PERS Defined Benefit Plan FAQs
- Death Benefits
- Disability Benefits
- Medical Benefits
- Pension Benefits
- Service Credit
- The Plan
How can I obtain the contribution account balances for my account and my spouse's account?
Your contribution account balance and any information related to your account is available to you upon proper identification.
Administrative regulations do not allow us to release information regarding personal or financial data to anyone other than the member without the member's prior written authorization unless the inquiring party has a subpoena or a court order to secure the information. We are allowed to release the information to the member's employer, former employer, or other authorized state agency.
A member's spouse or legal counsel is NOT entitled to the member's information without a properly executed release.
Can I borrow money from my contribution account balance in an emergency?
No! Your account balance is not available to you until you are terminated from employment. Layoff or leave without pay status is not termination for purposes of obtaining a refund.
What are my options regarding my contribution account balance if I terminate my position?
You always have the option of leaving the money in your account. If you are a vested member intending to retire in the future, or are a nonvested member and intend to become re-employed in a covered position in the future, it may be wise to do so.
To obtain a refund of your contribution account balance you must complete a Refund Election Form.
If you are nonvested (less than five paid years of service) or single, completing the form is sufficient. If you are a married and vested member, your spouse must consent to the refund on a form provided by the Division of Retirement and Benefits. This form must be notarized. If the rights to your refund are subject to a Qualified Domestic Relations Order (QDRO), you must also provide the notarized consent of each person entitled under the order.
When can I expect to receive the refund of my account balance?
You should have completed form GEN008, Refund Election form [PDF 142K], which tells us your intentions concerning your refund. If you did not, contact your employer or contact us directly.
There is a minimum waiting period of 60 days from your termination date or 30 days from the receipt of your application, whichever is later, before your refund will be processed. This is to make sure your employer has transmitted all of your contributions and your account can be refunded in full. There would be another week to ten days processing and mailing time once the waiting period has been met.
What are the tax consequences if I choose to take a refund of my contribution account balance?
First, the Division of Retirement and Benefits and the State of Alaska do not provide tax advice. Each member's tax situation is unique and you must consider the affect on your individual taxes. You should consult with the Internal Revenue Service (IRS) and a consultant as you deem necessary.
Contributions placed in the PERS before July 1, 1986, is "post-tax" contributions. The contributions have already been taxed and you should owe no further tax on them. The interest earnings from these periods are still subject to income taxes.
Contributions and interest placed in the PERS on or after July 1, 1986, is "pretax" contributions. These contributions have not been taxed previously. Therefore, both the contributions and interest earned on these amounts are subject to income tax.
In January following the year in which a refund is made, members will receive a 1099R informational return which indicates the amount of the taxable and nontaxable portions.
For the "pretax" contributions, if you choose to have the refund sent directly to you at your address or to your regular account at a banking institution, the IRS requires that we withhold 20% of the taxable portion of your refund, even if you later choose to do a "rollover" within the 60 day rollover period. You may also be subject to an additional early withdrawal penalty if you receive the refund before age 59½.
You can avoid the withholding tax on the portion of your refund that you have us "Direct Transfer" to another qualified plan that accepts your transfer, such as an IRA. Only the taxable portion of your refund can be transferred. If your refund includes money that has already been taxed, we will refund that portion directly to you without withholding any taxes on it.
How do I arrange for a direct transfer of my refund?
You must arrange for another qualified plan, such as an Individual Retirement Arrangement / Account (IRA), to accept a direct transfer of your taxable contribution account balance. Once you have arranged for an institution to accept this transfer, you would complete a Notification of Termination/Refund Application filling in the appropriate information. Be sure to include the plan name, address, plan contact person, and your account number.
Can a refund be attached by other parties and therefore the account may not be paid to the member directly?
Generally, except for a few exceptions, employee contributions and other amounts held in the system are exempt from levy to enforce the collection of a debt, and are not subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge of any kind, either voluntary or involuntary, without first being received by the person entitled to the amount under the terms of the system.
The exceptions primarily include unpaid state, local, or federal taxes, a Child Support Enforcement Order for unpaid child support, and up to one month's unpaid earnings of an individual employed by a member. In addition, a member's right to receive benefits may be assigned by a Qualified Domestic Relations Order as a result of a divorce or dissolution.
Can my contribution account balance be attached if I have not terminated my employment?
Until an employee terminates employment or is appointed to retirement, the employee has no right to receive his regular contribution account balance, and therefore, it cannot be distributed at that time. However, while we will not distribute your account balance, we will place a hold on your account. A valid attachment (see the answer to question 10), still in effect when the employee terminates, or is appointed to retirement, will be honored at that time.
