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Full text of "Montana Public Employees' Retirement System (PERS) member handbook"

MONTANA 

PUBLIC EMPLOYEES' 

RETIREMENT SYSTEM 

(PERS) 

MEMBER HANDBOOK 



July 2008 



Public Employees' Retirement Board 



State of Montana 

Brian Schweitzer, Governor 

Public Employees' Retirement Board 

Term 
Name Statutory Designation Location Expires 

(§ 2-15-1009, MCA) 

Jay Klawon Investment Experience Hamilton 3/31/09 

President 

JohnPaull Active Public Employee Butte 3/31/10 

Vice President 

Terrence Smith Active DC Plan Member Bozeman 3/31/09 

Ray Peck Member At Large Helena 3/31/11 

John Niels on Active Public Employee Glendive 3/31/12 

Dianna Porter Member at Large Butte 3/31/13 

DarcyHalpm Retired PERS Member Belgrade 3/31/13 

Executive Officers 

Roxanne Minnehan Executive Director 

Melanie Symons Legal Counsel 

Scott Miller Legal Counsel 

Kim Flatow Member Services Bureau Chief 

Barbara Qumn Fiscal Services Bureau Chief 

Kathy Samson DC Plans and Education Services Bureau Chief 

Ann Reber Editor 

PERB Mission Statement 

The Montana Public Employees' Retirement 
~ - Board will fiduciarially administer its retire- 

ment plans and trust funds, acting in the best 
interest of the members and beneficiaries. 




Contacting MPERA 

If you have any questions about the Public Employees' Retirement 
System (PERS), call or e-mail us or visit our website. 

Helena Office 



Telephone Mailing Address Office Address 

(877) 275-7372 P.O. Box 200131 100 North Park Ave. 

(406)444-3154 Helena, MT 59620-0131 Suite 200 



Helena, MT 59620 



E-Mail 



In most cases, if you know the name of the person you are e- 
mailmg, use their first initial and their last name plus @mt.gov. 
For example, John Doe's address is: jdoe@mt.gov. 

If you don't know who to contact, e-mail our "front desk" and 
we'll forward your question to the right person: mpera@mt.gov. 

Web Site 

For updated information and to view MPERA newsletters and 
other publications visit us on the web at http://mpera.mt.gov/. 



MPERA Mission Statement 

The Montana Pubhc Employee Retirement Administration 
(MPERA) will efficiently provide quah'ty benefits, education and 
service to help our plan members and beneficiaries achieve a qual- 
ity retirement. 

Permission is granted to reproduce, copy or duplicate the informa- 
tion in this book, provided credit is given to MPERA. Cover 
photo courtesy of Choctaw Photo. 



Ftable of contents"! 

Preface 6 

Introduction 7 

PERS Plan Options 8 

Section I: Membership [ 



1. Membership Enrollment 10 

- Membership Cards 

- Optional Membership 

- Working Retiree Membership 

- Exclusion from Membership 

I. Contributions 14 

- Member Contributions 

- Employer Contributions 

- Refund of Contributions 

>. Service 17 

- Membership Service 

- Vesting 

- Service Credit 

- Part-time Service 

- Annual Membership Statement 

- Purchase of Service 



Section II: Benefits 



1. Qualifying for Benefits 24 

- Vested Members 

- Active Members 

- Inactive Vested Members 

- Non-Vested Members 

- General 

2. Retirement Benefits 26 

- Service Retirement 

- Early Retirement 

- Money Purchase Benefit 

3. Disability Retirement 29 

- Effective Date of Disability Benefit 

- Disability Benefit 

- Disability Reviews 

- Employment 

- Disability Benefit Cancellation 



Table of Contents (Continued) 

4. Circumstances Affecting Benefits 33 

- Working Retiree 

- Involuntary Termination 

- Independent Contractors 

Section III: Payment Options | 




1 . Option 1 35 

2. Option 2 38 

3. Option 3 39 

4. Option 4 42 

5. Changes to Options 43 

6. Sample Calculations 44 



Section IV: Additional Information 



1 . Death of an Active Alember 48 

- Beneficiaries 

- Death Benefit Claim 

- Death Benefits or Payment 

- Death of an Inactive Member 

- Death of a Retired Member 

- Survivorship Benefit 

2. Benefit Increases 51 

- GABA 

- Eligibility for and Effective Date of GABA Benefits 

- Timing for Benefit Payments 

3. Taxes on Benefits 53 

- Tax Statements 

- Tax Advice 

- Taxes on Refunds 

4. Assignment of Benefits 55 

- Family Law Order 

5. For More Information 56 

Glossary of Terms 57 



TABLES 



Table 1: Early Retirement Factors 27 

Table 2: Service Retirement Benefit 36 

Table 3: Service Retirement Option Factors 40 



Preface 

This Public Employees' Retirement System Member Handbook is a general 
summary of the benefits provided by the Montana Public Employees' 
Retirement System (PERS) . It is intended to give you an idea of what 
your benefits are and to acquaint you with PERS. Every effort has 
been made to ensure the contents agree with the law and rules. The law 
and its interpretation can change, so this handbook may be out-of-date 
soon after it is published. This handbook is not a final source of the 
law and rules. IT SHOULD NOT BE TAKEN AS FINAL 
LEGAL AUTHORITY. Information in this handbook is based on 
2007 law. Benefits are based on the law in effect at the time of your 
termination from employment; therefore, some information found 
here may not apply in specific cases. If this handbook differs with the 
law or rules, the law or rules will apply. This handbook replaces all 
previous PERS member handbooks. 

Montana Code 

The law governing PERS may be found in Title 19, Chapters 2 and 3, 
Montana Code Annotated (MCA). The MCA is available on line at: 
http://data.opi.mt.gov/bills/mca_toc/index.htm. References to the 
pertinent sections of MCA are provided in parentheses throughout this 
publication. 

Overview 

• PERS provides service retirement benefits, disability retirement 
benefits and survivor benefits, if eligible. 

• You are eligible to retire and receive a service retirement benefit if 
you complete 30 years of membership service at any age or you are 
age 60 with at least five years membership service. 

• You and your employer both contribute toward your future retire- 
ment benefits. 

• You may withdraw only your contributions plus interest if you 
leave PERS-covered employment and don't retire. 

• If you withdraw your contributions, you lose your right to any fu- 
ture retirement benefit. 



Introduction 

Retirement S ecurity for our Members Since 1 945 

The Public Employees' Retirement System (PERS) is a public 
pension plan for employees of the state, university system, and local 
governments. The 1945 Legislature created PERS to grant service 
retirement, disability retirement, or survivor benefits to plan mem- 
bers and their beneficiaries. Unless another state plan covers the 
position, PERS will cover all state and university workers. Local 
governments may contract with the Board to cover their workers 
under PERS. Membership of PERS consisted of the following as of 
June 30, 2007: 

PERS Defined Benefit Membership 

Number of participating employers 528 

Active plan members 27,977 

Inactive plan members entitled to 

but not yet receiving benefits or a refund: 

Vested 2,576 

Non-vested 6,401 

Retirees and beneficiaries receiving benefits: 

Service Retirements 15,488 

Disability Retirements 316 

Survivor Benefits 333 



The Public Employees' Retirement Board (PERB) is an 
independent, seven-member board appointed by the Governor to 
administer PERS, eight other retirement systems, and the State's 
457 Deferred Compensation Plan. The Montana Public Employee 
Retirement Administration (MPERA) does the day-to-day work. 
This handbook uses the following terms: we, us, MPERA, and 
Board interchangeably. 



PERS Plan Options 

All new PERS members will have an opportunity to choose mem- 
bership in either the Defined Benefit Retirement Plan (DBRP) 
or the Defined Contribution Retirement Plan (DCRP). Once 

made, your choice can not be changed. A clear knowledge and un- 
derstanding of both the DBRP and the DCRP is very important to 
help members make this decision. MPERA provides information 
and training to help PERS members understand the plans and the 
necessity of retirement planning (§§ 19-3-2102 and 19-3-2103, MCA) 

Following is a brief explanation of the DBRP and the DCRP: 

Defined Benefit Retirement Plan (DBRP): A DBRP guarantees 
a specified retirement benefit, based on a percentage of your highest 
average compensation and your years of service credit. When eligi- 
ble, your monthly benefit will be increased each year by a Guaran- 
teed Annual Benefit Adjustment (GAB A). Your monthly benefit 
will be paid to you for your lifetime. In a DBRP, the employers bear 
the risk when it guarantees your lifetime retirement benefit. 

Money that you pay into PERS earns interest and helps pay for your 
benefits. At MPERA, we keep track of your money in your own 
account, and credit your account with interest. We combine the 
funds from all accounts in a trust fund, which the Board of 
Investments controls. Income earned from the trust fund invest- 
ments is returned to the trust fund. Only the Board may authorize 
payment from the trust fund. Current law limits payments to 
benefits and refunds for members or their survivors. In addition, 
the Board must pay administrative expenses from the investment 
earnings. 
(§§ 19-2-408 and 19-2-505, MCA; Montana Constitution, Art. VIII, § 13) 

Every year, an actuary evaluates the trust fund's capability to pay the 
benefits promised to members. Based on the trust fund's strength 
and the actuary's advice, the Board may initiate increases in benefits. 
Benefits are set by law, and only the Legislature may change them. 



Before each legislative session, the Board will review the sufficiency 
of the benefits and advise the Legislature. 
(§§ 19-2-403 and 19-2-405, MCA) 

Defined Contribution Retirement Plan (DCRP): In a DCRP, 

the contributions into the plan are known; the benefit is not. A 
DCRP establishes individual member accounts and offers a variety 
of investment options. Members direct their (and a large portion of 
the employers') monthly contributions to investment options se- 
lected from those offered by the plan. The retirement benefit re- 
ceived is based upon the account balance - contributions plus in- 
vestment earnings (or losses), less administrative cost. In a DCRP, 
members bear the risk that their investment and accumulated ac- 
count balance will be sufficient for their retirement needs. 

All new members of PERS will receive educational information to 
assist them in making a decision to remain in the DBRP or select 
the DCRP. The educational materials will be sent directly from 
MPERA once the new member has been reported on a payroll. All 
newly-hired PERS members will have 12 months from the date first 
reported to MPERA to decide which retirement plan is right for 
them. 

NOTE : This PERS Member Handbook provides information for the De- 
fined Benefit Retirement Plan. It does not explain the Defined Contribu- 
tion Retirement Plan. 

Defined Contribution Retirement Plan information can be found on our 
web site at: 

http://mpera.mt.gpv/docs/DCBasics.pdf 



Section I: Membership | 



Generally, if PERS covers the job, you must become a member 
though there are some exceptions. This section explains 
membership enrollment, contributions, and service. 

