2019 Employer Contribution Rate Information
The current rate is 7.5 percent beginning July 1, 2017, through June 30, 2018. The 2019 rate will remain the same at 7.5 percent and will be effective July 1, 2018, through June 30, 2019.
The composite rate for 2019 is 11.2 percent and is unchanged from 2018. As allowed by Senate Enrolled Act 549 described below, this rate pertains to all PERF employers for 2019.
This includes 1,179 employers at 11.2 percent and four employers with rates ranging from 10 percent to 11 percent. In 2019, all PERF Hybrid employers will be at 11.2 percent.
PERF My Choice: Retirement Savings Plan
The breakdown of the PERF 2019 contribution rate (for state of Indiana employees) of 11.2 percent is 3.4 percent for normal cost and 7.8 percent for amortization of the unfunded liability. No change for 2019.
For political subdivisions, employers choose how much to contribute to employee accounts, from 0 percent up to the normal cost of the fund. Effective Jan. 1, 2018, the normal cost is 4.1 percent. Beginning Jan. 1, 2019, the normal cost is 4.2 percent.
In addition, political subdivisions must make a supplemental contribution toward the fund’s actuarial unfunded liability. Effective Jan. 1,2018, the supplemental contribution is 7.1 percent. Beginning Jan. 1, 2019, the supplemental contribution is 7.0 percent.
Please note that the breakdown of the rate can change each year.
The current rate is 17.5 percent beginning Jan. 1, 2018, through Dec. 31, 2018. The 2019 rate will remain the same at 17.5 percent effective Jan. 1, 2019, through Dec. 31, 2019.
When does the new 2019 rate become effective?
Effective dates are as follows:
- TRF – July 1, 2018
- Most PERF employers – Jan. 1, 2019
- PERF employers on a fiscal year cycle – July 1, 2018
- 1977 Fund employers – Jan. 1, 2019
How often are employer rates reviewed?
Employer contribution rates are reviewed annually by the INPRS Board of Trustees and are based on the actuarial valuation of the prior fiscal year (July 1 through June 30). Thus, the 2019 employer contribution rate was based on the actuarial valuation of the fiscal year ending June 30, 2017.
Who has the authority to set the contribution rates?
The INPRS Board of Trustees is authorized to set the employer contribution rates. The board uses the expert assessment of actuaries and considers liabilities, assets, and the amount needed to fund past and estimated future benefit payments while maintaining the health of the fund.
What determines my employer contribution rate?
The employer contribution rate is determined by investment performance over a rolling five-year period, as well as the demographics of fund members, such as age, salary and years of service.
Actuarial assumption changes can also play a role. To determine funds necessary to pay member benefits, our actuaries use economic and demographic assumptions to predict the amount and timing of the benefits that will be paid as well as the amount and timing of contributions required. Those assumptions are periodically compared to the actual experience of our members and to economic forecasts to ensure that they reflect recent trends and expectations. Lower expected returns on investments means higher employer contributions are needed to fund benefits. In addition, recent studies show that, on average, people are living longer. As such, the mortality assumption used by our actuaries was updated in 2015 to reflect longer life expectancy. Since benefits are paid to our members for life, longer life expectancy means more funds are needed to pay the benefits.
What is Senate Enrolled Act 549?
Previously, a separate contribution rate was calculated for each of PERF’s employers. Senate Enrolled Act 549, which passed in 2011, allows us to create a pool of employers with a common rate. This is intended to reduce the year-to-year volatility of employer contribution rates.
Does the employer contribution rate include the 3 percent that employers may “pick up” for employees?
No. The employer contribution rate is used to fund the pension component of the retirement benefit. The 3 percent that employers may resolve to pick up for employees goes toward the Annuity Savings Account (ASA) component of the members’ retirement benefits.
What should I do if I have additional questions about my employer contribution rate?
Please call our office at (888) 876-2707 or via e-mail at firstname.lastname@example.org. We are available Monday through Friday from 8 a.m. to 5 p.m. EST.