Overview
MISSION STATEMENT
We are committed to serve - through exceptional customer service - our employers, our members and their families, in achieving their retirement goals and financial security.
OVERVIEW
The Public Employees' Retirement Fund was created on July 1, 1945, to provide secure, long-term pension benefits for Hoosiers who choose careers in public service. Since that time, smaller funds have been created, and are now included under the original administrative umbrella. Indiana's PERF is now a retirement system of six separately managed retirement plans:
- Public Employees' Retirement Fund;
- 1977 Police Officers' and Firefighters' Pension and Disability Fund;
- 1977 and 1985 Judges' Retirement System;
- Prosecuting Attorneys' Retirement Fund;
- Legislators' Retirement System (Defined Benefit and Defined Contribution Plans);
- Excise Police and Conservation Enforcement Officer' Retirement Plan;
PERF administers two special death benefit funds for public safety officers and state employees who die in the line of duty.
The fund also manages the Pension Relief Fund, created by the Indiana General Assembly in May, 1977, to address the unfunded pension obligations of the police officers' and firefighters' pension systems of Indiana's cities and towns. Administered by the PERF Board of Trustees, this Fund derives its revenues from cigarette and alcohol taxes and investment income earned on them. A fixed distribution formula provides for relief payments two times per year, and is based on the number of retirees and amount of benefits paid the previous year.
PERF is not responsible for the administration of those local pension funds addressed by the Pension Relief Fund. Those local funds have been closed to new membership since the creation of the 1977 Police Officers' and Firefighters' Pension and Disability Fund.
Benefits Administration Role
PERF provides financial and retirement services to people in nearly all fields of public service to the State of Indiana and our municipalities. The system's members and beneficiaries receive direct payments through retirement, disability, and death benefit programs. Public employers are able to use PERF as a quality benefit to attract and retain workers.
The clientele base for each of the six plans consists of active members, benefit recipients (retirees) and employers. Services offered to our three critical customer bases are fairly uniform across each of the six funds administered by PERF, with certain exceptions depending on the provisions that govern each plan.
Active Members
For this purpose, active member is defined as that person who is either: a) actively employed in a governmental position covered by one of our participating employers; or b) no longer employed in a covered position but still having an account balance or future benefit obligation from PERF.
The services PERF provides these members include, but are not limited to, the following:
- Toll-free Call Center with customer service representatives available Mon-Fri 8am-5pm to handle any inquiry related to fund participation;
- Outreach (distance education) services available on request statewide;
- Investment services that track returns on invested funds, monitor adherence to PERF investment policies, and provide information related to self-directed investment options available in the Annuity Savings Account and Legislators Defined Contribution investment programs;
- Active Member services that handle creditable service verification, and member purchases of additional service, and refund or rollovers distributions of the Annuity Savings Account when a member separates from PERF-covered service;
- Accounting services that provide all services necessary to apply investment earnings and value member accounts on a quarterly basis, generates quarterly member statements of account, processes and withholds taxes on refunds or rollovers, generates IRS 1099 forms annually, etc; and,
- Communications services that produce informational materials via the Fund's website and printed publications on issues related to fund participation and investments.
Benefit Recipients
For this purpose, benefit recipients are defined as those receiving a retirement, disability or survivor benefit payable by PERF. Across all funds, PERF has approximately 62,000 benefit recipients.
The services PERF provides these members include, but are not limited to, the following:
- Retirement Services division that provides pre-retirement counseling to those members contemplating retirement, calculates estimates of future benefits for members, certifies creditable service and salary information prior to retirement, and validates and processes all documentation to apply for benefits.
- Accounting division that provides all necessary services to process a benefit request, withholds applicable taxes, prepares benefit payment via check or electronic fund transfer, generates IRS 1099 forms annually, calculates and applies cost of living adjustments when applicable, provides death benefit audits and collections, etc.
- Toll-free Call Center.
- Outreach services.
Employers
The Public Employees' Retirement Fund and the 1977 Police Officers' and Firefighters' Pension and Disability Fund are both multiple-employer retirement plans with approximately 1,000 and 250 participating employers, respectively. All other plans administered by PERF are plans sponsored by a single employer - the State of Indiana.
The services PERF provides employers include, but are not limited to, the following:
- Calculating and communicating contribution rates.
- Investment services related to employer pension assets.
- Enrolling new members into PERF.
- Those services related to expanding coverage in the system and enrolling new employers.