1. Membership Enrollment 

Membership enrollment is required for most PERS-covered jobs. 
Optional membership for some positions is explained on page 11. 
Pages 12 and 13 contain information for working retired members 
and an explanation of employees who are excluded from 
membership. 

Membership Cards 

New employees must complete a membership card upon starting 
work in a PERS-covered position. Your payroll clerk should provide 
you with this card on your first day of work. Complete the card and 
return it to the payroll clerk who will send it to us. Membership may 
not be discontinued until employment in a PERS-covered position 
is terminated. (§19-3-401, MCA) 



A membership card is a vital record; 

you must keep it up-to-date. To Update your membership 

update your information, complete a card whenever any of the 

new card and give it to your payroll information on the card 

clerk. The payroll clerk must send it changes. 

to us in order for the changes to take , 



effect. Marriage, divorce, birth of a child, any name changes and 
death of a beneficiary are some of the reasons to update your card. 
We print data from your membership card on your Annual Mem- 
bership Statement which is mailed to you each July. Check the 
statement carefully. If any of the member or named beneficiary data 
is wrong, submit a new card to your payroll clerk. (§ 19-2-801, MCA) 

10 



Optional Membership 

Listed below are the types of new employees who are not required, 
but who may choose, to become members of PERS. The follow- 
ing positions are optional: 

□ Elected officials of state or local government paid on a salary 
or wage basis, or receiving retirement benefits under the 
DBRP or a distribution under the DCRP. (§19-3-412) 

□ Employees scheduled to work less than 960 hours per fiscal 
year (cumulative if in more than one PERS position). 

□ Employees directly appointed by the Governor. 

□ Employees of the legislative branch, working 10 months or 
less, performing work related to the legislative session. 

L) Chief administrative officers of a city or county. 

□ Employees of a county hospital or rest home. 

If you are a new employee and ^^^^^^^^^^^^^^^^^~ 

PERS membership is optional for The Optional 

your position, you may choose to Membership Election 

become a PERS member by: (1) f orm must be completed 

filling out a membership card, and an d returned to MPERA 

(2) completing an Optional Mem- whether or not you choose 

bership Election form. If you wish PERS membership. 

to decline membership in PERS, 

you must still complete the Op- 
tional Membership Election form. You , not your employer, must 
decide if you should be a member. 

Your payroll clerk will give you the card and form and will send 
them to MPERA after you complete them. The employer must 
keep a copy of the form on file and return the original to MPERA. 
Once you become a member, you must follow the same laws and 
rules as any other member. Do not complete a membership 
card if you do not want to become a member. 

(§§ 19-2-303, 19-3-401 and 19-3-412, MCA) 

11 



You are a member if you have ^^^^^^^^^^^^^^^^^ 

contributions and service on Your membership 

account with PERS. Once a continues as long as you 

member, you may not withdraw work in a PERS-covered 

from PERS even if you will work job, when you have 

less than 960 hours in the coming contributions and service 

year. Even if you terminate employ- on account. 
ment and later accept a job for 



which membership is optional, you must continue your 
membership if you have funds on account. In other words, if you 
are already a member, then your membership must continue 
even if you later accept employment in an optional position. 

You are required to complete a new election form only if you 
received a refund of your account. Elected officials may not 
withdraw upon re-election to office. 

Working Retiree Membership 

A retired member may work for a limited time in a PERS-covered 
job without becoming an active member. Current law imposes 
various limits on working retirees. If they exceed the limits, their 
benefit may be reduced. Each employer must report all working 
retirees to MPERA monthly. The report must show each retiree's 
total paid hours and total wages. Retirees must verify all the infor- 
mation on the form, sign and date it to meet their reporting re- 
quirements. See page 32 for more details about working retirees. 
(§ 19-3-1106, MCA) 

NOTE : A member must be retired for at least 30 days, have no agree- 
ment, written or verbal, to return to that employer, and receive one 
benefit check before accepting a PERS-covered job. 

Working retirees may end retirement and become active members. 
They need to complete a membership card and have their payroll 
clerk send the card to us. Upon receipt, we will stop paying a 
benefit to the working retiree. When these members are ready to 
retire for the second time, they must notify MPERA. We will cal- 
culate a new benefit using the additional service. 

12 



Exclusion from Membership 

The following types of employees may not become members: 

(§ 19-3-403, MCA) 

U Inmates of state institutions. 

U Persons in state institutions mainly for training, but who receive 
compensation. 

□ Independent contractors. 

U Persons who receive credit for their current employment in any 
other public retirement plan, except Social Security. 

□ Court commissioners, elected officials, or members appointed 
to boards or commissions who serve part-time and receive only 
per diem. 

□ Full-time students working at and attending the same public 
school, community college, or unit of the state university 
system.* 

* A student of a public community college or a unit of the university 
system who later becomes a member of PERS may purchase this 
time. (See Purchase of Service, on pages 20 - 23.) 



13 



2. Contributions 

You and your employer pay contributions to PERS. The following 
explains contributions to PERS and what is expected of you and 
your employer. 

Member Contributions 

All members must pay part of their gross compensation to PERS. 
The current contribution rate is 6.9%. Your employer will withhold 
this money from your gross pay and send it to us. We will credit 
your contributions to your individual account. (§19-3-315, MCA) 

Interest : Your PERS account earns interest each month. The in- 
terest credited to your account will not affect the amount of 
your monthly retirement benefit. The exception is the money 
purchase benefit (see page 28). The monthly service retirement 
benefit is set by a statutory formula (see page 26). However, if you 
end your PERS-covered employment and leave your money on ac- 
count, it will continue to earn interest. If you take a lump sum re- 
fund instead of a monthly benefit, you will receive your contribu- 
tions plus accrued interest. 

Taxation : Since July 1985, the money you contribute to PERS is 
pre-tax. The interest your account earns has always been tax- 
deferred. This means state and federal taxes are not paid until you 
receive the money as a benefit or refund. Any money you paid to 
PERS before July 1985 was taxed. In other words, you paid the 
taxes before you paid the money to PERS. If you have taxed 
money in your account and elect to take a lump sum refund, or 
retire, then part of your refund or monthly benefit will be not be 
taxed. 

Purchase of Service : To purchase refunded or other types of op- 
tional service, you may contribute amounts beyond your regular 
contributions. These additional payments are pre-tax if you 
authorize payment by a payroll deduction contract. If these 



14 



contributions are not made through payroll deduction, they may be 
taxed. (For more details and other methods of paying, see Purchase 
of Service section on page 20.) 

You will earn interest on service purchase payments at the same 
rate you earn interest on regular contributions. All interest credited 
to your account is tax-deferred. (§19-2-704, MCA) 

Employer Contributions 

Your employer also contributes to the trust fund. Each month 
State and University employers contribute 7.035% of their total 
PERS-covered payroll. Each month local government employers 
contribute 6.935% while the State contributes 0.1% for a total of 
7.035%. School district employers pay 6.8% of their total payroll 
each month with the State contributing 0.235% for a total contri- 
bution of 7.035%. These contributions provide "pooled" funds for 
retirement, disability and death benefits. Employer contributions 
are not refundable. (§§ 19-3-316 and 19-3-319, MCA) 

Refund of Contributions 



Vested members who end PERS- ^^^^^^^^^^^^^^^^^™ 
covered employment may leave When you receive a 

their money on account to continue re f U nd, you are no longer 
to earn interest; or receive a refund a mem ber of PERS. You 
of their accumulated contributions w [\\ have no right to any 
(member contributions plus inter- form of PERS benefit. 

est). 



To receive a refund, complete an application from your employer. 
The application has two parts. You must complete the member 
section, then give it to your employer. Your employer will complete 
the employer section and send it to MPERA. 

If you have been inactive for more than three months, you should 
contact MPERA directly to apply for a refund. (§19-2-602, MCA) 



15 



Processing a Refund : MPERA cannot process your refund 
before your employer sends us the application and the final payroll 
information. This process may take up to four weeks from the 
date you get your last paycheck. Extending your last day of work 
into a new pay period or month may increase the processing time. 

Mandatory Refunds : If you are not a vested member (less than 
five years of membership service) IRS regulations may require that 
we distribute your contributions to you. If you have: 

• less than $200 in accumulated contributions, you will auto- 
matically be sent a lump sum refund. No taxes are with- 
held. 

• Between $200 and $1,000 in accumulated contributions, 
you will be sent a notice and a refund application. The ap- 
plication allows you to request that your contributions be 
rolled over to another eligible plan. Rolling your contribu- 
tions to another eligible plan protects the tax-deferred 
status of your contributions. 

• more than $1,000 in accumulated contributions, you may 
leave your contributions on account and continue to earn 
interest. 

(§19-2-602, MCA) 

NOTE : If you receive your refund directly, the IRS requires us to 
withhold 20% for tax purposes. The IRS may also charge you an 
additional 10% penalty for early withdrawal. (For more information, see 
Taxes on Refunds, on pages 53 and 54.) 

Return to Work After Receiving a Refund : If, after receiving a 
refund, you accept a mandatory PERS-covered position, you will 
again become a member. We will consider you a new member 
without credit for the refunded service. You may purchase the 
refunded time plus interest to reinstate that service. (For more 
details see Purchase of Service, on pages 20-23.) (§19-2-603, MCA) 



16 



3. Service 

The amount of time you work and contribute to PERS affects the 
amount of your retirement benefit. The monthly benefit you receive 
will depend on the number of years you work in a PERS-covered 
position, whether you work full or part-time, your compensation 
and any purchases of service. 

Membership Service 

MPERA uses membership service to determine if you are eligible 
for vesting, retirement, or other PERS benefits. You earn one 
month of membership service for any month you contribute to 
PERS, regardless of the number of hours you work or pay you re- 
ceive that month. 

If eligible, active and inactive vested members may purchase some 
types of service that will count as membership service. (See Pur- 
chase of Service, on pages 20-23.) Your total membership service 
will not match service for other employee benefits, such as the rate 
at which you earn annual leave. Service for different benefits may 
vary because the laws and rules that apply are different. 
(§§ 19-2-303, 19-2-702, and 19-3-401, MCA) 

NOTE : Retirees do not earn membership service, nor may they buy ser- 
vice. 

Vesting 

You are vested after you accrue five years of membership service. 
Once vested, you are entitled to any retirement benefits for which 
you are eligible. (See page 26, Retirement Benefits.) If you withdraw 
your accumulated contributions, you give up your right to retire- 
ment benefits. 

