Frequently Asked Questions (FAQs)
We’ve collected the questions we hear the most. Of course, if you can’t find the answer you are looking for, call us. We’re here to help you.
Name, Address & Beneficiary Changes
Yes. PERA sends multiple mailings during the year that are mailed to the address on PERA records. You can change your address online by registering for MY PERA. You can also change your address by downloading a PERA Change Form or by calling PERA at 651 296-7460 or toll free 1-800-652-9026.
We ask that employers report any name and address changes for an active employee, in addition to the routine reporting of contributions. However, changes may be missed. Ultimately it is the member’s responsibility to notify PERA of any personal changes.
If you sign up for MY PERA, you can verify this information anytime. Otherwise, contact our office.
You can download a PERA Change Form. Complete this form and follow the instructions to mail the completed form to PERA.
Register for MY PERA or send us the address change in writing, or call our office at 651-296-7460, or toll free, 1-800-652-9026.
Register for MY PERA, send us the name change in writing, or call our office at 651-296-7460, or toll free, 1-800-652-9026.
PERA has created a web page explaining the impact of marriage dissolution on an Association pension. The page is designed to assist the parties involved in marriage dissolution and their attorneys in the division of PERA pension benefits as part of the overall disposition of marital property.
We also have a publication that answers questions concerning marriage dissolution called PERA Benefits and Marriage Dissolution. This publication is available online or by mail by contacting the PERA office.
You begin to build service credits from the first time deductions are paid into PERA, and a service credit is earned each month a deduction is reported to the association. You cannot exceed 12 credits for any calendar year, even if employed concurrently in more than one public job. It is possible for you to acquire service credit in addition to that earned while contributing on current earnings.
For example, limited credit is given for authorized layoffs. In some instances, you may purchase credit while on an unpaid leave of absence. See the Member Purchases page for more information.
For a Defined Benefit Plan member, a PERA pension is based on a formula using three variables: your age at retirement, the average of your highest five consecutive years’ salary, and your years of service credit. While each of these factors is important, the more service credit you have, the higher the percentage of your average salary you will receive as your retirement benefit.
You will automatically receive service credit while on a paid leave of absence of any type. The normal employee contributions are deducted from your salary and your employer makes employer contributions.
You may also purchase service credit for up to one year of authorized unpaid personal, parental or medical leave, including leave under the federal Family Medical Leave Act. You must make your employee contribution, as well as your employer's contribution. Payments are based on your salary during the six months prior to the leave and must be made within one year after you return to public service or 30 days after termination of service, whichever is sooner. Annual interest of 8.5 percent will be charged from the date your leave ends until full payment is made. You must return to active public service for a minimum of three months to be eligible for the purchase of any subsequent authorized leave of absence. If more than a year has elapsed since the end of the leave, credit may be purchased on an actuarial basis. However, this can be very expensive.
Yes, if that leave interrupts your PERA-covered service. Upon your return, you may purchase credit for any or all of your leave, up to a maximum of five years. To obtain credit, you must make your regular employee contribution. This is based on the average of the salary you would have earned during your leave. Full payment must be made within three times the length of the leave or five years, whichever is shorter. Employer contributions and any interest due are the obligation of the agency reemploying you when you return from military service.
Are You Really Retiring?
These Frequently Asked Questions are intended to explain the requirements you must meet in order to receive your retirement benefit.
A right to a retirement benefit requires a complete and continuous separation from all public employment for 30 days. There can be no written or verbal agreement prior to termination to provide services to a public employer. Independent contractors and employees of independent contractors may not work for their same employer for 30 days. Public employment includes service to any governmental employer in Minnesota – e.g. school districts, cities, counties, townships, and state.
PERA’s governing statutes have had this break-in-service requirement in place for decades. The original intent, we believe, was to ensure that the plan could be adequately funded by systematically providing for the retirement of eligible participants. If members can choose to begin collecting benefits at any time, and then return to the same positions without paying into the plans, the cost of the benefits will be higher for everyone.
