1. Overview & Benefit Options Presented by Jan Hawkins Senior Retirement Benefits Officer

2. What Is IPERS? The largest public retirement system in Iowa –Members include employees of: public schools, cities, counties, state government, state universities, State Board of Regents, & other Approximately 340,000 members 2,000 employers 108,000 retirees $1.8 billion in benefit payments paid annually 2

3. What Is IPERS? 401(a) ( defined benefit plan ) under IRS codes: –Lifetime benefits are paid based on a formula, not on the amount of contributions. –Formula factors Age Years of service Highest average salary 3

4. DB vs. DC: What’s the Difference? Guaranteed Benefit YES. Monthly benefit is guaranteed for life. NO. Benefit fluctuates with market performance. Investment Risk Pooled investments. IPERS takes on all the risk. YOU take on all the risk. Withdrawals & Loans NOT AVAILABLETYPICALLY AVAILABLE Vesting 100% in your contributions. Portability YES Death Benefits YES Disability Benefits YES. IPERS provides disability benefits depending on certain qualifications. NO. Defined contribution plans do not usually provide disability benefits. Fees & Expenses INCLUDEDTYPICALLY HIGH 4 401(k), 403(b), etc. (Defined Contribution Plan) IPERS (Defined Benefit Plan)

5. How Does It Work? Contributions from active members and employers are paid in. Lifetime retirement benefits, disability benefits, death benefits, and refunds are paid out. The IPERS Trust Fund The IPERS Trust Fund must be used for the exclusive benefit of members and their beneficiaries. 5

6. What’s My Part? Contributions + interest –Contributions based on gross wages –Current Regular class contribution rate: 5.95% from you, the member 8.93% from your employer IPERS can adjust the total contribution rate by no more than 1.0 percentage point up or down, following an actuarial valuation. 6

7. What’s My Part? Contributions + interest – Protection class contribution rate: 6.56% from you, the member 9.84% from your employer – Sheriffs/Deputies contribution rate: 9.88% from you, the member 9.88% from your employer 7

8. IPERS Annual Interest Rate 1.99% - 2015 1.65% - 2014 1.28% - 2013 1.34% - 2012 2.03% - 2011 2.64% - 2010 3.61% - 2009 5.33% - 2008 5.79% - 2007 8

9. What Is “Vesting”? Vested status is obtained after: 28 quarters (7 years) of reported wages, or When wages are reported in the same calendar year age 65 or older is attained 9

10. Vesting Entitles the member to: Monthly retirement or disability benefit A portion of employer’s investment if refund is taken and Is required for a service purchase 10

11. Benefit Formula Monthly benefits are calculated using: –Years of Service –Age –Highest Average Salary 11

12. Benefit Formula – Years of Service 12 Each year worked earns 2% of the 60% payable for the first 30 years. 1% for a maximum total of 65% payable for each additional year after 30. Early retirement reduction if before normal retirement.

13. Rule of 88 Rule of 62/20 Age 65 At least age 62 with 20 or more years of service Age + Years of service = 88 or greater Regardless of service Normal Retirement Age (No Age Reduction) 13

14. Reduce 3% a year for portion of service through 06/30/12 From nearest normal retirement eligibility (rule of 88; rule of 62/20; age 65) Reduce 6% a year thereafter From age 65 As of July 1, 2012 Early Retirement Age Reduction 14

15. Example: Early retirement Retire age 61 with 26.5 years of service Total years 26.5 Annual multiplier Adjustment factor Adjusted to How long Reduction 24 2% 3% 62/20 1 yr 3% June 30, 2012 2.5 2% 6% 65 4 yr 24%

16. Example: Early retirement Reduce 3%/year for 1 year Earned before 7/1/12: 24 x 2% = 48% multiplier $54,000 x 48% = $25,920 Early retirement reduction: $25,920 x 3% = $777.60 $25,920 – $777.60 = $25,142.40 24 yrs2.5 yrs Reduce 6%/year for 4 yrs Earned starting 7/1/12: 2.5 x 2% = 5% multiplier $54,000 x 5% = $2,700 Early retirement reduction: $2,700 x 24% = $648 $2,700 - $648 = $2,052 Annual benefit = $27,194.40

17. Example: Work 6 more months Retire age 61 with 27 years of service 24 2% 0% Rule of 88 0 yr 0% 3 2% 0% Rule of 88 0 yr 0% June 30, 2012 Total years 27 Annual multiplier Adjustment factor Adjusted to How long Reduction

18. Example: work 6 more months Rule of 88 Earned before 7/1/12: 24 x 2% = 48% multiplier $54,000 x 48% = $25,920 Early retirement reduction: $25,920 x 0% = $0 $25,920 24 yrs3 yrs Rule of 88 Earned starting 7/1/12: 3 x 2% = 6% multiplier $54,000 x 6% = $3,240 Early retirement reduction: $2,700 x 0% = $0 $3,240 Annual benefit = $29,160.00