Example: You become vested after earning five years of member- 
ship service. If you leave PERS-covered employment at age 37 with 
nine years of membership service, and do not withdraw your contri- 
butions, you may receive a monthly benefit when you are eligible for 
retirement. (Age 60, see page 26) 

17 



Service Credit 

Your service credit affects the amount of your retirement benefit. 
You earn one month of service credit for each month of full-time 
service. Full-time service means your employer paid you for at least 
160 hours of work during that month. You may not get more than 
one month of service credit even if you work more than 160 hours 
during a month. If you work less than 160 hours during any month, 
you will receive proportional service credit. For example, if you 
worked 80 hours during a given month, you would earn 0.5 months 
of service credit. However, for that same month you will earn one 
month of membership service. (§19-2-701, MCA) 

Your service credit years at retirement will be calculated by dividing 
service credit months by 12. 

Example: Suppose you were hired April 1, 1986 and you work full- 
time until June 30, 2006, when you will retire. Your months of ser- 
vice credit would be calculated as follows: 



Period of Employment 


Months 


April 1986 - December 1986 


9.0 


January 1987 - December 2005 


228.0 


January 2006 - June 2006 


6.0 


TOTAL 


243.0 



243 months divided by 12 months = 20.25 years of service credit. 
The service credit used to calculate your service retirement benefit 
would be 20.25. (See page 26.) 



18 



Part-time Service 

Upon retirement, if you work part-time MPERA will adjust either 
your service credit or your Highest Average Compensation (HAC). 
We adjust one or the other to prevent a double reduction of your 
benefit. If you retire with a full-time salary, then we will not adjust 
your part-time service credit to calculate your benefit. You will not 
see the adjustment to your service credit until retirement. 

Annual Membership Statement 

Each July, MPERA will send you a ^^^^^^^^^^^^^^^^~ 

membership statement projecting po- . , 

• , i r u j Carefully review the 

tential retirement benefits based on J 

■ c T r i statement to verily all the 

current inrormation. It you have . J 

, ■ information is correct. 

corrections, changes or questions con- 
cerning any information, including ser- ^^^^^^^^^^^^^^^^^^_ 
vice credit, Contact MPERA in writing and provide a copy of your 
statement with the changes noted. 

If you have part-time employment, the total service credit reported 
in your statement may seem wrong. The statement reflects the 
service reported by your employer. When your employer reports 
you worked less than 160 hours, the system gives you less than one 
month of service credit. As noted above, we will make adjustments 
for part-time service when you retire. We adjust your service credit 
to prevent a double reduction of your benefit for part-time service. 
However, if you work full-time somewhere else, then your HAC 
may be based on that full-time service. When your HAC is based on 
full-time service, we don't adjust your part-time service. 

NOTE : We will correct mistakes in your account or service when 
identified and verified. Mistakes will not bind MPERA to pay a benefit for 
which you are not eligible. 



19 



Purchase of Service 

Eligibility and Cost Statements : Vested members, both active 
and inactive, may purchase membership service and service credit at 
any time before retirement. Purchasing service may enhance your 
retirement benefit. Be aware, any delay may increase the cost 
because of added interest or higher salaries. 

You may not buy any service that will make you eligible for a 
retirement from another public retirement system until you receive a 
refund of the service from the other public system. 



Requesting a Cost Statement : A 

cost statement provides the amount After 30 days, the cost 
required to purchase service as well as statement is not valid. 
payment options. You must provide Contact MPERA for an 
the following written information: updated cost statement, 
your full name (including any. 



former names), a current mailing address, social security num- 
ber, and the type of service you wish to buy. If you are sending 
your request via e-mail, include all of the above information, how- 
ever, provide only the last four digits of your social security num- 
ber. You should also send any documents that relate to the service, 
including the approximate dates of service. We will review the 
request and send you a cost statement for buying any eligible 
service. 

You must pay the lump-sum cost or start monthly payments within 
30 days. Only MPERA can give you a cost statement. A cost 
statement from any other source may not be used. 

Paying for Service Purchases : You may pay for a service purchase 
in one lump-sum, or you may make monthly payments. Active 
members can make monthly payments by pre-tax payroll deduction. 
You may also purchase service through a rollover of funds from an 
eligible employer plan. Inactive vested members, active members 
not paid monthly, or active members who wish to self-pay may send 

20 



payments directly to MPERA. (These payments are not made pre- 
tax.) If you fail to make a regular monthly payment, you give up the 
right to make any more payments. Your service purchase will be 
prorated. 

MPERA will track your monthly payments in an additional 
contribution account until you complete the service purchase 
contract. We will then transfer the money to your regular account 
and credit your account with the service. You must complete all 
service purchases before you retire or the service purchase will be 
prorated. (§§ 19-2-704 and 19-2-708, MCA) 

Types of Service Which May Be Purchased: 

1. Refund: A member who terminates their job and requests a re- 
fund of the accumulated contributions (contributions plus interest) 
may purchase the refunded service if they return to a PERS-covered 
position. To purchase the refund, the member must repay the con- 
tributions and interest received as a refund. The interest the refund 
would have earned if it had been left on deposit must also be repaid. 
Refund service is both membership service and service credit. 

(§ 19-2-603, MCA) 

2. Retroactive: Retroactive service is service with a PERS-covered 
employer that wasn't credited to PERS at the time. A member who 
has retroactive service may buy all or a part of that service. Retroac- 
tive service is both membership service and service credit. 

(§ 19-3-505, MCA) 

3. Montana Public Service: Members may buy service refunded 
from (or for which they are eligible to receive a refund) other 
Montana statewide retirement systems administered by MPERA. 
Other full-time public service employment with the state or a 
political subdivision of the state may also qualify. Members may also 
buy service from the Teachers' Retirement System for which they 
have received, or are eligible to receive, a refund. All service refer- 
enced in this paragraph is both membership service and service 
credit. (§§ 19-3-509 and 19-3-511, MCA) 



21 



4. Absence Due to Illness or Injury: Time that a member is 
absent from work due to a work-related injury or illness is 
considered membership service. To qualify, the illness or injury 
must be work-related. The time which can be purchased may not 
exceed five years. If the member is eligible and pays the 
contributions and interest, the absence will also count as service 
credit. Upon return to work, the employee and employer must file a 
written application to buy the time. MPERA must receive certifica- 
tion the injury was work-related within one year of the member's 
return to work. Members lose the right to contribute for the 
absence if they received a refund of their account during the 
absence. (§ 19-3-504, MCA) 

This service is both membership service and service credit. 
(§19-3-503, MCA) 

5. "One-for-Five" Additional Service: For each five-year period 
of membership service, you may buy one year of additional service 
credit. You may buy no more than five years of additional service 
credit. Members eligible to buy one year may buy less than a full 
year. 

"One-for-Five" service is not membership service and cannot make 
you eligible to retire or to purchase other types of service. Your total 
service credit on your annual membership statement will not include 
the "One-for-Five" service purchased; however, it will be added to 
your service credit when we calculate your retirement benefit. If you 
meet the 25 year requirement for early retirement without the "One- 
for-Five" service, you can use that service to reduce or eliminate the 
early retirement reduction of your monthly benefit. (§19-3-513, MCA) 

6. Military/Reserve Military Service: When you have at least five 
years of membership service, you may, at any time prior to retire- 
ment, purchase up to five years of active military service or reserve 
military service. Reserve military service may include service in the 
army or air national guard. Both active and reserve military service is 
purchased at the actuarial cost. 

You may not purchase your military time if you are receiving a 
retirement benefit from the military, or from another retirement sys- 

22 



tern or plan for that time. You may not purchase your reserve mili- 
tary service if you have received service credit under USERRA for 
the same time period. You may purchase your reserve military time 
prior to separation from the services in the reserves. 

This service is both membership service and service credit. 
(§19-3-503, MCA) 

7. Volunteer in a U.S. Service Program: Vested members may, at 
any time prior to retirement, buy membership service and service 
credit for up to five years of the member's volunteer service in a 
United States service program, such as the Peace Corps. You may 
also purchase any documented, successfully completed required 
term of service in the Americorps Vista, Americorps National Com- 
munity Conservation Corps; or any other National and Community 
Service Act (NCSA) program that requires the volunteer to enroll 
for a specific term of service. (§19-3-515, MCA) 

8. Other Public Service: Vested members may buy service covered 
by another state, local, or federal government retirement system. If 
you received a refund of your account with another system, you may 
buy up to five years of that service in PERS. You may also buy the 
service if it occurred before the employer adopted a public 
retirement system. You may not use this service to qualify you to 
buy military service. Also, you may only count it as service credit if 
your last five years of service are with a PERS employer. 

(§§ 19-3-510 and 19-3-512, MCA) 

Limitations : Current law limits your purchase of active military, 
reserve military, additional, volunteer in U.S. service program, and 
other public service to a combined total of five years. For example, 
suppose you had twenty years of state service and three years of 
military service. Without any limit, you would be eligible to buy 
seven years: four years of additional (One-for-Five) service and 
three years of military service. However, current law limits you to 
only five years, but it can be any combination of the above service. 
(§ 19-7-805, MCA) 

When purchasing service, the most recent service must be pur- 
chased first. 



23 



Section II: Benefits 



To receive retirement benefits under the PERS defined benefit re- 
tirement plan, you must fulfill certain age and service requirements. 
Retirement benefits are payable directly to you. The benefit option 
you choose at retirement may also provide for a continued survivor 
benefit. This section explains how to qualify for retirement, the 
payment options available, how to calculate your benefit, and 
sample calculations for benefit options. 

1. Qualifying for Benefits 

Vested Members 

When you complete five years of membership service (explained 
on page 17), you become a vested member. Once vested, PERS 
guarantees a retirement benefit after you reach the minimum age or 
service requirement. 

Active Members 

You are an active member if you are in a PERS-covered position 
and making the required contributions to the system. If vested, and 
at least age 50 or 25 years of membership service at any age, you 
may terminate and apply for monthly retirement benefits. 



\ou could also take a refund of your _ , 

. . . ; Remember . . . 

account, rather than a retirement ~ . , , , 

, _ ' „ . . . Once you withdraw the 

benefit, when you withdraw your ac- " r 

, , , r money from your 
cumulated contributions rrom your 

.. i-i account, your 

account, you eive up all vested rights. , , . . v 

, , , membership ends. You 

In other words, once you cash your , . , 

r . . . J i- -i i r lose your right to any 
rerund check, you are not eligible tor a 

retirement benefit. (§ 19-3-401, MCA) 



benefit from PERS. 



