PERS Choices
Washington PERS (Public Employees Retirement System) is a pension plan consisting of PERS 1 and its two successors. These issues represent choices that will have long lasting effects on your retirement.
Plan-Specific Issues
Cashing out sick leave. This can help you to boost your Average Final Compensation and increase your monthly pension. Working overtime in your last two years will do the same.
New employees have the choice of joining Plan 2 or Plan 3.
Transferring to Plan 3. If you joined Plan 2 before March 1st, 2002, you can transfer to Plan 3 any January, while you are still working. This would be an advantage for a younger employee. Transferring would decrease the loss of value, to inflation, that occurs during a long gap between termination the start of pension payments. A ten year gap, with annual inflation of 3% would decrease the value of a pension by 27%.
(Plan 2 employee contributions are placed in tax-deferred account which can be left with Plan 3, put in a roll over IRA, or taken as a distribution with taxes and penalties.)
New employees have the choice of joining Plan 2 or Plan 3.
Choosing the deferral rate. This is done on enrollment in Plan 3. This sets the amount taken out of your paycheck; it varies from 5 to 15%. It is irrevocable, so choose carefully. Plan 3 deferrals do not affect the annual cap on other deferred plans, such as the Washington DCP or a 403(b); this could allow you to defer annual amounts in excess of $25,000 per year.
Issues for All Three Plans
This is an opportunity you have while you are no longer employed before you are eligible for Medicare. There is a short window for enrollment.
Age of Retirement
This could be your most important decision.
Do you like your work? Want to try something else? Travel? Your age, assets, debts, budget, dependents, Social Security income, PERS pension, survivor options, and health make this particular to you. Asking the right questions, doing the math can result in much better results. This is where careful planning, by yourself or with my help, makes a big difference. Unfortunately, during this recession many people have left the workforce before they were ready.
Survivorship
The choice affects your income and offers protection for a spouse or domestic partner at a cost of monthly income. The choice is generally irrevocable.
Buying Additional Service Credits
You may buy up to 5 extra years of service. Essentially, this is an annuity. This annuity is less expensive than it would be from a private insurer.
Long Term Care Insurance
While not part of PERS, it is available as a group plan to some current State of Washington employees. The group plan is cheaper; there are no sales commissions. Long term care insurance is not for everyone. Buying a policy can protect your assets, maintain your independence and help your family, if you should need care. Check with your benefits department to see if the group plan is available..