In 1983, PERA’s plans met the requirements as tax-qualified plans under the provisions of the Internal Revenue Service’s code and regulations. Over the past several years, the IRS has increased its review of pension plan provisions pertaining to what the IRS calls “bona fide separation of service.” The IRS is attempting to make sure individuals are actually retiring and not taking early distributions from their pension plan while continuing to work (which would be easy to do if you “retired” for a day or two and then started working again in the same job right away).
The IRS grants tax-deferred status to the contributions made to the PERA pension plans under its “qualified plan” rules. Under those rules, the IRS does not allow “at will” payment of benefits to individuals from the retirement plan. In other words, an individual cannot choose to start drawing benefits anytime in his or her career and continue working in the same position. The IRS considers this to be a “sham” retirement and does not allow tax-qualified plans to permit this.
Only if the work is for an employer who is not required to participate in PERA’s benefit plans. If your new employer contracts with a PERA-eligible agency, you, yourself, cannot provide services to that PERA employer for at least 30 days.
If your work after retirement is not for a PERA-eligible employer, your benefit will not be affected.
As a former member of PERA collecting a monthly retirement benefit, you may be employed in what would normally be a PERA-covered position. As an employee, your earnings must be reported to PERA, but no deductions are taken from those earnings. You may earn up to pre-defined earnings thresholds each year. If you exceed those thresholds, your benefit will be offset or suspended until the earnings threshold changes again at the beginning of the new calendar year.
If you will not reach your full Social Security retirement age in 2018, you may earn up to $17,040 before your benefit is affected. If you will reach full Social Security retirement age in 2018, the limit is $45,360 for the period between January and the month in which you reach full retirement age. In both cases, your benefit will be reduced $1 for every $2 you exceed the limit.
If, however, it is determined that suspending your pension at some point during the year will result in a higher overall annual benefit to you, your pension may be suspended until the beginning of the following year, or until you terminate the employment, rather than reducing your benefit on a monthly basis.
If you exceed these limits as the result of PERA-covered employment, your annual pension will be reduced. However, when you reach full retirement age, as defined by Social Security, there are no longer any limits on your earnings.
If you exceed the annual earnings limits, the amount by which your pension is reduced is held by PERA and can be claimed as a lump-sum distribution one year after you terminate your PERA-covered employment. If your reemployment extends through the end of a calendar year, the deductions from that year may be reclaimed one year later. Should you die prior to claiming the withheld benefits, they can be claimed by your spouse or beneficiaries.
The law specifically states that the break in service must be 30 days, so in this example you may return on December 16.
It is 30 calendar days (weekends are included).
Working as an IC with a PERA-participating employer, whether it is your former employer or another governmental entity required to participate in PERA’s benefit plans, will not affect your retirement benefits if the employment is truly as an IC (or an employee of an IC) and begins more than 30 days after termination.
An important factor to consider is whether your relationship with the employer is truly that of an independent contractor. We strongly recommend that you check with PERA before you enter into this type of arrangement to make sure it meets the requirements for an independent contractor relationship. Otherwise, your earnings must be reported and your benefits may be reduced or suspended.
If the independent contractor for whom you will be working is not providing services to a governmental entity required to participate in PERA, there is no requirement for a 30-day break. You can leave your PERA-covered position and go to work for this IC the next day. If the IC has a contract to provide services to a PERA-covered employer, you must have a complete break in service for the full 30 calendar days. If not, you are not considered “retired” and your benefits will be terminated. Any payments you have already received from PERA will have to be repaid to PERA.
Yes, if your work for the private company does not involve providing services to a PERA-eligible employer, your retirement benefits will not be affected. If your work for the private company does involve providing services to a PERA-covered employer, your work cannot begin until more than 30 days after your pre-retirement termination and you must not have had an agreement to provide those services prior to your termination.
If you returned to work for a PERA-covered employer prior to 30 days after termination (including as an employee of a private company), the retirement benefit would be rescinded and benefit payments would have to be returned to PERA.
Yes, but you must not have had an agreement, written or verbal, to return to your same employer before you retire and you must not return within 30 days of the date of your retirement. And please tell your public employer that you are a PERA retiree.
This is okay as long as you do not provide services to your same employer.
No, you must terminate completely for the 30-day break to begin.
No, you must terminate completely and sever all employment rights with your employer for the 30-day break to begin.
No, provided you are not contributing to the Coordinated Plan on your earnings from your elected position.