24 



Inactive Vested Members 

You are an inactive, vested member when you terminate PERS- 
covered employment, have five or more years membership service, 
and do not withdraw your PERS account. You may buy any service 
for which you are eligible. You may apply for a retirement benefit 
when you meet the minimum age and/or service requirement. 
(§ 19-3-401, MCA) 



Non- Vested Members 

You will not be eligible for a retirement benefit. However, you are 
eligible for a refund of your accumulated contributions (your contri- 
butions plus interest). PERS will pay you interest until you receive 
the refund. Remember, if you do take a refund of your accumulated 
contributions, you give up all rights in PERS. (See page 16 for 
information on refunds for non-vested members.) (§ 19-3-401, MCA) 



General 

Once you are eligible to retire and begin taking a retirement benefit, 
you will receive your retirement benefit for life. We will not reduce 
your benefit by amounts that you receive from other retirement 
programs, such as Social Security. Upon your death, if you select 
Option 2 or 3, your contingent annuitant will receive a benefit for 
life. (Section III: Payment Options explains your payment options.) 



25 



2. Retirement Benefits 

PERS members are eligible to receive benefits upon meeting certain 
requirements. The PERS defined benefit retirement plan provides 
benefits for members as outlined on the following pages. 

Service Retirement 

You are eligible for service retirement when you meet any of the 
following criteria: 

• Age 60, with at least five years membership service. 

• Age 65 and in active service. 

• 30 years of membership service at any age. 

As stated earlier, defined benefit retirement plans use a set or 
defined formula to calculate your benefit. The PERS retirement 
benefit is based on your highest consecutive 36 months of compen- 
sation. This does not have to be your last 36 months of employment. It 
may come from earlier in your career. (§ 19-3-901, MCA) 

The factors used to calculate your lifetime benefit are: 

(A) Service Credit is the amount of full-time service you earned 
(see page 18). 

(B) 1.7857% (1/56) or 2% (1/50) is the factor that determines 
how much of your HAC you get for each year of service credit. 

(C) HAC is the average of your highest consecutive 36 months of 
salary. Add your highest consecutive 36 months of compensation 
and divide by 36 to get the average monthly compensation. 

The basic formula for a monthly service retirement benefit in the 
PERS depends on your years of membership service and service 
credit as explained below: (§ 19-3-904, MCA) 

1. Less than 25 years membership service : 1.7857% x years of Service 
Credit x Highest Average Compensation (HAC) 

2. 25 years or more membership service : 2% x years of Service Credit 
x Highest Average Compensation (HAC) 

26 



Early Retirement 

You are eligible for early retirement if you meet either of the 
following criteria: 

• Age 50, with at least five years membership service. 

• 25 years of membership service at any age. 

For early retirement, MPERA reduces the amount of your service 
retirement benefit by an early retirement factor (ERF). The ERF 
depends upon how many years it will take you to reach age 60 or 30 
years of membership service. We use the ERF that gives you the 
larger benefit. 

To estimate your early service retirement benefit, you must first 
calculate your Option 1 service retirement benefit from Table 2 on 
pages 37-38, or by using the formula on the previous page. Next, 
select the ERF from the table below which applies to you. If both 
an age and service category apply, then use the largest factor. 
(§§ 19-3-902 and 19-3-906, MCA) 

TABLE 1: EARLY RETIREMENT FACTORS 



AGE 


EARLY 
RETIREMENT 
FACTOR (ERF) 


YEARS OF MEM- 
BERSHIP SERVICE 


59 


0.940 


29 


58 


0.880 


28 


57 


0.820 


27 


56 


0.760 


26 


55 


0.700 


25 


54 


0.664 




NOTE: Members 
under age 50 with 
less than 25 years of 
membership service 
are not eligible for 
early retirement. 


53 


0.628 


52 


0.592 


51 


0.556 


50 


0.520 



27 



Money Purchase Benefit 

PERS has a money purchase benefit available instead of the benefit 
calculated by the defined formula. It is a lifetime monthly benefit 
just like the service retirement benefit. If you retire after a long 
period as an inactive member, the money purchase benefit may give 
you a larger benefit. We will calculate your benefit using both 
the defined benefit formula and the money purchase benefit 
methods. You will receive the larger of the two benefits. You 
may also choose any of the payment options. (§19-3-904, MCA) 
The money purchase benefit is based on the following formula: 

(Account Balance x 2) x Single Lifetime Annuity (SLA) 

The SLA is based on actuarial tables too large to present in this pub- 
lication. 

Example: You terminate your PERS employment at age 37 with 9 
years of service and a highest average compensation (HAC) of 
$3,200. In 14 years, at age 50, you are eligible for early retirement 
and your accumulated contributions (your contributions plus inter- 
est) in PERS now total $48,000. 

The monthly service retirement benefit would be: 

1.7857% x years of Service Credit x HAC x ERF 

1.7857% x 9 x $3,200 x 0.520 = $267 per month 
The money purchase benefit would be: 

(Account Balance x 2) x SLA x ERF 

($48,000 x 2) x 6.391 x 0.520 = $319 per month 

The money purchase benefit in this case is $52 more than the 
monthly service retirement benefit. 

Additional contributions to purchase service, plus interest, will also 
be used in the calculation of this benefit. 

NOTE : Your account will continue to earn interest, and it grows over 
time. Eventually, the money purchase benefit will be larger than the ser- 
vice retirement benefit. The money purchase benefit helps compensate for 
inflation. As stated above, we will calculate a member's benefit using both 
methods and you will receive the larger of the two. 

28 



3. Disability Retirement 

To qualify for a disability retirement, you must meet the following 
requirements: 

• You must be a vested member (have at least five years of 
membership service) and be under the age of 60. 

• Your disability must be permanent, or at least of uncertain 
duration. 

• Your disability must totally prevent you from doing the essential 
elements of your job. 

• Employers must catalog the essential elements of your job. 

• Your disability must occur during your active membership. 

Effective Date of Disability Retirement Benefit 

You should apply for the disability retirement benefit while you are 
an active member, or 120 days after termination of PERS employ- 
ment. You must also prove the disability occurred during PERS em- 
ployment. Once you are approved, disability retirement benefits are 
effective the day after you terminate your employment. To receive 
disability retirement benefits, you must terminate all current PERS- 
covered employment. 

If you terminate your job first, then an application made within four 
months of your termination must prove your disability occurred 
before you terminated. If you apply for the disability retirement 
benefit after four months have passed since your termination of em- 
ployment, you must prove your disability occurred before you 
terminated and also that it has been continuous from when you 
terminated. (§§ 19-3-1002 and 19-3-1005, MCA) 

Disability Benefit 

Members who joined PERS before February 24, 1991, could choose 
disability coverage under the old or new disability law. This choice 
had to be made in writing on or before December 31, 1991. 

If you are uncertain whether you signed the election form to be cov- 
ered under the new law, please contact us. 

29 



A disabled member who chose coverage under the new law, or 
joined PERS after February 24, 1991, will receive a monthly benefit 
equal to one of the following: 

1. Less than 25 years membership service : 1.7857% x years of Service 
Credit x Highest Average Compensation (HAC) 

2. 25 years or more membership service : 2% x years of Service Credit 
x Highest Average Compensation (HAC) 

This is the same formula used to calculate your service retirement 
benefit except there is no reduction in the benefit amount for early 
retirement. The money purchase benefit is not used for a disability 
retirement benefit. A disability retiree may elect any of the four 
benefit payment options available to service retirees. 
(§ 19-3-1008, MCA) 

Under the old law, a disabled member with at least five years of 
membership service could receive a monthly benefit equal to the 
larger of the following: 

1. 0.90 x (1.7857% x years of Service Credit x Highest Aver- 
age Compensation); or 

2. 0.25 x (Highest Average Compensation) 



Disability Reviews 

The Board may review the medical condition of any member 
receiving a disability benefit. Periodic reviews may be performed to 
decide if the member still qualifies for disability retirement. 

(§ 19-3-1015, MCA) 

Employment 

While receiving a disability benefit, you may earn income (other 
than PERS-covered employment), but the law limits how much 
you may earn. This limit is the monthly amount you were earning 
when you became disabled. For any month that your other income 
plus your disability retirement benefit is more than the limit, 
MPERA will reduce your benefit. 

30 



Your benefit will be reduced $1 for 

every $1 your earnings are over the MPERA will review the 
limit. After receiving a disability monthly income of all 

retirement benefit for 36 months, disability retirees every year. 

the board will automatically adjust You must re P ort y our annual 

your limit for inflation. (§ 19-3-1103, income on forms provided by 
MCA) MPERA. 



The limit applies to income you earn from employment in a posi- 
tion that is not covered by PERS. If you accept a PERS-covered 
job, we will reinstate you to active service and cancel your 
disability retirement benefit. 

Disability Benefit Cancellation 

The Board will cancel a member's disability retirement in the 
following cases: 

L) The member is no longer totally disabled and can return to his 
or her former job. 

□ The member accepts a PERS-covered job. 

□ The member refuses to submit the results of a current medical 
exam for review. 

(§§ 19-3-1015 and 19-3-1104, MCA) 

Contact us for complete details about disability benefits and how to 
apply. 

NOTE : When you reach service retirement age (60), we will convert 
your disability retirement to a service retirement. The benefit amount will 
not be adjusted. Converting to a service retirement will end medical 
reviews and annual financial reviews and eliminate the earnings limit. If 
you accept a PERS-covered job after conversion, your limits will be the 
same as for all other service retirees. See the next page for more 
information on Working Retirees. 



31 



4. Circumstances Affecting Benefits 

Working Retiree 

As a PERS retiree, you may wish to work in a job covered by PERS, 
but the law imposes some limits. Whether or not a limit applies will 
depend on your age. 

If you are less than age 65 . your benefit will be reduced $1.00 for 
each $1.00 earned from PERS employment in excess of 960 hours. 
Only the hours you are paid to work will count toward the 960-hour 
limit. This does not include paid sick or annual leave. The limit ap- 
plies to each calendar year and MPERA reduces benefits only if you 
exceed the limit. 

If you are 65 to 70 1/2 years of age , the limit is either the 960 hours 
or an earning limitation, whichever is higher. The earning limitation 
is equal to your Highest Average Compensation (HAC) adjusted for 
inflation. The sum of your retirement benefit and PERS job- 
covered earnings must be less than the earning limitation (HAC ad- 
justed for inflation). Any other earnings that you have from other 
sources will not apply to the limit. Both limits apply to a single cal- 
endar year and only reduce benefits for those years that your hours 
or earnings exceed the limit. Your benefit will be reduced $1.00 for 
each $1.00 earned from employment exceeding the limit. 

If you are age 70 1 /2 or older , there are no limits restricting the 
earnings of retired members. 

