account.
Your choices are:
- Leave your money in the retirement fund. Your service credit will be preserved for you in the event you return to State of Washington employment. When you have a minimum of 5 years of service credit, you have a vested right to a retirement benefit when you meet PERS 1 age requirements. Vesting means you have earned the right to a future benefit even if your covered employment ends. Your funds will continue to accrue interest.
- Transfer 100% or a designated amount of your money to a qualified retirement account. No withholding tax is required on funds that are directly transferred, nor does the 10% penalty apply.
- Withdraw your own contributions plus interest. Withdrawals may be subject to withholding taxes and a penalty. Check with DRS or your tax advisor for more information.
- Note: You cannot withdraw or transfer your employee contributions if you are moving directly to a PERS-eligible position with another employer.
If you withdraw your contributions before retirement, you lose your right to future retirement benefits. You can restore your contributions and re-establish your benefits under certain circumstances. Explore the PERS website for more information including member publications.
- PERS Plan 1 Member Handbook
- Voluntary Investment Program (VIP)
- Washington State Deferred Compensation Program (WSDCP)
- Social Security Administration
- Department of Retirement Systems Comprehensive Annual Financial Report