Elected officials on a governing body for a PERA-covered governmental unit (this does not include elected auditors, attorneys, treasurers, administrators, etc.) who are participating in PERA’s Defined Contribution Plan or are not participating in any of PERA’s plans on the elected official earnings, do not have to have a 30-day separation from elected service to be eligible for retirement from the non-elected position as long as you do not return to any other non-elected service with a PERA-covered employer within 30-days of terminating the Coordinated Plan covered position.
If the benefits have not yet been paid to you, the retirement application would be cancelled and employer and employee contributions to PERA would resume. If the benefit began before you returned to work for a PERA-covered employer and there was no advance agreement, written or verbal, for you to provide services, paid or unpaid, to that employer, your retirement would be valid and your benefit payments would continue.
No, you must have a 30-day break from all public employment. Public employment includes services to any governmental employer in Minnesota - e.g.school districts, cities, counties, townships, and state.
No, you need the 30-day break from ALL PERA plans. If you begin collecting benefit payments from the Coordinated Plan and have a 30-day break, then begin work covered by either the Correctional or Police and Fire Plan, you would be subject to earnings restrictions and no salary deductions would be paid to PERA.
No; however, to qualify for the enhanced benefits under PERA’s Privatization Provisions, you will need to meet the same break-in-service requirements that apply to all other PERA members. For additional information on the special provisions covering employees of a privatized employer, please visit our Privatization (Chapter 353F) page.
Yes, you must wait 30 days after termination to be eligible for retirement benefits and you cannot provide services to your employer during those 30 days. You may want to consider terminating after you’ve trained the new person.
Also, you must not have had a written or verbal agreement to provide services (training or any other) to your pre-retirement employer before you retire.
No, the break applies only to employment with, and providing services for, an employer required to participate in the benefits plans administered by PERA of Minnesota.
Applying for Retirement
60 to 90 days before you want your benefits to begin.
The effective date of your retirement is the first day of the month following your termination of public employment if you work continuously up to retirement.
If you have already terminated public service and are eligible for a pension, your effective date of retirement will be the first of the month after PERA receives your retirement application. You may lose benefits if you delay the filing of your application more than one year after you retire.
You will need to provide the following information and materials.
- A completed and notarized retirement application.
- Proof of your age (birth certificate)*
- Proof of any name change (marriage certificate, court documents, etc.)*
- Proof of age and any name change for your survivor if you choose a Survivor Option.
- A Termination Verification Form (PERA provides you with this form when you request a retirement application. It is to be filled out by your employer, indicating your date of termination from public employment).
*While PERA will accept photo copies of the documents, we reserve the right to see the originals or certified copies.
Note: If all required documents are received by PERA in advance of your termination, your first pension payment will be sent approximately two weeks following the effective date of your retirement. Subsequent payments will be sent the first working day of each month.
Your initial benefit payment may be based on estimated earnings and service credits. When we have received all salary deductions and required information from your employer, we will recalculate your pension, make any necessary adjustments, and notify you of the final amount of your benefit.
You can change the benefit option that is selected on the application up until the time that PERA issues a benefit payment. Once the first payment is made, the benefit option chosen is, in most cases, irrevocable. Therefore, you should consider the pension options carefully when filling out the application.
You are considered retired when you terminate your employment and have a complete and continuous separation from all public employment for 30 days. In addition, there can be no written or verbal agreement prior to termination to provide services to a public employer. If you return to PERA-covered employment as a retiree (after at least a 30-day break) no PERA deductions will be taken from your salary.
However, if you are under full retirement age for Social Security, your total annual pension will be reduced or suspended if your earnings from a PERA-covered job exceed the annual earnings limits set by the Social Security Administration. These limits are subject to change each year.
After reaching full retirement age for Social Security, or a year after you again leave PERA-covered employment, whichever is later, you can apply for a refund of the withheld pension amount plus interest.
Note: Earnings limits only apply to PERA-covered employment. There is no limit on earnings from self-employment, private employment, elective service, pensions or other sources of income.
No. You can mail it to our office. Our telephone representatives can answer questions you have about your PERA retirement benefit, explain the benefit options available to you and can help you complete your application. You will need to make copies of the necessary documents and send them with your application.