The above limits apply only to retirees of PERS and to employment 
covered by PERS. The PERS covers most positions with the state, 
university system, local governments, and school districts. If unsure, 
ask potential employers if PERS covers the position before you start 
work. Any retiree working in a covered job may become an active 
member anytime. If the retiree becomes an active member, MPERA 
will stop the retiree's benefit. You may re-retire later and MPERA 
will recalculate your retirement benefit based on the additional ser- 
vice. (§19-3-1106, MCA) 



32 



Each month, your PERS employer must certify the hours you were 
paid to work in a PERS-covered job, and how much pay you re- 
ceived. Only the regular hours you were paid to work will count to- 
ward the 960-hour limit. Annual, sick, or holiday pay are not in- 
cluded. Also, any donated hours do not count, and you don't need 
to report them. 

We will supply the form necessary to report your hours and wages 
as a working retiree. Both you and your employer must report this 
data to MPERA. Your signature on the employer's report will meet 
your reporting requirements. We do not require a report for a 
month in which you do not work. If you become an active mem- 
ber, the report is no longer required. (§19-3-1106, MCA) 

NOTE : This reporting requirement does not apply to a PERS retiree 
who is elected to a state or local public office and chooses not to become 
an active member of PERS. 

Involuntary Termination 

A special provision requires the state and university system to pay 
part of the cost of buying additional service if you are involuntarily 
terminated. You must be a state or university employee, and eligible 
for service or early retirement under PERS. Your termination must 
be the result of reorganization, closure of an agency, or a reduction 
in force (RIF). You must also waive any other benefits that you 
may be eligible for under the State Employee Protection Act. The 
provision allows you to receive up to three years of additional 
service, if you are eligible; however, the state may only pay part of 
the cost. 

If you accept the additional service, then special restrictions besides 
those previously discussed will apply. You may work in the same 
jurisdiction for only 959 hours in a PERS-covered position or for 
only 599 hours in a position covered under any of the other public 
retirement systems. All state agencies and units of the university 
system are the same jurisdiction, the State of Montana. Tocal 
government units are separate jurisdictions. 

33 



If you exceed the limit, you will forfeit the additional service. We 
will recalculate your benefit without the additional service credit. (§§ 
19-2-706 and 19-3-908 MCA) 

Example: assume you are under age 65, and you are involuntarily 
terminated from a state agency due to reorganization. You decide 
to retire, and the state pays part of the cost of buying three years of 
additional service. You can accept lesser service, or pay the addi- 
tional amount to receive three full years. Later, you accept a PERS- 
covered job with a state agency. We will apply the 959-hour limit. 
After 959 hours, you will lose the additional service. We will 
recalculate your benefit without the employer paid share of the three 
years of additional service. If you were to return to work in another 
retirement system, the 599-hour limit would apply. After 599 hours, 
we will recalculate the benefit without the additional service. 

Independent Contractors 

The above limits do not apply if you work as an independent con- 
tractor. An independent contractor is an individual engaged in an 
independent trade, occupation, profession, or business; who works 
under contract; and who is free from control or direction when per- 
forming services under the contract. Factors which determine 
whether services are free from control or direction include, but are 
not limited to, the following: 

• Exercise of control — contractor control of the means by 
which the work is done shows independence. 

• Method of payment — payment based on hours — shows 
employment rather than independence. 

• Furnishing of equipment — contractor-furnished equipment 
shows independence. 

• Right to fire — employer right to fire the contractor shows 
employment rather than independence. 

If you are not engaged in an independent trade, occupation, profes- 
sion, or business, or if you do not perform your services free from 
control, you are not an independent contractor. 



34 



Section III: Payment Options I 



When you retire, you must select a benefit payment option. Cur- 
rently, PERS offers four benefit payment options. The option you 
choose determines whether or not income is provided for someone 
else (the contingent annuitant) after your death. If you choose an 
option to provide income for someone after you die, your monthly 
retirement benefit will be reduced. The reduced benefit depends 
upon the option you choose, your age and the age of your named 
"contingent annuitant." (§19-3-1501, MCA) 

This section provides information on each option, a table to help 
you calculate your benefit, and some sample calculations. 

1. OPTION 1 



Option 1 provides a monthly benefit 

for your lifetime and is the largest The monthly benefit 
monthly amount you may choose. under Option 1 is for 
Option 1 is also the basis for calculat- your life only and will 
ing all other options. The benefit is cease upon your death. 
computed using the defined benefit ^^^^^^^^^^^^^^^_ 



formula or the money purchase benefit formula. (See pages 26 and 
28) If you retire early, the early retirement factor will reduce your 
benefit. (See page 27.) 

Upon your death, the designated beneficiary will receive any balance 
left in your account. That account balance is the amount available at 
retirement, less the total benefits paid to the member. All monthly 
benefit payments end upon your death. 

NOTE : Once you receive and accept your first benefit pay- 
ment, you may not change your option. 



35 



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37 



2. Option 2 



Option 2 provides a monthly benefit 

to you for your lifetime. When you die, The benefit under 

your named contingent annuitant will Option 2 is for both your 

receive the same amount for the rest of lifetime and the lifetime 

his or her life. Option 2 is an annuity of your contingent 

based on the lives of two people. The annuitant. 
benefit amount of Option 2 is less than 



Option 1 because the lifetime value is spread over two lives instead 
of one. 

Your Option 2 benefit is calculated by multiplying the Option 1 
benefit by an Option 2 factor. The Option 2 factor is based on both 
your age and your contingent annuitant's age at your retirement 
date. 

You may not change your Option 2 election or your designated con- 
tingent annuitant, except in limited circumstances. (See page 43.) 

According to IRS regulations, if the age difference between 
you and your non-spouse contingent annuitant is greater than 
ten years you may not select Option 2. 



NOTE : The Option 2 factors listed on pages 40 - 41 are for members 47 
to 62 years of age. Contingent annuitant ages are in increments of 5 years 
and provide factors for contingent annuitants both older and younger than 
the member. The factors on pages 40 - 41 are examples. There is not 
enough space available in this publication to present the complete actuarial 
table for all Option 2 factors. 



38 



3. Option 3 

Option 3 provides a monthly benefit to you for your lifetime. When 
you die, your named contingent annuitant will receive one-half of 
that amount for the rest of his or her life. The benefit amount of Op- 
tion 3 is less than Option 1 because the lifetime value is spread over 
two lives instead of one. However, because the contingent annuitant 
receives only one-half of the member's benefit, your benefit is larger 
than the Option 2 benefit. 

Your Option 3 benefit is calculated by multiplying the Option 1 
benefit by an Option 3 factor. The Option 3 factor is based on both 
your age and your contingent annuitant's age at your retirement date. 

You may not change your Option 3 election or your designated con- 
tingent annuitant, except in limited circumstances. (See page 43.) 

NOTE : The Option 3 factors listed on pages 40 - 41 are for members 47 
to 62 years of age. Contingent annuitant ages are in increments of 5 years 
and provide factors for contingent annuitants both older and younger than 
the member. The factors on pages 40 - 41 are examples. There is not 
enough space available in this publication to present the complete actuarial 
table for all Option 3 factors. 



