What Types of Mississippi State Pensions are offered?
All state employees are covered under the main state-funded pension program. The definition of state employees covered under the benefit plan is any employees that are paid directly or indirectly through state funds.
- The Public Employees’ Retirement System of Mississippi (PERS) covers all state employees including educators, general employees, state paid medical employees or police and firefighters. Judges, legislators, and even some state utility workers are also included in the plans
- In addition, the PERS system also covers all teachers in public schools, Universities and community colleges. The system has enrolled members that are employed through state agencies, and county, city and state political employees.
There are several aspects of retirement plans that all public employees should understand when planning for benefits after work. These include contribution rates, benefit calculations and COLA adjustments. In addition, employees should understand additional benefit aspects such as disability and survivor benefits included in plans. Employees may find the general information listed in the employee benefits handbook useful when determining a plan for retirement.
Employee and Employer Contributions to PERS
The PERS system is a defined benefit plan which means that members reaching retirement qualifications are guaranteed benefits for life. During work time the employee will acquire service credit years that count towards the retirement calculations and pay a specific amount of payroll pre-tax towards future benefits. In addition, most employers also pay contributions to the plan for the length of employment until reaching a service year’s cap.
Employee contributions are state-tax free for both the duration of employment and while receiving benefits. However, federal taxes apply once benefit distribution has begun. Monthly interest paid by the state is accumulated on the gross total amount of contributions up to 3.50% annually.
Highway Safety Patrol members pay 7.25% contributions/employer contribution is 3.30%
According to the ‘Board Regulations 60, Contribution Rates’ listed on www.pers.state.ms.us employees enrolled before July 1 1958 is subject to a fixed contribution rate of 2.5% per payroll. The article also states that employment after July 1, 1958 will allow contribution rates to be determined by each specific case for individual areas of employment. The rates are determined by the Board of Trustees and re-evaluated periodically.
In order to determine the amount of employee/employer contributions, employees must log into their account online. The online members area in which employees will find contribution rates, vesting eligibility and current amount contributed by visiting the PERS website and selecting Members from the left hand menu.
Vesting Periods are determined by the employees’ enrollment date in the PERS retirement system:
- If employee was hired before June 30, 2007 employees are vested after 4 years of service credit.
- Employees hired between July 1, 2007 and June 30, 2011 must have 8 years of service credit in order to be vested
- Those employees hired after July 1, 2011 must also have 8 years service in order to be vested
Retirement age for PERS Employees
Specific requirements must be met in order to retire with full benefits and are also enrollment date specific for each employee:
- Those hired before June 30, 2007 may retire at age 60 with 25 years of credited service
- Employees hired between July 1, 2007 and June 30, 2011 may also retire with 25 years service credit at age 60
- Employees hired after July 1, 2011 may retire with 30 years of service credit at age 30
In all groups, additional service credit may be purchased which will be used when determining retirement benefits. If an employee has 23 years of service credit and purchases 2 additional years, then the employee is considered to have 25 years credited service and can retire.
Benefits are calculated using a formula determined by the board of trustees. The formula used currently is 2% of the annual wages multiplied but the years of credited service up to the 25 or 30 year maximum. That total is then added to any additional years of service either worked or purchased and multiplied by 2.5%. This number is called the Service Credit Factor and is used to calculate each employees benefit amount after retirement.
Average annual salary is determined by generating an average yearly pay for the highest for years of salary and up to 240 hours of qualifying leave added to the total.
Additional Benefits for PERS Members
Survivor benefits include several options. If an employee dies before becoming vested, survivors will receive a lump sum payment for any contributions made. If the employee is vested the surviving family will receive regular monthly benefits.
Disability is determined by whether or not the employee is already vested. Disability leave benefits are available for those still employed without being vested while Disability benefits needed after retirement require employee to be vested. Disability can include employment causation, personal disabilities and those that occur after retirement.
Cost of Living and inflation protection and what is the level for 2012, 2013 and 2014
COLA is determined after the retiree has been officially retired for one fiscal year. The COLA is designed to assist retirees with inflation and cost of living increases. COLA increases are equal to 3% of the yearly benefits currently paid out to an employee. Rates are compounded yearly at 3% for retirees over the age of 60.