Annually PERA mails a statement to active members that informs them of their eligibility for retirement. Online services are also available in MY PERA that allow members to view personal benefit information, change personal data, and create their own custom benefit estimate.
You can also sign up for MY PERA, and create your own estimates, including custom estimates, any time.
As you approach retirement you may wish to attend a group counseling program available at one of the various locations throughout Minnesota. PERA offices are located in St. Paul, Duluth, and Mankato. Schedules for the Education Programs are available online.
PERA has several publications available to assist you in better understanding the purpose and benefits of PERA. Publications are available online in Publications or they can be mailed to a member upon request.
Combined service can provide you with benefits for public service under more than one retirement program. However, you must have at least six months of service with each fund to qualify. For many PERA members, this is service under the Police & Fire, Coordinated, Basic, or Correctional plans, as well as the Minneapolis Employees Retirement Fund division of the Association. In addition to PERA's defined benefit plans, it can also be public service covered by any of the retirement funds listed below:
- Minnesota State Retirement System:
- General Plan
- Correctional Employees Retirement Plan
- State Patrol Retirement Fund
- Unclassified Employees Retirement Plan
- Judges' Retirement Fund
- Legislators' Retirement Plan
- Elective State Officers' Retirement Plan
- Teachers Retirement Association
- St. Paul Teachers Retirement Fund Association
- Duluth Teachers Retirement Fund Association (recently consolidated with Teachers Retirement Association)
A combined service pension is calculated using your service with each of the covered funds. The actual benefit calculations are those of the specific funds, using your years of service with each plan. A single average salary for your five highest-paid consecutive years of service (60 consecutive months), no matter when earned, is used in the calculation of each benefit. This is known as your “high-five salary.” The effective date of your benefits from all funds must be within one year of each other.
Upon the death of a PERA member, the spouse, beneficiary or the personal representative of the estate of the member should contact PERA. An application for a benefit or refund will be mailed, along with a letter explaining the survivor benefit options. PERA will require a copy of the death certificate before any payments can be made. If monthly benefits are available, proof of member’s age and evidence of any name change for the member or survivor may also be required.
PERA provides survivors of active members with several benefit options depending on the type of membership held by the participant. If monthly benefits are not payable, the designated beneficiary(ies) is entitled to a refund of the member contributions plus interest.
Information on survivor benefits can be found in your Plan Handbook. Handbooks are available in the Member Handbook page of this site.
If, when applying for a pension, the member named an individual to receive a death benefit, that person is eligible for a continuation of all or a portion of the member’s monthly benefit. However, if the retiree chose a single-life benefit there is no continuation of the pension, but there may be a portion of his or her contributions remaining that would go to the beneficiaries PERA has on file for the member’s account. This is normally true if the member had been receiving a pension for less than two years.
You can request an application by phone. You can also e-mail us by hitting the Contact Us button on the left side of your computer screen.
Qualifications for disability are based on the plan in which you participate. Information explaining disability benefits can be found in the Plan Handbook available in the Member Handbook section of this site or you can call PERA's office and request information.
When you apply for disability benefits, you will need to give medical evidence supporting your claim of disability. After benefits begin, PERA will require periodic medical examinations as proof that you are still disabled, usually once each year for the first five years you are on disability, and every third year thereafter. PERA, by law, can request updated medical information at any time.
You will also need to provide PERA with documents indicating your age (i.e. birth certificate) and any name change you may have had (i.e. marriage certificate). If you choose a Survivor Option, we will also need this information for your survivor.
If your application for disability benefits is denied, you have 60 days from the date of the denial letter to appeal that decision.
You must send a written request to PERA before the appeals process can begin. PERA will then refer your case to an administration law judge. You do not need an attorney for the appeals process. However, you may retain an attorney if you wish.
No. You must terminate public employment and your employer must certify that you have done so.
If you terminate public service and remain out of public employment for more than 30 days, you may elect to receive a refund of your contributions instead of leaving them with PERA and drawing a pension later, provided that you meet the vesting requirements.
The refund consists of your employee contributions plus interest.
A member must download an Application for Refund or contact PERA directly to have a refund application mailed. Complete this form and follow the instructions to mail the completed form to PERA.
