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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > My Fund > Police and Firefighters > Police and Firefighters Member Handbook: Retirement Benefits 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:

  1. Retirement Benefits;
  2. Survivor Benefits; (See the Survivor Benefits section of the member handbook for more information) and
  3. 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 twenty (20) years of creditable service in the 1977 Fund;
  • Are at least fifty-two (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 fifty percent (50%) of the base salary (first-class salary) in the year you retired.

If you have accumulated more than twenty (20) years of service, you will receive an additional one percent (1%) of base salary for each six months of active service over twenty (20) years, up to a maximum of twelve (12) additional years (or a maximum additional twenty-four percent (24%) of base salary).

For example, if you retire with exactly twenty (20) years of service, your benefit at retirement will be 50 percent of your department’s base salary. If you retire with thirty (30) years of service, your benefit at retirement will be 70 percent of your department’s base salary. When you have accumulated thirty-two (32) years of service or more, your benefit at retirement will be seventy-four percent (74%) 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.

Benefit Overpayment and Underpayment

Occasionally, errors occur in benefit calculation. If such an error is discovered, INPRS is required by federal and state law to correct errors at any time, including after you take a distribution of your account balance.  If you receive an overpayment as a result of any error, INPRS is required by federal and state law to recover benefit overpayments.  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 by statute an irrevocable election to retire on the DROP retirement date. The member shall select a DROP retirement date not less than twelve (12) months and not more than thirty-six (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.

With at least twenty (20) years service, you can retire and receive reduced benefits as early as age fifty (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 twenty (20) years of service, you may elect to retire and receive actuarially reduced benefits at age fifty (50). The actuarial reduction factor is fourteen percent (14%) at age fifty (50).

For example, upon retirement a person who is age fifty (50) would receive eighty-six percent (86%) of the pension that would be payable if the member was age fifty-two (52), using years of service and base salary at retirement. The actuarial reduction factor decreases uniformly from age fifty (50) to age fifty-two (52) on a monthly basis. At age fifty-one (51), the pension reduction factor is seven percent (7%); therefore, if you elected retirement benefits at age fifty-one (51), you would receive ninety-three percent (93%) of a normal pension benefit for the rest of your life plus any additional cost of living increases.

If you choose to take early retirement, your pension benefits will remain at a reduced level even after you reach 52 years of age.

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 three percent (3%).

Section Four: Survivor Benefits