Will I lose my right to retire if I am a terminated, vested member and there is a valid attachment placed on my account?
Yes! If we are forced to honor a valid attachment (see the answer to question 10), a member becomes a former member and loses any rights he or she may have had as a member. Even if the attachment is for a portion of your account balance, we would be forced to refund the balance to you, since there can be no partial refunds from the system. In this instance, an involuntary refund, plus any accumulated accrued interest, may be repaid to the system to reinstate your service without becoming re-employed in a system-covered position. However, if the original attachment is still in effect, any repayments will be forwarded to the appropriate agency to satisfy any amount still due.
In an emergency, is there any way to obtain a refund of my account prior to the 60-day waiting period?
The Division of Retirement and Benefits takes a critical view of what constitutes an emergency. For any emergency consideration, you must request a waiver in writing, and provide sufficient proof of your emergency. If you have other extenuating circumstances that you feel warrant consideration, you must provide a written detailed description to us along with your request for a waiver. If a waiver is granted in that case, a refund will be processed as soon as your employer has transmitted all of the contributions that were withheld from your pay (generally at least 30 days).
How can I make payments on my indebtedness?
After receiving verification that your indebtedness has been established, you may make payments on your indebtedness directly to the Division of Retirement and Benefits either in full or with periodic payments over time.
If you intend a payment to pay off your indebtedness balance, you should contact us for the balance. You may also establish a monthly payroll deduction through your employer. We can estimate when your indebtedness would be paid in full based on the amount of deduction you set up. If you have not received verification that your indebtedness has been established, contact us. Interest on your indebtedness will continue to accrue until your indebtedness is paid in full.
What is the interest rate charged on my indebtedness, and when is it posted?
The interest rate for the PERS is 7%, compounded semiannually. Interest on an indebtedness is posted monthly (see question below regarding interest posting).
What happens if I have an indebtedness balance left when I retire?
If you have not completely paid your indebtedness by the time you retire, your monthly benefits will be actuarially reduced over your lifetime, unless the reduction causes your benefit to be less than what it would have been without the service related to your indebtedness. If that is the case, your indebtedness payments would be refunded to you.
When does a payment on my indebtedness have to be received to have it post prior to interest posting?
Interest posts to an account during the last monthly processing cycle during the last week of the month. Your indebtedness payments must be received by the cutoff for input to that processing. Please call the Division for cutoff times.
Will I lose my tier on July 1, 2006 when the new PERS/TRS DCR Plan becomes effective if I am not vested?
No. Nonvested members whose employer has elected to participate in the conversion option may choose to transfer to the new plan. The decision to elect to convert to the new plan is solely the eligible employee's choice.
How long will a member have to elect to participate in the defined contribution plan once their employer decides to participate in it?
The window period for election begins on the date the resolution to participate is approved by the PERS Administrator and ends 12 months later or when the member vests, whichever occurs first.
I am a deferred former member and my former employer is participating in the conversion option. Can I convert my account to the new plan?
Yes and No. Since you are not an active employee with your former employer, you do not have the option to convert to the new plan. However, if you reemploy with your former employer before you vest and before the 12 month conversion period ends, you may elect conversion.
I worked for two other PERS employers besides my current PERS employer. Will all the PERS employers I worked for have to agree to participate in the conversion option before I can convert?
No. Only the employer you are currently working for must agree to participate in the conversion option. Your current employer is responsible for matching the balance of your employee contribution account up to the allowable limits of the IRC Sec. 415(c) regardless of which PERS employer you may have earned service with in the past.
PERS Death Benefits
Does the PERS provide any benefits to my family if I die?
PERS death benefits are determined by several things--whether the death is from occupational or nonoccupational causes, if the member was vested or not vested (nonoccupational), how much total service the member had, and if they are actively employed or retired at the time of death.
In general, monthly survivor benefits are provided for spouses and dependent children if the death is from occupational causes. These benefits include both pension and medical benefits. If the member is not married and has no dependent children, a lump sum payment is made to the named beneficiary.
If the member dies from nonoccupational causes and is not vested, only a lump sum benefit is available to the beneficiary.
If the member dies from nonoccupational causes and is vested, a surviving spouse has the choice of receiving a monthly survivor benefit, including pension and health, or a lump sum payment. If the member is not married, a lump sum payment is made to the named beneficiary.
Please refer to the PERS Information Handbook on this web site for more detailed information regarding death benefits.
PERS Disability Benefits
Does the PERS offer me any protection if I become disabled and cannot work?
PERS does not provide short-term disability benefits. It provides disability benefits for occupational and nonoccupational causes for those members who are totally and presumably permanently disabled because of a physical or mental condition.
