Early Retirement
Your retirement benefits are based on the law in effect at the time of your termination from employment; thus, some information in this brochure may not apply in specific cases. This publication is meant to explain PERSI law as simply and accurately as possible. If there is any discrepancy between this publication and the law, the provisions of the law will prevail.
Congratulations on your upcoming early retirement! You have worked many years to secure a rewarding retirement, and we at PERSI wish to help you make this transition as easy as possible. Right now you have a lot of information to read and some important decisions to make. We urge you to read this information and all retirement forms carefully, and to take your time in deciding on your retirement option. If you have any questions, call the PERSI field office near you and we will be happy to assist you.
Retirement Eligibility
When you are eligible for retirement depends on how many months of credited service you have, your age, and whether you are a general member, a police officer/PERSI firefighter, a member with mixed general and police officer/firefighter service, or an elected or appointed official. There are several types of retirement, each with its own eligibility requirements. The types of retirement are:
- Service Retirement
- Early Retirement, including the Rule of 80/90
- Disability Retirement
Here we will cover Early Retirement only. If you would like to learn more about the other forms of retirement, see Service Retirement, Disability Retirement, and Retiring with Mixed (police/firefighter and general) Service.
Early Retirement
You may retire early if you: 1) end employment after meeting the minimum age requirement, AND 2) have at least 60 months of credited service. Note: Elected and appointed officials should contact PERSI regarding service requirements.
You may take early retirement with an unreduced allowance if you meet the minimum age requirement and the requirements of the Rule of 80/90.
Rule of 80/90
You may receive an unreduced retirement allowance if your years of credited service, plus your age equal 90 (general members) or 80 (police officer/PERSI firefighters).
Age Requirements For Early Retirement
General member - minimum retirement age is 55. You may retire the first day of the month following the month you turn 55. For example, if you turn 55 on May 15, you may retire June 1. Rule of 90: for an unreduced allowance, your age plus years of credited service must equal at least 90.
Police Officer/PERSI Firefighter - minimum retirement age is 50. You may retire the first day of the month following the month you turn 50. For example, if you turn 50 on May 15, you may retire June 1. Rule of 80: for an unreduced allowance, your age plus years of credited service must equal at least 80.
Members with Mixed (General and Police/Firefighter) Service - minimum retirement age is between 50 - 55. Rule of 80/90: For an unreduced allowance, your age plus years of credited service must equal 80 - 90 depending on the ratio of general member to police officer/PERSI firefighter service. See your PERSI Handbook or the brochure on Mixed Service for more information.
Early Retirement Reductions
If you retire before reaching service retirement age (65 general members, 60 police officers/PERSI firefighters), or before reaching the Rule of 80/90, your retirement allowance will be reduced. The percentage of the reduction is based on the smaller of: 1) the number of years you are from service retirement age at date of retirement, OR 2) how many points you are from reaching the Rule of 80/90. When your retirement allowance is calculated, PERSI automatically figures in the reduction that is most advantageous to you. If you work beyond service retirement age or the Rule of 80/90, your retirement allowance continues to increase.
Rule of 80/90 Reduction Chart
The chart shown here is a partial listing, computed on whole years. The actual calculation of reduction will be based on years and months. For example, if you were one and one-half years away from the Rule of 80/90, your reduction would be 4.5%, not 3% or 6%.
First Five Years Early Retirement |
|||||
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
| % Reduction | 3.00% |
6.00% |
9.00% |
12.00% |
15.00% |
| % You Receive | 97.00% |
94.00% |
91.00% |
88.00% |
85.00% |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|
| Last Contribution Prior to 10/1/92 |
|||||
| % Reduction | 23.00% |
31.00% |
39.00% |
47.00% |
55.00% |
| % You Receive | 77.00% |
69.00% |
61.00% |
53.00% |
45.00% |
| 10/1/92 - 9/30/93 | |||||
| % Reduction | 22.25% |
29.50% |
36.75% |
44.00% |
51.25% |
| % You Receive | 77.75% |
70.50% |
63.25% |
56.00% |
48.75% |
| 10/1/93 - 9/30/94 | |||||
| % Reduction | 21.50% |
28.00% |
34.50% |
41.00% |
47.50% |
| % You Receive | 78.50% |
72.00% |
65.50% |
59.00% |
52.50% |
| 10/1/94 and After | |||||
| % Reduction | 20.75% |
26.50% |
32.25% |
38.00% |
43.75% |
| % You Receive | 79.25% |
73.50% |
67.75% |
62.00% |
56.25% |
|
The chart shown here is a partial listing, based on whole years. Your actual reduction will be based on years and months. For example, if you were 1 1/2 years away from meeting the rule of 80/90, your reduction would be 4.5%, not 3% or 6%. Benefits will be computed or estimated using the reduction rate in state law at the time of your last Base Plan contribution. |
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Benefits will be calculated or estimated using the reduction percentage amount in effect at the time of your last contribution.