39 



Table 3: Service Retirement Option Factors 



Mem 


CA 


Opt 2 


Opt 3 


Opt 4 


Opt 4 


* 


** 






10-yr 


20-yr 


47 


32 


0.8445 


0.9190 


0.995 


0.979 


47 


37 


0.8608 


0.9284 


0.995 


0.979 


47 


42 


0.8787 


0.9385 


0.995 


0.979 


47 


47 


0.8975 


0.9488 


0.995 


0.979 


47 


52 


0.9159 


0.9586 


0.995 


0.979 


47 


57 


0.9332 


0.9675 


0.995 


0.979 


47 


62 


0.9483 


0.9752 


0.995 


0.979 


48 


33 


0.8376 


0.9150 


0.995 


0.976 


48 


38 


0.8545 


0.9249 


0.995 


0.976 


48 


43 


0.8732 


0.9356 


0.995 


0.976 


48 


48 


0.8928 


0.9463 


0.995 


0.976 


48 


53 


0.9121 


0.9567 


0.995 


0.976 


48 


58 


0.9301 


0.9660 


0.995 


0.976 


48 


63 


0.9459 


0.9740 


0.995 


0.976 


49 


34 


0.8303 


0.9109 


0.994 


0.973 


49 


39 


0.8480 


0.9213 


0.994 


0.973 


49 


44 


0.8675 


0.9324 


0.994 


0.973 


49 


49 


0.8879 


0.9438 


0.994 


0.973 


49 


54 


0.9081 


0.9546 


0.994 


0.973 


49 


59 


0.9269 


0.9644 


0.994 


0.973 


49 


64 


0.9435 


0.9728 


0.994 


0.973 


50 


35 


0.8228 


0.9065 


0.993 


0.970 


50 


40 


0.8412 


0.9175 


0.993 


0.970 


50 


45 


0.8615 


0.9292 


0.993 


0.970 


50 


50 


0.8828 


0.9410 


0.993 


0.970 


50 


55 


0.9039 


0.9524 


0.993 


0.970 


50 


60 


0.9235 


0.9627 


0.993 


0.970 


50 


65 


0.9409 


0.9715 


0.993 


0.970 



Mem 


CA 


Opt 2 


Opt 3 


Opt 4 


Opt 4 


* 


** 






10-yr 


20-yr 


51 


36 


0.8150 


0.9020 


0.992 


0.966 


51 


41 


0.8341 


0.9135 


0.992 


0.966 


51 


46 


0.8553 


0.9257 


0.992 


0.966 


51 


51 


0.8775 


0.9382 


0.992 


0.966 


51 


56 


0.8995 


0.9501 


0.992 


0.966 


51 


61 


0.9200 


0.9609 


0.992 


0.966 


51 


66 


0.9382 


0.9701 


0.992 


0.966 


52 


37 


0.8069 


0.8972 


0.991 


0.962 


52 


42 


0.8268 


0.9093 


0.991 


0.962 


52 


47 


0.8488 


0.9221 


0.991 


0.962 


52 


52 


0.8720 


0.9352 


0.991 


0.962 


52 


57 


0.8949 


0.9477 


0.991 


0.962 


52 


62 


0.9163 


0.9590 


0.991 


0.962 


52 


67 


0.9353 


0.9687 


0.991 


0.962 


53 


38 


0.7984 


0.8922 


0.990 


0.957 


53 


43 


0.8192 


0.9049 


0.990 


0.957 


53 


48 


0.8421 


0.9184 


0.990 


0.957 


53 


53 


0.8662 


0.9321 


0.990 


0.957 


53 


58 


0.8901 


0.9452 


0.990 


0.957 


53 


63 


0.9125 


0.9570 


0.990 


0.957 


53 


68 


0.9324 


0.9672 


0.990 


0.957 


54 


39 


0.7897 


0.8870 


0.989 


0.951 


54 


44 


0.8113 


0.9003 


0.989 


0.951 


54 


49 


0.8351 


0.9144 


0.989 


0.951 


54 


54 


0.8602 


0.9288 


0.989 


0.951 


54 


59 


0.8852 


0.9425 


0.989 


0.951 


54 


64 


0.9085 


0.9550 


0.989 


0.951 


54 


69 


0.9293 


0.9657 


0.989 


0.951 



40 



*Mem = Member's Age 



CA — Contingent Annuitant's Age 



Mem 


CA 


Opt2 


Opt3 


Opt4 


Opt4 


Mem 


CA 


Opt 2 


Opt 3 


Opt 4 


Opt 4 


* 


** 






10-yr 


20-yr 


* 


** 






10-yr 


20-yr 


55 


40 


0.7807 


0.8815 


0.987 


0.945 


59 


44 


0.7415 


0.8571 


0.978 


0.914 


55 


45 


0.8031 


0.8954 


0.987 


0.945 


59 


49 


0.7674 


0.8739 


0.978 


0.914 


55 


50 


0.8279 


0.9103 


0.987 


0.945 


59 


54 


0.7962 


0.8918 


0.978 


0.914 


55 


55 


0.8540 


0.9254 


0.987 


0.945 


59 


59 


0.8267 


0.9100 


0.978 


0.914 


55 


60 


0.8800 


0.9398 


0.987 


0.945 


59 


64 


0.8572 


0.9274 


0.978 


0.914 


55 


65 


0.9044 


0.9528 


0.987 


0.945 


59 


69 


0.8860 


0.9431 


0.978 


0.914 


55 


70 


0.9261 


0.9641 


0.987 


0.945 


59 


74 


0.9120 


0.9568 


0.978 


0.914 


56 


41 


0.7713 


0.8758 


0.985 


0.938 


60 


45 


0.7311 


0.8504 


0.975 


0.904 


56 


46 


0.7946 


0.8904 


0.985 


0.938 


60 


50 


0.7579 


0.8680 


0.975 


0.904 


56 


51 


0.8203 


0.9060 


0.985 


0.938 


60 


55 


0.7878 


0.8868 


0.975 


0.904 


56 


56 


0.8475 


0.9218 


0.985 


0.938 


60 


60 


0.8194 


0.9058 


0.975 


0.904 


56 


61 


0.8746 


0.9369 


0.985 


0.938 


60 


65 


0.8511 


0.9240 


0.975 


0.904 


56 


66 


0.9000 


0.9505 


0.985 


0.938 


60 


70 


0.8812 


0.9405 


0.975 


0.904 


56 


71 


0.9228 


0.9624 


0.985 


0.938 


60 


75 


0.9083 


0.9549 


0.975 


0.904 


57 


42 


0.7617 


0.8698 


0.983 


0.931 


61 


46 


0.7204 


0.8435 


0.971 


0.893 


57 


47 


0.7858 


0.8851 


0.983 


0.931 


61 


51 


0.7482 


0.8619 


0.971 


0.893 


57 


52 


0.8125 


0.9014 


0.983 


0.931 


61 


56 


0.7792 


0.8816 


0.971 


0.893 


57 


57 


0.8408 


0.9180 


0.983 


0.931 


61 


61 


0.8120 


0.9015 


0.971 


0.893 


57 


62 


0.8689 


0.9338 


0.983 


0.931 


61 


66 


0.8449 


0.9205 


0.971 


0.893 


57 


67 


0.8955 


0.9481 


0.983 


0.931 


61 


71 


0.8763 


0.9379 


0.971 


0.893 


57 


72 


0.9193 


0.9606 


0.983 


0.931 


61 


76 


0.9045 


0.9529 


0.971 


0.893 


58 


43 


0.7517 


0.8636 


0.981 


0.923 


62 


47 


0.7096 


0.8364 


0.967 


0.882 


58 


48 


0.7767 


0.8796 


0.981 


0.923 


62 


52 


0.7383 


0.8556 


0.967 


0.882 


58 


53 


0.8045 


0.8967 


0.981 


0.923 


62 


57 


0.7704 


0.8762 


0.967 


0.882 


58 


58 


0.8339 


0.9141 


0.981 


0.923 


62 


62 


0.8044 


0.8971 


0.967 


0.882 


58 


63 


0.8631 


0.9306 


0.981 


0.923 


62 


67 


0.8386 


0.9170 


0.967 


0.882 


58 


68 


0.8908 


0.9457 


0.981 


0.923 


62 


72 


0.8713 


0.9352 


0.967 


0.882 


58 


73 


0.9157 


0.9587 


0.981 


0.923 


62 


77 


0.9007 


0.9509 


0.967 


0.882 



41 



4. Option 4 

Option 4 provides a continuing benefit to one or more contingent 
annuitants. As with all options, you will receive the monthly 
benefit for life. If you die before the end of the "certain" or 
guaranteed period, the contingent annuitant will receive the benefit 
for the balance of the guaranteed period. If you name more than 
one contingent annuitant, they will receive the continuing benefit 
payment, divided equally, for the remainder of the guaranteed pe- 
riod. Payments to the contingent annuitant(s) will stop when the 
guaranteed period ends. 

This benefit has two alternatives. 

♦ 10-year period certain. You must be age 75 or younger 

when you retire to be eligible for this benefit. You will receive 
this benefit for life. If you die within the 10-year period, then 
your contingent annuitant(s) will receive the same benefit for 
the remainder of the 10-year period. The 10-year period begins 
on your effective date of retirement. 

♦ 20-year period certain. You must be age 65 or younger 

when you retire to be eligible for this benefit. You will receive 
this benefit for life. If you die within the 20-year period, then 
your contingent annuitant(s) will receive the same benefit for 
the remainder of the 20-year period. The 20-year period begins 
on your effective date of retirement. 

You may change your contingent annuitant designation. 
Contingent annuitant(s) receiving the Option 4 benefit may, in 
turn, designate their own contingent annuitants. 

The Option 4 benefit is calculated using Option 4 factors based on 
your age only. Factors are provided on the previous two pages for 
members 47 to 62 years of age. There is not enough space avail- 
able in this publication to provide the complete actuarial table. 



42 



5. Changes to Options 

There are limited circumstances which will allow you to change 
your Option or contingent annuitant, if you are eligible. A written 
application must be filed with MPERA to make a change if one of 
the following conditions are met. 

♦ Your original contingent annuitant dies. 

♦ You and your contingent annuitant divorce and the court does 
not grant the contingent annuitant the right to receive part of 
the benefit. 

If you retired before October 1, 1999 and selected Option 2 or 3 
you may file a written application to name a new contingent annui- 
tant and choose a new option if one of the above conditions are 
met. 

If you retired on or after October 1, 1999, and selected Option 2 
or 3, you may revert to the higher Option 1 retirement benefit as 
was available at the time of your retirement, if one of the above 
conditions are met. The notification and change must occur within 
18 months of the death of or divorce from the contingent annui- 
tant (see below). 



NOTE : You must designate a new contingent annuitant or payment 
option, in writing, within 18 months of the death of or divorce from 
the contingent annuitant. You must contact MPERA to receive an 
estimate of the new benefit and an application form. (§ 19-3-1501, MCA) 



43 



6. Sample Calculations 

Service Retirement 



Wanda Retire, Age 60 

Membership Service 18 years 

Service Credit 18 years 

Highest Average Compensation (HAC) $1,750 per month 

Account Balance at Retirement $28,796 

Contingent Annuitant's Age 65 



Option 1 Formula : 1.7857% x Service Credit x HAC 

1.7857% x 18 x $1,750 = $562.50/month 

Because Wanda has less than 25 years of Membership Service, the 
1.7857% factor is used. (See page 26 for an explanation of the ba- 
sic formula.) Under Payment Option 1, Wanda will receive a 
monthly benefit of $562.50, plus GABA increases when eligible, 
for life. Upon her death, monthly payments will cease. If the total 
benefits paid to Wanda are less than her balance at retirement 
($28,796) the remainder of her account will be paid in a lump-sum 
to her designated beneficiary. 

Option 2 Formula: Option 1 Amount x Option 2 Factor 
$562.50 x 0.8511 = $478.74 per month 

If Wanda elects Option 2, she will receive a monthly benefit of 
$478.74, plus GABA increases when eligible, for life. Upon her 
death, PERS will pay Wanda's contingent annuitant the same 
amount Wanda was receiving, plus increases when eligible, for life. 

Option 3 Formula: Option 1 Amount x Option 3 Factor 
$562.50 x 0.9240 = $519.75 per month 

If Wanda elects Option 3, she will receive monthly a benefit of 
$519.75 plus GABA increases when eligible, for life. Upon her 
death, PERS will pay Wanda's contingent annuitantone-half of the 
amount Wanda was receiving, plus increases when eligible, for life. 



44 



Option 4 Formulas: 

10-Year certain: Option 1 Amount x 0.975 
$562.50 x 0.975 = $548.44 per month 

If Wanda chooses the 10-year certain payment option, she will 
receive monthly payments of $548.44 plus GABA increases when 
eligible, for life. If she dies before the 10-year period ends, then 
her contingent annuitant(s) will collectively receive the same bene- 
fit Wanda was receiving. Those payments will increase annually 
and will continue until the end of the 10-year period. If Wanda 
dies after the 10-year period ends, all payments end. Her 
contingent annuitant(s) will not receive any benefit payments. 

20-Year certain: Option 1 Amount x 0.904 
$562.50 x 0.904 = $508.50 per month 

If Wanda chooses the 20-year certain payment option, she will 
receive monthly payments of $508.50 plus GABA increases when 
eligible, for life. If she dies before the 20-year period ends, then 
her contingent annuitant(s) will collectively receive the same bene- 
fit Wanda was receiving. Those payments will increase annually 
and will continue until the end of the 20-year period. If Wanda 
dies after the 20-year period ends, all payments end. Her 
contingent annuitant(s) will not receive any benefit payments. 

The 10-year and 20-year periods begin on the effective date of 
your retirement. Factors used for 10-year or 20-year periods 
are based only on the retiree's age. 



45 



Early Retirement 



Kenny Retire, Age 51 

Membership Service 25 Years 

Service Credit 25 Years 

Highest Average Compensation (HAC) $1,750 per month 

Account Balance at Retirement $42,796 

Contingent Annuitant's Age 51 



Because Kenny has 25 years of Membership Service, the basic for- 
mula will use the 2% factor. If Kenny had less than 25 years of 
Membership Service, the 1.7857% factor would be used. (See page 
26 for an explanation of the basic formula.) 