Organizations that Impact PERF
PERF is governed by a board of trustees who serve as the ultimate fiduciaries of the Fund. The board consists of five members appointed by the governor, one of whom must be a member of the fund with at least 10 years of creditable service. Also one trustee must be either a member of a collective bargaining unit of state employees or an officer of a local, national or international labor union representing state employees. Not more than three of the trustees may be of the same political affiliation. The board appoints the executive director of the fund for approval by the governor.
Other bodies that have significant impact on PERF's operations include:
- Office of Management and Budget
- Pension Management Oversight Commission (PMOC).
- Office of the Attorney General. " Office of the Auditor.
- 1977 Police Officers' and Firefighters' Pension and Disability Fund Advisory Board.
- Retired Indiana Public Employees' Association (RIPEA). " Indiana Association of Cities and Towns (IACT).
- Association of Indiana Counties (AIC).
- Indiana Teachers' Retirement Fund.
PERF'S HISTORY
The Public Employees' Retirement Fund (PERF) was created on July 1, 1945, with the passage of the Public Employees' Retirement Act. Since then, the Fund has faithfully served its members and their employers, providing a wide range of retirement services and grown from a single pension trust fund to an retirement system of seven separately managed pension funds serving a broad spectrum of public employees. Although the Fund was created in 1945, events that occurred almost 100 years earlier had a significant impact in shaping the Fund.
Early Events that Shaped the Fund
In the 1840s, the State of Indiana held significant common stock in canal construction companies. The birth of the railroad industry spelled the decline of those companies, taking its toll on the State's investment dollars. To avert similar financial losses in the future, a Constitutional amendment was adopted prohibiting State money from being invested in the "common stock of any company." Therefore, from the Fund's inception in 1945 until the law changed in 1996, its monies were invested exclusively in domestic fixed income assets.
Expanding the Scope of the Fund
The period from the 1950s through the 1980s was a time of great change for PERF. The scope of the Fund was expanded to cover more and more employees, and many important changes were made to the operation of the Fund.
In the 1950s and 60s, the Fund saw the creation of the first Judges' Retirement System and the approval by referendum to allow the combination of comprehensive benefits between PERF and the Federal Social Security Act.
The 1970s witnessed the creation of the Excise Police and Conservation Enforcement Officers' Retirement Fund and the 1977 Police Officers' and Firefighters' Pension and Disability Fund. The Pension Relief Fund was created to assist cities and towns with the unfunded liability of locally administered police and fire pension funds. It was also the time that PERF initiated a formal program to systematically amortize unfunded accrued liability, which was the foundation by which PERF's current fiscal stability was built.
The 1980s created the youngest of the plans administered by PERF-the Legislators' Retirement System in 1985 and the Prosecuting Attorneys' Retirement System in 1989.
The Transformation of PERF
November 1996 was a watershed in the transformation of PERF, when Indiana voters passed the Equity Referendum of 1996. The following year, enabling legislation was signed into law to allow the Fund its first investment in equities. As a result, the portfolio could be diversified among fixed income, equities, and various other asset classes. This event forever changed the way the PERF Board of Trustees and staff fulfill their responsibilities as fiduciaries of the Fund.
In May 1997, PERF made its first equity investment with a $300 million buy into an S&P 500 Fund. Thanks to these changes, the Fund's asset base has grown remarkably and, through diversification, those assets are safer than they have ever been in PERF's history.
In July 1998, legislation was enacted to allow PERF members to begin directing the investment of their Annuity Savings Account into two new funds:
- The S&P 500 Stock Index Fund and
- The U.S. Small Companies Stock Fund.
- In January 2002, a third equity option became available to members:
- The International Equity Index Fund.
These investment options are in addition to the traditional Guaranteed, Money Market, and Bond Funds. With this legislation, PERF offers equity investment to its members.
The ability to invest in equity funds and the opportunity to make voluntary contributions to the Annuity Savings Account provide PERF members with valuable financial planning tools.
New agency status and expanded electronic services
A new chapter in PERF's history was written on July 1, 2000, when the Fund was reconstituted by the State Legislature as a "separate body corporate and politic." In 2006, the Legislature approved inclusion of the Director of the Budget, or a designee, as a member of the Board. Although the Board of Trustees is still appointed by the Governor, and appoints the Executive Director with the Governor's approval, PERF is no longer constrained by the regulations applied to a state agency. This change puts PERF in a position to employ the best practices of both the public and private sectors.
Beginning in 2004, the recordkeeping of the Legislators' Retirement System was transferred to a private company, Great West, Inc. Great West is able to provide individual members of this system with real-time access to their own account information via the internet.
In 2005, PERF launched its first interactive services with PERF Interactive. Members of all funds are now able to change their own addresses, beneficiaries, and investment choices using a secure website.