19. Value of working the additional 6 months Annual Pension with Reduction$27,194.40 Annual Pension with Rule of 88$29,160.00 Increase of $163.80 per month for lifetime for working an additional 6 months

20. Maximizing Years of Service Free credit –Leaves of absence Granted prior to July 1998 Requires verification from employer –Active military duty Entered military as an IPERS-covered employee and returned to IPERS employment within one year of discharge Submission of DD214 form required 20

21. Beginning 01/01/16: Purchasing will take place only during the retirement process. Increased accuracy of cost Reduced risk of under- or overpaying Request an official cost quote when you apply for retirement benefits. Application for Service Purchase Service Purchases 21

22. Service Purchase Options Refunded IPERS service IPERS employment not previously covered Other public system(s) (if not eligible to draw pension from the other system) Active duty military/leave of absence time not eligible for free credit Nonqualified service (air time) 5-year limit IPERS buy-up credit conversion Buy-back with cost credit 22

23. How Much Will It Cost? Submit an Application for Service Purchase (available at www.ipers.org).www.ipers.org Your service purchase cost will be calculated. –Official cost quotes generated only after your Application for Retirement Benefits is on file. –You will receive the cost per quarter and the entire purchase cost. Cost quotes are valid for six months. Remember, completing the Application for Service Purchase does not obligate you to purchase service. 23

24. Saving Up for a Purchase Request a basic cost estimate anytime before retirement. – Application for Service Purchase Save money in a separate retirement account that can eventually be rolled over to IPERS for your service purchase. 24

25. Retirement Estimates Request benefit estimates from IPERS before deciding on a retirement date. For detailed information on your account: –Call toll-free 1-800-622-3849 or locally at 515-281-0020. Phones are answered by Retirement Benefit Officers from 7:30 am to 5:00 pm Monday through Friday, excluding holidays. Working a little longer could increase benefits significantly. May be eligible to retire earlier! 25

26. Sample Estimate 26

27. Monthly Benefit Six monthly payment options –Always lifetime to member –Different death benefit provisions IMPORTANT! Option choice cannot be changed once benefits are paid. 27

28. Option Summary OPTION 1 Guaranteed death benefit in $1,000 increments OPTION 2 Death benefit only if balance of investment remains OPTION 3 No death benefit OPTION 4 Dual life annuity OPTION 5 Guaranteed 10 year monthly benefit payments OPTION 6 Dual life annuity with pop-up feature for member Always lifetime to member! 28

29. Pre-Retirement Death Benefits Designated sole beneficiary of vested member can elect lump sum payment or lifetime monthly benefit (provided monthly benefit is $50 or more). If member not vested at death, beneficiary only eligible for lump sum payment. If designated beneficiary is more than one individual or entity, death benefit can only be paid in lump sum payment. Federal law now allows multiple beneficiaries to rollover lump sum payments. If no beneficiary has been designated, lump sum payment made to the estate. 29

30. Important Facts to Remember! Working any time in a month makes you ineligible for benefits that month. You can get a paycheck in the same month you start IPERS payments. 30

31. Getting Monthly Benefits Started Must terminate employment unless age 70 Must be age 55 or older –Unless vested and eligible for IPERS disability benefits, first month of entitlement is month following the month you terminate employment Must submit completed application Benefits paid the last business day of month 31

32. Taxes Benefit payments are subject to federal and state income tax –You can request that the tax can be withheld from monthly benefit payment 1099R mailed each January For detailed tax information, contact the IRS for publication 575 or consult a tax advisor 32

33. Reemployment Must have a bona fide retirement. It’s your responsibility to contact IPERS if you are returning to an IPERS-covered position. –It’s possible that returning to an IPERS- covered position will affect your benefit. Know the Social Security earning limits 33

34. Bona Fide Retirement To qualify for a bona fide retirement, you must: End all service with covered employers, including non-covered service. File an IPERS benefit application. Stay out of all employment with a covered employer for one month. Stay out of all employment in an IPERS-covered position for an additional three months. 34

35. Reemployment Guidelines Applies to IPERS-covered employment only $30,000 earnings limit under age 65 (benefits reduced 50 cents for each dollar earned over the limit) No earnings limit after age 65 Benefits recomputed upon termination 35

36. Online Access 24/7 36

37. When to Contact IPERS 3–5 years from possible retirement for estimates 5–6 months from retirement to obtain application packet At termination, if before age 55 for additional options If a disability occurs 37

38. The purpose of this presentation is to give you a brief overview of IPERS and upcoming law changes. For detailed information on your account: Call toll free 1-800-622-3849 or locally at 515-281-0020 Phones are answered by Retirement Benefit Officers from 7:30 am to 5:00 pm Monday through Friday, excluding holidays. Website : www.ipers.org www.ipers.org E-mail requests: info@ipers.org Retirement calculators Handbook Newsletters Other important information Contact us: 38

39. Thank You! Presented by Jan Hawkins Senior Retirement Benefits Officer