PERS 3 is a two -part (hybrid) retirement savings plan that provides a secure base income, but also allows you to invest your own contributions for retirement.
PERS 3 includes:
PART 1: An employer-funded defined benefit
The UW contributes to your retirement by funding the defined benefit
portion of PERS 2. Currently the employer contribution rate is 8.31%
of your gross salary (as set by the legislature effective July 1, 2008).
These monies are invested in the PERS 3 Retirement Trust Fund to pay
future benefits, and cannot be withdrawn. The employer contributions
are invested by the Washington State Investment Board.
PART 2: An employee-funded defined contribution
The defined contribution component of PERS 3 is based entirely on your contributions, the investment earnings on those contributions, and, if an annuity is taken, the age at which you decide to take payment. You select from the rate options available and can self-direct your own investments or choose to have your account managed by the Washington State Investment Board.
PERS 3 is open to all monthly and temporary paid contract classified, classified non-union, and GCIU bargaining unit employees who work a minimum of 70 hours per month in any five months of a 12-month period.
Temporary Employees: If you are a temporary employee you may become eligible to participate in the Public Employees Retirement System (PERS) if:
Newly Eligible Employees: If you participated in an employer-matched, defined contribution, basic retirement plan with your prior employer, you may be eligible to participate in the University of Washington Retirement Plan (UWRP) instead of the Public Employees Retirement System (PERS). Learn more.
Changing positions at the UW? If you move from a PERS-eligible position to a UWRP-eligible position or vice versa, email Benefits & Work/Life at benefits@u.washington.edu to determine your retirement plan choices.
Staff who are full-time UW students or the spouse of a full-time UW student: If you are a full-time UW student or the spouse of a full-time UW student, you may be eligible to exempt yourself from participation in PERS. However such exemption will not count toward future retirement service credits. Email Benefits & Work/Life at benefits@u.washington.edu to learn about exemptions from PERS participation.
All UW employees participate in their applicable retirement plan from the beginning of employment. Retirement plan participation is a condition of employment.
If you are in a PERS-eligible position, but you were participating in an employer-matched, defined contribution, basic retirement plan with your prior employer, you may be eligible to participate in the University of Washington Retirement Plan (UWRP) instead of the Public Employees Retirement System (PERS). An employer-matched plan is one in which both you and your employer make contributions to your basic retirement plan, such as a 401(k) or 403(b) plan.
To be eligible for UWRP you must have:
If you believe you meet this exception criteria, email the Benefits & Work/Life Office to determine your retirement plan choices.
Choosing a retirement plan is an important financial decision. to make the best choice you will need to carefully consider your individual situation, including such factors as:
After you've thought about your personal situation, research your options:
In a defined benefit retirement plan, the eventual retirement benefit is calculated using a pre-determined formula and is not related to the amount of money paid into the plan. In PERS 3 the UW contribution funds the defined benefit. The formula for PERS 3 benefit is 1% x years of service credit x average final compensation. Your average final compensation is the monthly average of your 60 consecutive highest paid service credit months.
Currently in PERS 2, both the employee and employer contributions go towards funding the defined benefit at retirement, and the formula is 2% x years of service credit x average final compensation.
Once you begin drawing your defined benefit, both PERS plans provide for a cost of living adjustment (COLA) each July 1, of up to three percent per year. The COLA begins once you have been receiving your defined benefit for one full year.
The employee contribution to PERS 3 funds a defined contribution plan. In a defined contribution retirement plan, your eventual benefit will vary depending on how you elect to invest your funds and how those investments perform over time.
Employee contributions to the PERS 3 retirement plan:
*Note that under current federal law, once you select a contribution rate, you cannot change that rate unless you change employers. Changing employers means working someplace other than the UW, not just changing departments or divisions within the UW.
The defined contribution component of PERS 3 is based entirely on your contributions, the investment earnings on those contributions, and, if an annuity is taken, the age at which you decide to take payment. If you end employment at the UW and withdraw your contributions, you still have a right to the employer-funded defined benefit component.
| Current Contribution Options: | |
|---|---|
| Option A: | 5% of pay at all ages |
| Option B: | 5% of pay up to age 35; then 6% from age 35 up to 45; and then 7.5% age 45 and above |
| Option C: | 6% of pay up to age 35; then 7.5% from age 35 up to 45; and then 8.5% from age 45 and above |
| Option D: | 7% of pay at all ages |
| Option E: | 10% of pay at all ages |
| Option F: | 15% of pay at all ages |
Defined Benefit: If you leave the University before retirement you may delay receiving your defined benefit until a later date. Members who have at least 20 service credit years and who leave the University prior to age 65 have the value of their defined plan prorated. PERS 3 provides an average three percent adjustment for inflation per year until you begin collecting your benefit (or until age 65, whichever is earliest).
Defined Contribution: You can access your defined contribution account whenever you leave service. Withdrawing money from the defined contribution portion of PERS 3 does not affect your eligibility to receive a monthly pension benefit under the defined benefit portion of the plan.
Withdrawn contributions and earnings are subject to income taxation in the year they are withdrawn. In addition, if you are under age 59 1/2 (or age 55 and retired) you may be subject to an IRS penalty for early withdrawal from a retirement plan.
If you withdraw your contributions before retirement, you lose your right to future retirement benefits. You can restore your contributions and re-establish your benefits under certain circumstances. Explore the PERS website for more information including member publications.
Contact the Social Security Office periodically to review your file's accuracy.
Refer to the PERS Plan 3 Member Handbook.
See the Department of Retirement Systems 2005 Summary Annual Financial Report.
Save even more for retirement with the Voluntary Investment Program (VIP)
Copyright © 2007 University of Washington