Option 1 Formula : 

2% x Service Credit x HAC x Early Retirement Factor 
2%x 25 x $1,500 x 0.70 = $612.00/month 

The early retirement factor is 0.70 for Kenny. Two factors could 
apply to Kenny, either 0.556 for age 51 or 0.70 for 25 years of 
service credit. MPERA will use 0.70 because it gives Kenny a 
larger benefit. See Table 1 on page 27 for a list of early retirement 
factors. 

Under Payment Option 1, Kenny will receive a monthly benefit of 
$525.00 plus GABA increases when eligible, for life. Upon his 
death, monthly payments will cease. If the total benefits paid to 
Kenny are less than his balance at retirement, the remainder of his 
account will be paid in a lump-sum to his designated beneficiary. 
The account balance will be equal to his contributions plus inter- 
est at retirement minus all benefits paid to him. 

Option 2 Formula : Option 1 Amount x Option 2 Factor 
$525.00 x 0.8775 = $537.47 per month 

If Kenny elects Option 2, he will receive a monthly benefit of 
$460.69, plus GABA increases when eligible, for life. Upon his 
death, Kenny's contingent annuitant will receive the same monthly 
benefit Kenny was receiving, plus increases when eligible, for life. 

46 



Option 3 Formula : Option 1 Amount x Option 3 Factor 
$525.00 x 0.9382 = $574.65 per month 

If Kenny elects Option 3, he will receive a monthly benefit of 
$492.56 plus GABA increases when eligible, for life. Upon his 
death, Kenny's contingent annuitant will receive one-half of the 
same monthly benefit Kenny was receiving, plus increases when 
eligible, for life. 

Option 4 Formulas : 

10-Year certain: Option 1 Amount x 0.992 
$525.00 x 0.992 = $607.60 per month 

If Kenny chooses the 10-year certain payment option, he will re- 
ceive $520.80 per month, plus GABA increases when eligible, for 
life. If he dies before the 10-year period ends, then his contingent 
annuitant(s) will collectively receive the same benefit Kenny was 
receiving. Those payments will increase annually and will continue 
until the end of the 10-year period. If Kenny dies after the 10-year 
period ends, all payments end. His contingent annuitant(s) will not 
receive any benefit payments. 

20-Year certain: Option 1 Amount x 0.966 
$525.00 x 0.966 = $591.68 per month 

If Kenny chooses the 20-year certain payment option, he will 
receive $507.15 per month, plus GABA increases when eligible, for 
life. If he dies before the end of the 20-year period, then his 
contingent annuitant(s) will collectively receive the same benefit 
Kenny was receiving. Those payments will increase annually and 
will continue until the end when the 20-year period. If Kenny dies 
after the 20-year period ends, all payments end. His contingent 
annuitant(s) will not receive any benefit payments. 

The 10-year and 20-year periods begin on the effective date of 
your retirement. Factors used for 10-year or 20-year periods are 
based only on the retiree's age. 



47 



Section IV: Additional Information 



1. Death of an Active Member 



Keep your designated 
beneficiaries current. 



Upon your death, if you are an active 

member, your named beneficiary is 

entitled to receive either a lump-sum 

j , , c . Change your beneficiaries 

payment or a monthly benefit. ° J 

by filing a new 

membership card with 

MPERA. 



Beneficiaries 



You may designate any persons, charitable organization, estate, or 
trust (for the benefit of a living person) you wish as a beneficiary 
(ies). Beneficiaries are either primary or contingent. Contingent 
beneficiaries will receive a payment or a benefit only if no primary 
beneficiary survives you.(§§ 19-2-801 and 19-2-802, MCA) 

You must designate your beneficiaries on a PERS membership card 
and give the card to your payroll clerk. The clerk will send the card 
to us. If you are an inactive member, call us and we will send you a 
new membership card. Any change is not effective until the card 
is received in our office. 

NOTE : Advise your beneficiary to contact MPERA for complete details 
about benefits in the event of your death. 



48 



Death Benefit Claim 

Upon notification of a member's death, MPERA will send a death 
benefit claim to the designated beneficiary. To claim a death 
benefit, the beneficiary must return the completed form to 
MPERA along with a certified copy of the member's death certifi- 
cate. (§ 19-3-1201, MCA) 

Death Benefits or Payment 

At the death of an active member, the designated beneficiary may 
receive a lump-sum payment or a monthly survivorship benefit. 
The benefit is the actuarial equivalent of the applicable service re- 
tirement benefit. (§ 19-3-1201, MCA) 

This death payment will be the sum of: 

(1) the member's accumulated contributions (member's contri- 
butions plus interest); and 

(2) an amount calculated as 1/12 time your last twelve months 
of pay times the lesser of six or your years of service credit. 

Interest will be paid on the amounts in (1) and (2) to the date the 
payment is made. This lump-sum death payment will be paid if the 
member's death occurs in any of the following cases: 

• while in active service. 

• within six months after the discontinuance of service but 
before receiving a benefit. 

• within six months after a disability benefit begins. 

• if disabled continuously since leaving active service, when the 
member is not receiving a disability retirement benefit. 

Under these circumstances, a beneficiary can receive the payment 
as a lump sum or a fixed monthly annuity payment. 

The fixed monthly annuity payment is guaranteed for life. The 
amount of the monthly payment will not change. Increases that 
may apply to other monthly benefits will not apply to these 
monthly annuity payments. To receive the monthly annuity 



49 



payments, the beneficiary must send a written election to the Board. 
(§§ 19-3-1201, 19-3-1202 and 19-3-1203, MCA) 

Death of an Inactive Member 

PERS will pay a lump-sum death payment to an inactive member's 
beneficiary. This death payment will be the member's accumulated 
contributions (member's contributions plus interest). If the inactive 
member is vested (has five years of membership service), the bene- 
ficiary may be able to receive a monthly benefit for their lifetime. 



Death of a Retired Member 

If you were receiving an Option 1 benefit, and you die before 
receiving benefits equal to your account balance, your beneficiary 
will receive your remaining account balance. Your remaining 
account balance is your contributions, plus interest to date of retire- 
ment, minus any benefit payments you received. Your designated 
beneficiary may request the lump-sum payment be received as an 
annuity. 

If you chose Options 2, 3 or 4, see Section III, Payment Options 
for details on death benefits. 



Survivorship Benefit 

Generally, a beneficiary eligible to receive . ,. , r . 

. ■" ib survivorship benefit, a 

a service death payment can choose to , r . . 

i . , r beneficiary must 

receive a survivorship benerit instead. A . . , . „„ , 

survivorship benefit is calculated based ,. 

r after receiving notice 

on the value or a vested members .. ,. .,, c 

... _ . r . . . . they are eligible for a 

potential benerit it the member had not , .. 

v death payment. 
died betore receiving the benerit. 



A survivorship benefit is also a monthly payment for life, but may 
be more than the monrlily annuity payment. Benefit increases such 
as the GABA also apply to the survivorship benefit but do not 
apply to death annuity payments. (§§ 19-3-1204 and 19-3-1205, MCA) 



50 



2. Benefit Increases 

The Guaranteed Annual Benefit Adjustment (GABA) will increase 
your retirement benefit every year if you are eligible. 

GABA 

PERS members hired on or after July 1, 2007, will be eligible for a 
1.5% GABA when eligible for retirement and receiving a benefit. 
Other events which increase your benefit will reduce the amount 
you get from GABA. If the other increases are 1.5% percent or 
more, then you will get no increase from GABA. 

Members of PERS, or another MPERA administered system who 
transfer to a PERS-covered position, hired prior to July 1, 2007, 
will be eligible for a 3% GABA increase when retired and receiving 
a benefit. Other events which increase your benefit will reduce the 
amount you get from GABA. If the other increases are 3% or more, 
then you will get no increase from GABA. 
(§§19-2-1101 and 19-3-1605, MCA) 

The GABA applies to: 

• Service Retirement Benefit 

• Early Retirement Benefit 

• Disability Retirement Benefit 

• Survivorship Benefit 

GABA also applies to recipients, other than members, such as 
contingent annuitants and survivors. It does not apply to a person 
receiving the lump-sum death payment as an annuity. 

If you were hired before July 1, 2007 and end PERS covered em- 
ployment, but do not withdraw your accumulated contributions 
(take a refund), your GABA will remain 3% if you return to PERS 
covered employment. 



51 



Eligibility for and Effective Date of GABA Benefits 

Before you will receive an increase under GABA you must receive 
your benefit for at least 12 months. Once eligible, you will receive 
your first increase in your retirement benefit payment the follow- 
ing January. 

Example: If you retired on July 1, 2008, you will meet the 12- 
month requirement on July 1, 2009. You will then receive your 
first GABA increase beginning with your January 1, 2010 benefit. 

Timing for Benefit Payments 

Benefit payments are processed the last working day of the month. 
For example: the January benefit payment is mailed on the last 
working day of January. 

If you receive your benefit by direct deposit, the transfer takes 
place on the last working day of the month. However, your bank 
may not add the transfer to your account until the next working 
day. With direct deposit, you receive your money one or two days 
sooner than with a paper check through the mail. 

If you receive your benefit by hard copy check, the check will be 
mailed on the last working day of the month. Due to mail time, 
you may not receive your benefit for several days. 



52 



3. Taxes on Benefits 

Some or all of your retirement benefit will be subject to federal 
and state income taxes. You must pay taxes on any part of your 
benefit derived from contributions which were not taxed (made 
pre-tax) during your working career. You paid income tax on any 
money you contributed before July 1, 1985. You paid taxes on any 
contributions you made to buy service before the year 2000. You 
have not paid taxes on your regular contributions since July 1, 
1985, nor have you paid taxes on the interest your account earns. 
If some of your benefit comes from pre-tax money, or tax- 
deferred interest, you must pay taxes on that portion. 
(§19-3-315, MCA) 

Tax Statements 

Once you are retired and receiving a benefit, each year MPERA 
will send you a Distribution Form (Federal Form 1099R). The 
1099R is similar to a W-2 Form. We send the form to all people 
charitable organizations, and trusts, who receive any payment from 
PERS, not just members. The 1099R will show the gross taxable 
amount you received during the past calendar year and any state or 
federal taxes withheld during the year. You may elect to withhold 
federal or Montana state income tax by submitting a tax withhold- 
ing certificate form available from MPERA. We base withholding 
rates on current federal and state tax law unless you request other- 
wise. 

