PERS2 is a traditional pension plan. It was
adopted by Washington State in 1977. PERS2 works well for an
individual who works for the state for a long, uninterrupted period
with an increasing salary without a long gap between stopping work
and taking their pension.
Eligibilty to PERS2 was open to new members as
of October 1, 1977.
PERS2 is funded by contributions from the
employer and the employee. Your contribution rate will vary.
Your monthly check is based the average monthly
salary of the highest consecutive 60 months of service, so
interruptions could decrease your pension.
Benefits:
- Offers predictable income.
- Generous payout of up to to 60% of your highest salary.
- Retirees are eligible to buy pooled medical insurance. This is important for people who retire before they are eligible for Medicare.
- Includes survivorship benefits. Survivorship benefits are now available to state-registered domestic partners.
- Provides for a Cost of Living Adjustment (COLA) of up to 3%
a year. You become eligible for COLA after 1 year of retirement.
- You can buy up to five service years for a lump sum
payment. The price for this "annuity" is much
lower than you could get from a private insurer.
- You can change to PERS3 in January of any year, if you are still working.
Considerations:
- If you are an "early leaver", leave service many years
before retirement, your pension, based on your salary can be
frozen, unadjusted for inflation. Your loss of wealth could
be substantial.
- PERS2 is subject to the state legislature;
the terms can be changed.
- Once your retire, the decisions you made under PERS2
cannot be changed. Carefully consider the effects of
survivorship provisions, buying more service years or early
retirement beforehand.
- If you pull your contributions out of PERS2 and put it into an IRA, you lose all pension benefits.
- Your pension can be seriously decreased by events late in your career, such as switching to part-time work before you retire.