All PERS members are eligible to apply for occupational disability. Only vested PERS members, however, may apply for nonoccupational disability benefits.
The PERS administrator reviews all applications for disability benefits and the substantiating medical documentation with the assistance of a consulting physician. After a disability application is approved and employment has been terminated, disability benefits will commence.
For more detailed information regarding disability benefits, please refer to the PERS Information Handbook on this web site.
Medical Benefits at Retirement
Will I have the same health benefits when I retire as I did as an active employee?
Most likely the State of Alaska Retiree Health Plan will differ from the insurance plan you have as an active PERS employee. One of the prime differences is that coverage for medical service and dental, vision and audio services are separate options.
The Medical plan includes coverage for hospitalization, medical, surgical, maternity care and other service necessary for the diagnosis and treatment of an injury or disease for you and your eligible dependents. The health care coverage is good worldwide.
The Dental-Vision-Audio (DVA) plan is an optional plan that all retirees have an opportunity to elect.
Another optional plan available to retirees is Long-Term Care Insurance (LTC).
For details regarding the election periods, deductibles, and coverage details please see our Retiree Health Plan.
Will I have to pay a premium for the medical insurance?
While all retirees receive the same level of coverage under the Retiree Medical Plan, payment of premiums for this coverage depends on which tier you are in. The PERS is currently a three-tier plan with different requirements for premium payment and eligibility for the medical insurance. (See PERS Comparison Chart [PDF 33K] if you don't know your tier.)
Tier I members are eligible for family medical coverage at retirement, whether an early or a normal retirement, with no premium payment.
Tier II members have access to medical coverage at retirement, whether an early or a normal retirement.
"All other" PERS members who retire early, between age 55 and 60, must pay full premium for coverage until age 60. At age 60, medical coverage is provided with no premium payment.
"All other" PERS members who retire with a normal benefit at any age with 30 years of service or who are vested and at least age 60 are eligible for medical coverage at retirement with no premium payment.
"Police/Fire" PERS members who retire under age 60 with less than 25 years of service must pay full premium for coverage until age 60. At age 60, medical coverage is provided free with no premium payment.
"Police/Fire" PERS members who retire with 25 or more years of service are eligible for medical coverage at retirement with no premium payment.
Tier III members are eligible for the same benefits as Tier II if they retire with 10 years of credited service. If they retire with less than 10 years of credited service, full premium must be paid for as long as coverage is desired.
All tiers must pay a premium for the optional DVA and LTC plans. Premium rates for these plans are the same for all tiers.
I am a survivor of a PERS member receiving medical benefits. I plan on remarrying soon. Will my new husband/wife be covered?
No. Only surviving spouses or eligible dependent children of the member can be covered under the medical plan.
Does my contribution balance indicate how much I will receive in pension benefits?
This is a common misconception. Your contribution balance does not reflect the true value of your PERS pension benefit since it only includes any contributions you have made (as well as any indebtedness payments and interest earned). The employer contributions only become available to members when they qualify and begin to receive a lifetime monthly pension benefit.
Then how is my pension benefit calculated?
Your pension benefit is calculated using a formula comprised of a multiplier times your average monthly salary (AMS) times the total years of service you have at retirement. PERS is designed to reward longevity, so the multiplier increases at certain key points in a members service.
For "All Other" members, the formula is:
- 2% x AMS x years of service up to 10 and all years served prior to July 1, 1986; plus
- 2.25% x AMS x years of service over ten served after July 1, 1986; plus
- 2.5% x AMS x years of service over twenty.
For "Police/Fire" members, the formula is:
- 2% x AMS x years of service up to 10; plus
- 2.5% x AMS x years of service over ten
Highly compensated employees may become subject to the salary limitations under IRS 401(a)(17) if they earn more than the maximum allowed salary for the year. If salaries exceed the limit ($265,000 for 2015) contributions will cease to be taken from their salaries until the start of the next tax year. Any contributions taken in error will be refunded, with interest, to the member and will represent taxable income. Members receiving a refund of contributions under this provision will receive a 1099 at the end of the tax year.
How can I obtain an estimate of what my pension benefit will be?
If you are more than 5 years from retirement eligibility, you can obtain a projection on this web site using the PERS Benefit Estimator.
If you are within 5 years or less from retirement eligibility, you should contact the Division at (907) 465-4460 and order a projection of benefits. Requests are processed in the order they are received. You should allow 15 working days for processing.
Is there any way to provide continuing benefits to my spouse after retirement if I die first?
Yes. If you are married, you are required to select a joint and survivor option unless your spouse consents to another form of benefit payment. With the election of a joint and survivor option, your benefit is reduced slightly to provide pension and medical benefits for your spouse for the remainder of their lifetime.