No. Employer contributions stay in PERA to finance future benefits and these contributions are not refundable.
There is some important information you need to know before you decide how to receive your PERA refund. A payment from PERA that is eligible for “rollover” can be taken in two ways. You may have all or any portion of your payment either: 1) transferred as a Direct Rollover, or 2) paid to you.
- If you choose a direct rollover: Your refund will not be taxed in the current year and no income tax will be withheld. Your refund will be sent directly to your traditional IRA or, if you choose, to another employer plan that accepts your rollover. Your refund will be taxed later when you take it out of the IRA or the new employer plan.
- If you choose to have your plan benefits paid to you: You will receive only 80 percent of the refund, because PERA is required to withhold 20 percent of the payment and send it to the IRS as income tax withholding to be credited against your taxes. Your refund will be taxed in the current year unless you roll it over. You may be able to use special tax rules that could reduce the tax you owe. However, if you receive the payment before age 59½, you also may have to pay an additional 10 percent federal tax penalty. You can roll over your refund to a traditional IRA or to another employer plan that accepts your rollover within 60 days of receiving your refund. The amount rolled over will not be taxed until you take it out of the IRA or employer plan.
If your refund is paid directly to you, PERA is required by law to withhold 20 percent of that portion of the refund that is an eligible rollover distribution. This amount is sent to the IRS as federal income tax withholding. The amount of the refund that is an eligible rollover distribution is considered taxable income in the year you receive it unless you roll it over to a traditional IRA or another plan that accepts rollovers within 60 days. If you do not roll it over, special tax rules may apply. For example, if your eligible rollover distribution is $10,000; only $8,000 will be paid to you because PERA must withhold $2,000 for federal tax. However, when you prepare your income tax return for the year, you will report the full $10,000 as a refund from PERA. You will report the $2,000 as withheld and it will be credited against income tax you owe for the year.
No. PERA is a defined benefit plan subject to both state and federal restrictions on participant access to the account until termination of public service. While loan provisions may apply to 401(k), 403(b), and some other retirement plans, they are prohibited for PERA. However, state statutes also protects your account against attachment or garnishment.
Yes. PERA has the "Applying for a Refund" publication you should read before taking a refund. This is available online or by request.
You can repay a PERA refund to regain credit for those years of service. You must be an active public employee contributing to PERA or another qualifying pension fund for a minimum of six months since your last refund to be eligible to make the repayment. If you have received multiple refunds from the Basic/Coordinated plan PLUS the Police and Fire Plan or Correctional Plan—you have the right to repay any or all of the plans, but you cannot choose which refund to repay within a plan. A repayment includes the initial refund amount you received, plus interest. Interest charged on repayment in 8.5 percent annually until June 30, 2015, and 8 percent thereafter. If you wish to restore only a portion of the service credit you forfeited in a plan, a partial repayment can be made if the following two requirements are met:
1) You forfeited a minimum of two years of service by taking the refund(s); and
2) The repayment restores at least one-third of the total service credits you previously lost in the plan by taking the refund(s).
The earliest you may repay a refund is after you have earned an additional six months of service credit since you became re-employed in a PERA covered public position (or a position covered by another Minnesota public pension plan). The latest you may repay a refund is six months after terminating your PERA-covered public employment.
State law requires checks to be issued the first week of each month. If the member has Direct Deposit (EFT) the money will be in their account on the first banking day of the month. If the first of the month is a weekend, deposits are made the first working day of the month.
Checks are mailed the same time every month. If you did not receive your check, contact our office so that we can verify that the check was mailed to the correct address. You will need to wait 10 working days for the post office to try to get the mail to you. If after that time you still have not received the check, call PERA back. We will then send an affidavit to you. Complete the affidavit and return it to PERA. The check will be re-issued within a week of receipt of the affidavit.
PERA provides direct deposit as a free service for all retirees. Benefit payments will be electronically deposited in your account on the first banking day of the month. You can apply for direct deposit at any time either by downloading a Direct Deposit Agreement or by requesting a copy. Complete this form and follow the instructions to mail the completed form to PERA.