EXAMPLES OF THE RULE OF 80/90 AND EARLY RETIREMENT REDUCTIONS
Barbara is a general member and has 30 years of credited service. She is 60 years of age. She may retire under the Rule of 90 with an unreduced benefit because
30 years of service + 60 years of age = 90
Paul has 20 years of credited service as a general member and is 60 years old. He is 10 points away from reaching the Rule of 90
20 years of service + 60 years of age = 80 (90 - 80 = 10)
but only five years away from Service Retirement Age
65 Service Retirement Age - 60 years of age = 5
Therefore, his reduction would be based on retiring five years early.
Kathy has 28 years of credited service and is 60 years of age. She is five years away from Service Retirement Age
65 Service Retirement Age - 60 years of age = 5
but she is only two points away from the Rule of 90
28 years of service + 60 years of age = 88 (90 - 88 = 2)
She could work one more year to reach the Rule of 90 or retire now with a reduction based on being two points away.
How An Allowance is Determined
A formula is used to determine your retirement benefit. The formula is made up of three factors: 1) your highest average monthly salary during a base period of 42 consecutive months, 2) your months of credited service, and 3) a multiplier (2% for general members, 2.3% for police officer/PERSI firefighter members).
Note: If your date of last contribution was before July 1, 2000, your multiplier will be different. If before 1994, your base period will also be different.
Highest Average Monthly Salary During 42 Consecutive Month Base Period
x Multiplier
x Months of Service
= Annual Benefit
÷ 12 = Monthly Benefit
Monthly Benefit x Reduction Factor = Early Retirement Benefit
Retirement Allowance Options
The allowance you choose at retirement will determine the payments you will receive for the remainder of your lifetime, as well as what your Contingent Annuitant, if any, will receive after your death. There are several options you may choose from at retirement. Each provides a different payment schedule. If you are married, your spouse must agree, in writing, to the retirement option you select.
Regular Retirement Allowance - This is a monthly benefit payable to you for your lifetime only.
Options 1 and 2 Contingent Annuitant Allowances - These options allow you to designate a Contingent Annuitant (CA) to receive a monthly allowance after your death. Most people select their spouse as their CA, however you may choose anyone you wish. With each of these options, a reduced monthly payment is made to you until your death. The amount of the reduction (compared to your regular retirement allowance) is determined by the age difference between you and your CA.
Option 1 provides your CA with the same monthly amount you had been receiving for the remainder of your CA's life. Option 2 provides your CA with 50% of the monthly amount you would have received.
Option 3 Social Security Adjustment Allowance
This is available only to those who retire before Social Security Full Retirement Age (SSFRA). It provides an increased retirement allowance before Social Security Full Retirement Age (SSFRA) and a reduced allowance after Social Security Full Retirement Age (SSFRA). It is paid to you for your lifetime only. Social Security Full Retirement Age (SSFRA) is age 65 for those born in 1937 or earlier. For those born later, Social Security Full Retirement Age (SSFRA) is between the ages of 65-67.
To calculate the Social Security adjustment allowance, your PERSI benefit amount is adjusted or accelerated based on the estimated amount you will receive from Social Security at Social Security Full Retirement Age (SSFRA). The amount of the acceleration is based on your age at the time of retirement reduced by the number of years you are from Social Security Full Retirement Age (SSFRA).
An important thing to understand about the Social Security option is that at your Social Security Full Retirement Age (SSFRA), your PERSI benefit will drop - in some cases significantly. It could even drop to zero. Also, the estimate provided by Social Security assumes you are not going to draw your social security benefit prior to your Social Security Full Retirement Age (SSFRA). If this is the case and you do elect to draw your Social Security prior to Social Security Full Retirement Age (SSFRA) it can also make an impact in your monthly allotment.
Option 4A and 4B Social Security Adjustment with Contingent Annuitant Allowances
These options provide an increased retirement allowance before your Social Security Full Retirement Age (SSFRA), and provide your Contingent Annuitant a monthly allowance after your death. Option 4A pays your CA 100% of the monthly amount you would have received for the remainder of your CA's life. Option 4B provides your CA with 50% of the monthly amount you would have received.
Again, under the Social Security options, at your Social Security Full Retirement Age (SSFRA), your PERSI benefit will drop - in some cases significantly. It could even drop to zero. This drop will occur at your Social Security Full Retirement Age (SSFRA) whether you or your CA are receiving the benefit.
This chart illustrates the differences between the retirement options. It is for comparison only and may not reflect what your particular benefit might be. Each individual's retirement benefit is unique due to the variety of factors in the calculations.
In this example: Member is age 60, CA is 59, Member's estimated Social Security benefit is $800 a month at age 65.
Retirement Option |
Member's |
CA's Monthly |
|---|---|---|
Regular Retirement Option 4A - Social Security with 100% CA |
$1,000 |
$0 |
Retirement Checklist
Six Months to One Year Before Retirement
Check with Social Security regarding your Medicare enrollment (parts A & B), and to get a Social Security benefit estimate. Your Social Security estimate will be necessary for PERSI to estimate retirement Options 3, 4A and 4B.