PERS provides two levels of survivor payment, 50% of your reduced benefit or 75% of your reduced benefit. If your spouse dies first, your benefit does not change.
Along with the pension benefit, health insurance eligibility will continue.
What is available to my spouse if survivor benefits are waived and I die first?
With no survivor benefit election, all benefits cease at your death, including the health insurance.
Your spouse would receive your last pension check and the balance of your contribution account, if any, at the time of your death.
Your spouse would also be given an opportunity to purchase health insurance for a limited time under the federal COBRA plan.
Please refer to the PERS Information Handbook on this web site for more detailed information regarding calculation of average monthly salary, survivor options and early retirement reductions.
How do I earn service credit in the PERS?
Full-time members of the PERS earn a day of service credit for each day they are actively employed in a PERS-covered position. This includes holidays or regularly scheduled days off (RDO) as long as you are in pay status the day before and the day after the holiday or RDO.
Part-time members of the PERS, those who work at least 15 hours per week but less than 30 hours per week, receive credit for the number of hours they work. A total of 1,560 hours must be earned to receive a year of service credit. However, service accrued for a stated period of part time service may not exceed the full-time equivalent.
How do I know how much service I have?
The PERS issues a member statement once each year. The statement includes your total service accrual as of the date of the statement as well as an accounting of all the contributions, indebtedness payments made and interest earned for the year.
If I think there is an error in my service on the statement, how do I get it corrected?
Your employer reports your service and contributions to the PERS each pay period. If you believe your service is in error, you should contact your employer first. If the employer agrees that there has been an error in reporting, they can correct the error on their next payroll processing or, if they are not able to make the correction that way, they can contact the Division for assistance.
The PERS Plan
What type of plan is the PERS?
For employees who first entered prior to July 1, 2006, the Public Employees' Retirement System (PERS) is a defined benefit plan which is designed to offer a lifetime monthly benefit once retirement eligibility is reached. Your retirement from the plan, provided you do not refund your contributions, will be determined by a formula defined in statute. Unlike a defined contribution account, your benefit is not based on the amount of money in your contribution account.
What kind of benefits are available through PERS?
PERS provides benefits for active members as well as pension and medical benefits at retirement. Qualifying active members have occupational disability and death benefits available upon entry to PERS. These benefits expand to disability and death benefits resulting from nonoccupational causes once a member is vested.
For members who reach retirement eligibility, PERS provides a lifetime pension benefit with options to provide continuing benefits to a surviving spouse. Along with the pension benefit, PERS also offers a retiree medical plan, Dental-Vision-Audio coverage, and Long-Term Care coverage.
Once retired, eligible members receive a cost of living increase to their PERS benefits once per year if there has been a raise in the cost of living in the previous year.
Retired members who are principally domiciled and physically present in Alaska and receiving a monthly pension may also be eligible for an additional after-retirement increase of 10% of their base pension benefit. This increase is paid on a monthly basis for as long as the member is eligible.
The PERS is administered by the Division of Retirement and Benefits. The division director is the administrator of the plan.
I have heard about "tiers" in the PERS. How do they affect me and how do I know what tier I am?
PERS is currently a three tiered system with each tier determined by the date a person first became employed with a PERS employer in a PERS-covered position, was receiving compensation and making PERS contributions. This is commonly referred to as your entry or enrollment date.
The tiers establish when a member is eligible for retirement and the after-retirement increases as well as when and if medical premiums are paid by the retirement system or are paid by the member. Tier III members also have a slightly different benefit calculation from Tiers I and II. For more information regarding tiers and to determine which tier you are in, please see the PERS Comparison Chart [PDF 33K] on this web site.
What does being "vested" mean?
A PERS member is vested when they have at least 5 paid-up years of membership service. Once you are vested, you may terminate PERS employment and still receive a monthly retirement benefit when you reach retirement age. However, you must leave your contributions in the PERS to stay vested.
As an active employee in the PERS, vesting also expands your death and disability benefits. Prior to vesting, both occupational death and disability monthly benefits are available for injuries or illnesses arising from occupational causes. Only vested members, however, have monthly benefits for death or disability resulting from nonoccupational causes.
Can I claim service to count toward vesting?
Claimed service does not count towards vesting. Members must have 5 years of paid up membership service.
How do I find out when I will vest?
The PERS does not provide notification of vesting. Since full-time service accrues on a calendar day for day basis, members can determine their vesting date by adding their paid up service periods until a total of five years is obtained. Part-time members can determine their service by dividing their hours worked each year by 1,560 to determine their service for that year (the service earned per year cannot exceed one year). Members needing assistance can contact the PERS.