Police and Firefighters Member Handbook: Retirement Benefits
In general there are three types of benefits payable in the 1977 Fund, which are all funded by the employer-financed contribution and the employee mandatory contribution:
- Retirement Benefits;
- Survivor Benefits; (See the Survivor Benefits section of the member handbook for more information) and
- Disability Benefits (See the 1977 Fund Disability Benefits section of the member handbook for more information)
Normal Retirement Benefits
Eligibility
You are eligible for an unreduced retirement benefit if you:
- Have at least 20 years of creditable service in the 1977 Fund;
- Are at least 52 years of age; and
- Have retired from service and separated from employment
Amount
If you are eligible for unreduced retirement benefits, you will receive a monthly benefit equal to at least 50 percent of the base salary (first-class salary) in the year you retired.
If you have accumulated more than 20 years of service, you will receive an additional 1 percent of base salary for each six months of active service over 20 years, up to a maximum of 12 additional years (or a maximum additional 24 percent of base salary).
For example, if you retire with exactly 20 years of service, your benefit at retirement will be 50 percent of your department’s base salary. If you retire with 30 years of service, your benefit at retirement will be 70 percent of your department’s base salary. When you have accumulated 32 years of service or more, your benefit at retirement will be 74 percent of your department’s base salary.
Re-employment after Retirement
Not less than thirty (30) days after a fund member retires from a 1977 Fund covered position, the fund member may be rehired by the same unit that employed the fund member in a 1977 Fund covered position for a position not covered by the 1977 Fund and continue to receive the fund member's retirement benefit.
You will also qualify for Social Security benefits. After retirement, Social Security is the largest source of income for most elderly Americans. More information on Social Security benefits is available online at http://www.ssa.gov/.
Benefit Overpayment and Underpayment
Errors may occur when determining benefits provided by the 1977 Fund. This could be due to incorrect or incomplete data or for other reasons. If such an error is discovered, INPRS reserves the right to correct the error at any time, including after you take a distribution of your account balance. If you receive an overpayment as a result of any error, you will be notified of the amount and will be required to repay it to INPRS. If you have an underpayment you will receive an additional payment from INPRS.
Deferred Retirement Option Plan (DROP)
The Indiana General Assembly created a new benefit option available to eligible members of the 1977 Fund. This Deferred Retirement Option Plan (DROP) is an optional form of benefit, which allows members who are eligible for an unreduced retirement benefit to continue to work and earn a salary while accumulating a DROP benefit payable in a lump sum or three annual installments. A member who elects to enter the DROP shall execute an irrevocable election to retire on the DROP retirement date. The member shall select a DROP retirement date not less than 12 months and not more than 36 months after the member’s DROP entry date. While in the DROP, the member shall continue to make applicable fund contributions.
When you enter the DROP, a “DROP frozen benefit” will be calculated. This is equal to your monthly retirement benefit based on your accrued service and base salary as of the date you enter the DROP. Upon your DROP retirement, you are eligible to receive a lump sum equal to the amount of your DROP frozen benefit times the number of months you were in the DROP. You may elect to receive this amount in three annual installments instead of in a single lump sum. In addition, you will receive a monthly retirement benefit equal to your DROP frozen benefit. You will not continue to accrue service credit for the years you are in the DROP. If there are cost of living adjustments, they will not apply to the frozen monthly benefit while in the DROP. Any cost of living adjustments will begin to be applied to the frozen monthly benefit, in the year after the year in which you retire.
If you elected to participate in the DROP, you may, upon retirement, elect to forego DROP benefits, and instead receive monthly retirement benefits calculated as if you never elected to participate in the DROP. These benefits would be based on your accrued service and base salary as of the date you retire.
With at least 20 years service, you can retire and receive reduced benefits as early as age 50.
More details about eligibility requirements and how the DROP benefit is calculated can be found in other 1977 Fund publications regarding the DROP. Electing to receive the DROP benefit is an important decision that you should not make without consulting a trusted financial advisor.
Overview of Retirement Options
| Type of Retirement | Age and Service Requirements* | Benefit Calculation |
| Unreduced | At least 20 years of service and at least age 52 |
1. A pension equal to 50 percent of base salary + 1 percent for each six months of service over 20 years. Total max. benefits is 74 percent of base salary for retirees with 32 years or more of service. |
| DROP | Eligible members electing to retire under the provisions of the DROP | Lump Sum or 3 Annual Installments = DROP frozen benefit x no. of months in DROP + monthly pension |
| Early | At least 20 years of service and at least age 50 | Actuarially reduced benefit for each month prior to age 52 |
* No service credit will be given to a member of the 1977 Fund for unused, but accrued sick leave, whether or not the member received compensation for such unused sick leave.
Early Retirement Benefits
If you have 20 years of service, you may elect to retire and receive actuarially reduced benefits at age 50. The actuarial reduction factor is 14 percent at age 50. For example, upon retirement a person who is age 50 would receive 86 percent of the pension that would be payable if the member was age 52, using years of service and base salary at retirement. The actuarial reduction factor decreases uniformly from age 50 to age 52 on a monthly basis. At age 51, the pension reduction factor is 7 percent; therefore, if you elected retirement benefits at age 51, you would receive 93 percent of a normal pension benefit for the rest of your life plus any additional cost of living increases.
Cost of Living Adjustments (COLA)
Pursuant to IC 36-8-8-15, each year the INPRS board determines if there has been an increase in the Consumer Price Index (CPI). Beginning on July 1 of the year after your benefits start, monthly retirement benefits for members and your survivors are increased when there has been an increase in the CPI by the percentage of increase in the CPI, but not by more than 3 percent.
Section Four: Survivor Benefits