Two to Six Months Before Retirement
If you have not already done so, contact the PERSI Answer Center to receive a benefit estimate. This will give you an idea of what your monthly check will be and what your options are. Send PERSI a copy of your Social Security card and birth certificate. If you select an option with a Contingent Annuitant benefit, you must also send a copy of your Contingent Annuitant's Social Security card and birth certificate.
Two Months Before Retirement
Complete the retirement application and related forms. If you meet with a PERSI Retirement Specialist, bring your spouse with you, as both your signatures must be notarized. Each PERSI office has a Notary Public - please call to set up an appointment. If you mail your application, your signature and your spouse's must be notarized.
All forms should be submitted to PERSI 45 days before your planned retirement date. Be sure to include additional materials as needed (i.e. copies of Social Security cards, birth certificates, Medicare cards; voided check, etc.).
One Month Before Retirement
Tell your employer the date you plan to retire. Your employer must send PERSI a "Notice of Separation" RS-109 form by the end of the month prior to your retirement. Your retirement application cannot be processed until PERSI receives this notice.
If you are an employee in a state agency or an eligible school district, ask your payroll clerk to advise PERSI of the cash value of your unused sick leave. If you are a school employee, ask your payroll clerk for a retiree health insurance form. If you are a state employee, you will be given a Retiree Insurance Benefits Request form with your retirement application package from PERSI.
Forms
Forms you may need to complete when applying for retirement:
- Application for Retirement RS 121
Allows you to select a retirement allowance and, if you wish, to name a Contingent Annuitant to receive a monthly allowance following your death. - Sick Leave Deduction Authorization RS 160
(For state and school employees who qualify only) Allows you to utilize your sick leave for employer sponsored insurance coverage. - Idaho & Federal Tax Withholding RS 322 (Optional)
Allows you to withhold Idaho and/or Federal income taxes from your monthly allowance. - Direct Deposit Authorization RS 448 (Optional)
Allows you to deposit your monthly allowance directly into your financial institution. Your funds are deposited more quickly and more securely than with paper checks. A voided check is required. - Beneficiary Designation RS 115 (Optional)
If you have not updated your PERSI Beneficiary Designation in some time and have experienced major life changes (marriage, divorce, death in the family, etc.), you may wish to select a new beneficiary to receive any possible death benefit. - Notice of Separation RS-109
Your employer must complete this form for PERSI to process your retirement.
In addition, you will need to provide the items below to finalize your retirement:
- Photocopy of your Birth Certificate (or acceptable substitute)
- Photocopy of your Social Security Card
- Photocopy of your Contingent Annuitant's Birth Certificate (or acceptable substitute)
Required if you select a Contingent Annuitant. - Photocopy of your Contingent Annuitant's Social Security Card
Required if you select a Contingent Annuitant. - An Estimate of Your Social Security Benefit from Social Security
Required if you are considering Retirement Allowance Options 3, 4A or 4B. Please contact the PERSI Answer Center at 1-800-451-8228 for details on how to request your estimate if you would like an estimate for Options 3, 4A and 4B. - A Voided Check from your Financial Institution
Required if you choose to have your monthly allowance deposited directly in your financial institution.
TIPS AND SPECIAL INFORMATION
Terminate After the 15th of Any Month
In most cases, it is best to separate from service (quit work) after the 15th of the month, but before the first of the next month. This way you will receive a month of membership service credit for that last month.
Your Check is Paid the First of Every Month
Generally, your retirement allowance is payable the first day of each calendar month. When you retire from active service, the allowance will be payable from the first of the month following the month you ended employment. For example, if you quit June 15th, and therefore retire July 1, you will receive your first check around the first of August for the months of July and August. Then September's check will be for September, and so on.
The first check is generally for two months and will have two months' worth of withholdings. This means that more taxes than normal may be withheld on this check because the payment is for a higher amount. If you elect to have taxes withheld in a flat dollar amount each month, your first check, even if it is for two months' worth of payments, will have just one month's worth of withholdings.
The second payment will be accompanied by a remittance advice notice which will itemize withholdings. If you receive a check, the remittance advice information will be on your paystub. If you are on Direct Deposit, you will receive just the notice - your payment will be deposited automatically. After this initial notice, you will receive remittance advice only when there is a change in the amount of your net benefit (for COLAs, etc.).
Award Letter
After you retire, you will receive a Statement of Award letter with your first benefit payment. This letter tells you your gross monthly retirement allowance and indicates tax withholdings.
Direct Deposit Changes
If you change financial institutions, contact PERSI for a new Direct Deposit form. Return this with a voided check from your new financial institution. Changes must be filed by the 5th of the month to ensure deposit in your new financial institution by the first of the next month.
Change of Address
If you move, let PERSI know, even if you have Direct Deposit. A change of address must be provided in writing, or submitted online and should include your name, Social Security number, the date and your signature.
If you have questions, please contact the PERSI Answer Center.
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