Retirement
Public Employees' Retirement System (PERS) Plan 2

 


What is PERS Plan 2?

Public Employees' Retirement System Plan 2 ("PERS 2") is a 401(a) defined benefit (DB) retirement plan that provides a secure income for retirement.

Participation in the PERS 2 retirement plan starts on your first day of employment in an eligible position. In this DB plan, you and the University contribute money to the PERS Plan 2 Retirement Trust Fund which pays your retirement benefit. Once you retire, you will receive your retirement benefit based on your service credit and average final compensation, not based on yours or the WWU’s contributions. Here are the plan highlights:

  • You contribute 4.64% of your gross salary as set by the legislature effective September 1, 2011. Your contributions are pre-tax. Should you leave without retiring, you can either leave your contributions in the account or withdraw your contributions plus interest (as set by law). Taxes and penalties may apply on early withdrawals. Check with the DRS for more information.
  • WWU contributes to your retirement savings too, with employer contributions set at 7.25% of your gross salary effective September 1, 2011. The employer contribution is invested in the PERS 2 Retirement Trust Fund to fund future benefits, and is not available for withdrawal.
  • There is no cap on the number of years of service credit you can earn.
  • Your future monthly retirement benefit is determined by a formula and has no relationship to the amount that you or WWU contributed to the plan.

Note: Each January, PERS 2 members who were enrolled prior to March 1, 2002, have the option to transfer to PERS 3. The Department of Retirement Systems (DRS) provides plan information in the Public Employee Retirement System Plan 2 Member Handbook.

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Earning Service Credit in PERS 2

PERS 2 benefits are based on a formula—see "Calculating Your PERS 2 Retirement Benefits" below. Key to that formula is earning "service credit" for the time you are enrolled in PERS 2. 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 = 1/4 month of service credit
  • 70 to 89.9 hours = 1/2 month of service credit
  • 90 hours and up = one full month of service credit

At WWU, to obtain one full month of service credit in each of the 12 months, the minimum salaried appointment is 56.25%.

Annual Basis

Alternatively, when you work for 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:

  • Begin working in September in an eligible position; and
  • Earn compensation during at least nine months of the school year; and
  • Have at least 810 hours of compensated employment during the period September 1 – August 31.

You may receive six service credit months for each school year if you:

  • Begin working in September in an eligible position; and
  • Earn compensation during at least nine months of the school year; and
  • Have at least 630 hours, but fewer than 810 hours, of compensated employment during the school year.

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 defined as the average of your 60 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.

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Calculating Your PERS 2 Retirement Benefits

Monthly retirement income = 2% x service credit years x average monthly final compensation

Example

Suppose you retire at age 65 with 32 years of service credit and a monthly average final compensation of $2,000. Your retirement benefit would be $1,280 each month, calculated as follows:
2% x 32 x $2,000 = $1,280

This calculation results in the standard single life benefit. It will be different if you choose to continue benefits to a survivor upon your death.

In addition:

  • You are eligible for annual cost-of-living adjustments of up to 3%.
  • There is no cap on the service credit you can earn.
  • 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.
  • Temporary duty disability, disability retirement and survivor benefits are available if you meet the requirements. Contact the WWU Benefits Office for an individual consultation.

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Enroll in PERS 2

  1. Review the benefits of the PERS 2 and PERS 3 plans and decide which is best for you.
  2. Download the PERS Enrollment/Member Information Form.
  3. Print, sign, and send your enrollment form to: WWU Benefits Office, MS 9054
  4. You should keep your beneficiary designation up to date by contacting the Department of Retirement Systems (DRS).

Remember: Newly-PERS eligible employees must make the choice between PERS 2 and PERS 3 within their first 90 days. If you take no action, after 90 days, state law requires that employees be permanently moved into PERS 3 with a 5% contribution rate. This cannot be changed at any time during your employment at UW.

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Leaving the University Before Retirement

You can leave your contributions in your PERS 2 account; or you can withdraw or transfer your employee contributions plus interest only if you completely separate from PERS employment. Withdrawals are managed by the Department of Retirement Systems. Contact them directly for more information.

Your choices are:

  • Leave your money in the retirement fund. When you have a minimum of five years of full-time service credit, you have a vested right to a retirement benefit when you meet PERS 2 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. Your service credit will be preserved for you in the event you return to State of Washington employment.
  • Transfer 100% or a designated amount of your money to a qualified retirement account such as an IRA. Check with your tax advisor or IRA provider for more information.
  • 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.

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Additional Information

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Page Updated 11.26.2013