Tax Advice 

Tax laws that apply to retirement benefits change frequently. You 
should contact a tax professional for specific, up-to-date informa- 
tion about state and federal taxes. 



53 



Taxes on Refunds 

MPERA must withhold 

The pre-tax portion of your accumu- federal taxes and the 

lated contributions is subject to state IRS may charge early 

and federal taxes when refunded di- withdrawal penalties on 

rectly to you in a lump-sum. The tax- refunds. Roll the money 

able amounts under state law differs over and no money will 

for that under federal law, because be withheld for taxes. 
the state does not tax the interest 
credited to your account. 



The IRS requires us to withhold 20% for federal taxes if you 
choose to have the refund paid directly to you. Depending on 
your personal circumstances, the amount withheld may not cover 
all taxes you may owe on the refund. The IRS may also, at the 
time you file your income tax return, assess an additional 10% 
penalty for early withdrawal if you are under age 59 1/2. 

You may avoid paying the 20% withholding tax and possible im- 
position of a 10% penalty by "rolling-over" the taxable portion 
into an IRA or other eligible plan. If you choose a lump-sum pay- 
ment, IRS rules allow you 60 days to reinvest or roll the refund 
over into an eligible plan to avoid paying the 10% penalty. Be 
prepared to provide the IRS documentation of this roll-over. 

You will receive a Distribution Form (Federal Form 1099R) for 
the refund. It will list the gross distribution, the taxable part of 
the distribution, and any federal or state taxes withheld from the 
refund. The 1099R is an important document that you must keep 
for your tax records. We will not automatically send another 
1099R at the end of the year. However, if you lose your 1099R, 
you can request a duplicate from us. 



54 



4. Assignment of Benefits 

In most circumstances your retirement benefit is protected from 
attachment and cannot be assigned to or acquired by a third party. 
Your retirement benefit may not be assigned to another person 
under federal law governing private pension benefits; nor may a 
Qualified Domestic Relations Order assign your benefits to another 
person. 

However, there are circumstances when your retirement benefit 
may be subject to attachment or assignment. The IRS may place a 
levy against your benefit for unpaid taxes. Further, a court may 
assign all or a portion of your PERS benefit pursuant to a Family 
Law Order (FLO) which must be a judgment, decree, or order of a 
Montana court. Courts from other states may also assign your 
benefit with a Support Obligation if that Support Obligation meets 
requirements similar to those for a FLO. (§§ 19-2-907 and 19-2-909, 
MCA) 

Family Law Order (FLO) 

A Montana court may issue a FLO for child or parental support, 
spousal maintenance, or marital property rights. The FLO may 
require that we pay an alternate payee a set sum or percentage of 
your benefit. For example, the FLO may require us to pay $500 per 
month until a set sum of $12,000 has been paid. Or, the FLO may 
require us to pay 50% of your monthly benefit to your alternative 
payee for as long as you receive a benefit. The FLO may also 
require you to choose a specific option, contingent annuitant, or 
beneficiary. 

A FLO may not require MPERA to pay a type of benefit unless 
that benefit is available to you; nor can a FLO require an amount or 
length of payment greater than that payable to you. This means a 
FLO cannot require MPERA to make any payments before you 
retire or take a refund. Also, it may not require payments that are 
more than the amount MPERA may pay you. 
(§ 19-2-907 and 19-2-909 MCA) 



55 



5. For More Information 

• If you would like an estimate of your benefit, or a cost 
statement for buying service, please contact us in writing. Any 
estimates you receive from any other source may be wrong. 
MPERA is not responsible for any information from other 
sources. 

• You must contact us for application forms if you are 
considering service or disability retirement. 

• You should instruct your beneficiaries to contact us in the event 
of your death. 

When you correspond with MPERA by mail or fax, please include 
your full name, printed and signed , the last four digits of your social 
security number, your return address and your daytime telephone 
number. 

Mailing Address: MPERA 

P.O. Box 200131 
Helena MT 59620-0131 

FAX Number: (406) 444-5428 

You may also e-mail requests to MPERA at mpera@mt.gov. Be 
sure to include your full name, the last four digits of your social se- 
curity number, return address and daytime telephone number. 

We invite you visit MPERA in Helena at 100 North Park Avenue, 
Suite 200. Our office hours are Monday through Friday, 8 a.m. to 5 
p.m., except on designated state holidays. It is most helpful for 
staff if you make an appointment in advance. Phone our office 
at (406) 444-3154 or toll free (877) 275-7372. If our phone lines are 
busy, you may leave a voice mail message. Be sure to leave your 
name, telephone number, and the last four digits of your social secu- 
rity number first, then a brief message. 

NOTE : To avoid confusion, you should put in writing any questions 
requesting specific details about retirement options or service credit. We 
will give you a specific written response. 



56 



GLOSSARY OF TERMS 

ACCUMULATED CONTRIBUTIONS - any regular and additional con- 
tributions made by a member plus interest earned. 

ACTIVE MEMBER - a member in a PERS-covered job, making the 
required contributions, and properly reported for the most current 
reporting period. 

ACTUARIAL COST - the amount determined by the Board in a uniform 
and nondiscriminatory manner to represent the present value of the 
benefits derived from the additional service credited based on the most 
recent actuarial valuation for the system and the age, years until retirement, 
and current salary of the member. 

ADDITIONAL CONTRIBUTIONS - a member's payments to purchase 
various types of optional service credit under an installment contract. 

ANNUITY - equal and fixed payments for life that are the actuarial 
equivalent of a lump-sum payment under a retirement system and as such 
are not benefits paid by a retirement system and are not subject to 
periodic or one-time increases. 

BENEFIT - a service or disability retirement or survivorship provided by 
the PERS. 

CONTINGENT ANNUITANT - a person the retired member names to 
receive a continuing benefit after the member's death. 

CONTRACTING EMPLOYER - a political subdivision of the state that 
contracts with the Board to cover its employees under PERS. 

COMPENSATION - the pay an employee receives before deducting taxes 
or social security in accordance with § 19-3-108, MCA. 

DESIGNATED BENEFICIARY - the person a member names to receive 
any survivorship benefits or lump-sum payments upon the member's 
death. Designated beneficiaries are either primary or contingent. 

DISABILITY - total physical or mental incapacity of a member to do the 
essential functions of the member's job. You must become disabled while 
an active member, and it must be permanent or of an extended and 
uncertain period. 

EMPLOYEE - a person employed by a PERS employer in any capacity 
and the employer pays the person's salary. 

EMPLOYER - the state, its university system, or political subdivisions that 

57 



contract with the Board to cover their employees under PERS. 

FAMILY LAW ORDER (FLO) - an order from a Montana court that may 
assign all or part of a participant's payment. 

FISCAL YEAR - the 12-month period starting July 1 and ending the 
following June 30. 

GUARANTEED ANNUAL BENEFIT ADJUSTMENT (GABA) - a 

benefit increase, if and when a member is eligible. The amount is based on 
date of hire. 

HIGHEST AVERAGE COMPENSATION (HAC) - a member's highest 
average monthly compensation during any 36 consecutive months of 
membership service. Lump-sum payments for severance pay, sick leave, 
and annual leave may not be added to a single month's pay. Your HAC 
may include termination payments, but only if they replace regular pay on 
a month for month basis. 

INACTIVE MEMBER - a member who terminates PERS-covered 
employment and does not withdraw his or her PERS accumulated contri- 
butions. 

IRA - an individual retirement account. 

LUMP-SUM PAYMENTS - amounts, which may include interest, that are 
payable instead of monthly benefits. 

MEMBER - any person with contributions and service on account with 
the PERS. Persons receiving retirement benefits based on previous service 
credit are also members. 

MEMBERSHIP SERVICE or YEARS OF SERVICE - the periods of 
service used to decide vesting and eligibility for retirement or other 
benefits. You get 1 month membership service for any month you 
contribute to PERS, even if you only work one day during that month. If 
you contribute anything, you get membership service for the whole 
month. 

NORMAL RETIREMENT AGE - the age at which a member is eligible to 
immediately receive a retirement benefit from PERS without disability and 
without a reduction. Eligibility is based on the member's age, length of 
service, or both. 

PART-TIME EMPLOYMENT - any month during which the employer 
pays the member for less than 160 hours. 

PARTICIPANT - a member, beneficiary, survivor, or contingent annuitant 



58 



who is receiving, or may receive, a benefit or payment from PERS. 

REFUND - a withdrawal of all the money in a member's PERS account. 
By taking a refund, the member gives up all rights to any other benefits 
from the PERS. 

REGULAR CONTRIBUTIONS - the payments an active member must 
make to the PERS. The payments are a percentage of the member's 
monthly pay and are made pre-tax. 

REGULAR INTEREST - (1) Interest earned on the payments made to a 
member's account. This rate is set by the Board and is tax-deferred. (2) 
The interest rate charged for monthly service purchase payments. The 
rates for (1) and (2)may not be the same. 

RETIREMENT BENEFIT - the monthly payment to a member, for life, 
following early, service, or disability retirement. 

RETIREMENT or RETIRED - the status of a member who ends active 
service and receives a monthly benefit. 

SERVICE - employment of an employee in a position covered by a 
retirement system. 

SERVICE CREDIT - the periods in which you contribute the required 
money to PERS. MPERA uses service credit to calculate the amount of 
your benefit. If you work 160 hours or more in any month, you get 1 
month of service credit. If you work less than 160 hours, you will receive 
credit for a partial month. For example, if you work 80 hours, you receive 
Vz of a month of service credit. 

SURVIVORSHIP BENEFIT - monthly payments for life to the 
beneficiary of a vested member who died while an active member. 

TERMINATION or TERMINATION OF SERVICE - means the mem- 
ber left the employment relationship with the employer and has been paid 
all compensation due, including but not limited to payment of accrued 
annual and sick leave. Upon termination, the member will cease to accrue 
benefits attributable to that employment. 

VESTED MEMBER or VESTED - the status of a member with at least 
five years of membership service. A vested member is entitled to 
retirement when they meet the minimum service or age provision. 



59 



Alternate Accessible Format 

MPERA will provide alternative accessible formats of this 
document upon request. Persons with disabilities, who need an 
alternative accessible format of this information, should contact us. 

Write to : 

Attn: Ann Reber 

MPERA 

P.O. Box 200131 

Helena, MT 59620-0131 

You may contact MPERA at : 

Telephone (406) 444-3154 
Toll Free (877) 275-7372 
Fax (406) 444-5428 
E-mail mpera@mt.gov 



For more information, contact: 
Department of Administration 
Human Resource Division 
Phone (406) 444-3871 
TDD number (406) 444-1421 

To view publications on-line : 

http://mpera.mt.gov/ 



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