Because the PERSI Base Plan is a defined benefit plan, the lifetime allowance you receive at retirement from this plan is not dependent on the amount of money you contribute to PERSI. The Base Plan is a qualified tax-deferred plan under IRS Code Section 401(a).
PERSI is designed to provide pension benefits to career public employees. The longer you work for PERSI employers, the greater your retirement benefit will be. And although you may not plan on being a public employee your whole career, if you belong to PERSI as little as five years you will receive a lifetime benefit at retirement. And those five years need not be all at once or with one employer. Over 700 different employers across the state belong to PERSI. You may find yourself working for a city, then the state and then maybe a highway district at different points in your career. Frequently we hear about people who didn't think they would be at their place of employment for more than a few years, but who end up staying a long, long time. The average length of service for PERSI members is now 9.5 years, and this is increasing every year. The average length of service for a PERSI retiree now is 18.1 years.
The value of your Base Plan
The value of your Base Plan benefit is not merely the amount of contributions in your account – the value is actually far greater. Here's how:
When you retire, the PERSI Base Plan will pay you every month for as long as you live, and if you choose a Contingent Annuitant at retirement, after you die that person will continue receiving a benefit for the rest of his or her life.
You "make back" every dollar you put into the PERSI Base Plan within about your first three and a half years of retirement. For instance, say you put $60,000 into PERSI during your career. If your monthly benefit is $1,500, you will receive your $60,000 back in just over three years. But, we will continue paying you that $1,500 (plus yearly Cost of Living Adjustments – COLAs) every month for the rest of your life. If you are retired for another 30 years, you will receive another $540,000 from PERSI (plus COLAs – so the value will really be much higher.). It would be extremely difficult to find another investment with such a secure, long-term return.
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