PERA pensions are subject to state and federal taxes. When your first benefit payment is approved, PERA will send you a verification of the taxes withheld based on the withholding choices you made on your retirement application. You can change the amount of money withheld from your benefit for taxes at any time, however, the check net amount must be at least $5. You can change your withholding in MY PERA or by submitting a Tax Withholding/Change Certificate
We will also provide you with a Form 1099R every January. This form has all the necessary information you need to complete both state and federal tax forms.
Yes. A valuable feature of your PERA benefit is that it increases annually to help protect you from inflation. Cost-of-living adjustments (COLA) are effective January 1 of each year for eligible benefit recipients. For new benefit recipients, the schedule and amount of your first COLA will depend on the benefit plan type and start date. For more information, please visit Increases in Your PERA Pension.
Yes. PERA offers decreasing-term group life insurance, available to you if your employer has made provision for payroll deductions of your premiums. The premiums are fixed and the death benefit amounts decrease with age. You must be enrolled in the coverage before termination or retirement for your coverage to continue as an inactive member or a retiree. For further information see the Life Insurance section in Member Information.
Defined Contribution Plan (DCP)
No. The DCP is exclusively for physicians, elected local governmental officials, city administrators, and governmental volunteer ambulance service personal.
In the Defined Contribution Plan you choose how this money is invested and the benefit is determined by the performance of those investments. The Defined Benefit Plan (Coordinated Plan) is a traditional pension plan whereby the benefit is determined by a formula based on years of public service and average salary during the highest consecutive five-year salary. While the Coordinated Plan provides for lifetime benefits with annual adjustments, the DCP benefit is a lump-sum amount you can reinvest as you see fit.
You designate a percentage of total contributions to be placed in one or more of seven accounts of the Minnesota Supplemental Investment Fund administered by the Minnesota State Board of Investment. Investment goals of these accounts and the returns they have actually achieved are described in DCP Investment Prospectus, Minnesota Supplemental Investment Fund Prospectus, published by the Minnesota State Board of Investment.
Your contributions and those of your employer are combined and used to purchase shares in the accounts you select. The shares belong entirely to you. Except for the Money Market and Fixed Interest Accounts, whose shares are always one dollar each, shares are purchased at market prices. Interest paid by the Money Market and Fixed Interest Accounts is reinvested in additional shares of the respective accounts. Interest and dividends earned by the stocks and bonds held in the other five accounts are used to purchase additional stocks and bonds in those accounts.
These purchases and the gains and losses in market value of the stocks and bonds held in the accounts are reflected in the value of the accounts' shares, in much the same way as with mutual funds.
You may change your investment selections any time and may also transfer all or portions of previously purchased shares from one account to another. Some special restrictions apply, however, to transferring funds to other accounts from the Fixed Interest Account. Contact the PERA office for complete details about these transfer restrictions.
Employees enrolled in the DCP can either request or download the DCP Investment Form. Complete this form and follow the instructions on how to mail the completed form to PERA.
Register for MY PERA for instant access to your account information. DCP members are mailed semi-annual statements that show the contributions and how contributions were invested and the total value of the account both at the beginning and the end of the reporting period. Members can also contact PERA for information on their DCP accounts.
Comprehensive information about each account, including past performance, can be found in the Minnesota Supplemental Investment Fund Prospectus - DCP Investment Prospectus brochure published each year by the Minnesota State Board of Investment. The brochure is available online or by request and is mailed to each DCP participant annually.
DCP members who either terminate employment with the employer offering DCP participation have three options as to what to do with their DCP funds as stated below. Elected officials are not eligible to take a refund until the term of office is over.
1. Leave the money in the DCP – Once participation is discontinued, no additional contributions (either employee or employer) will be put in the account. The value of the account will be solely affected by the performance of the fund(s) in which the money is invested.
2. Rollover - Roll the account balance over to another tax-deferred account. DCP funds can be transferred, or rolled over to another qualified tax-deferred plan. There are two types of rollovers:
- Direct Rollover – In the case of a direct rollover, PERA will transfer untaxed funds into the qualified tax-deferred plan of the member’s choice. By using a direct rollover, the employee does not face any IRS early withdrawal penalty taxes or income tax liabilities at the time the rollover is made.
- Indirect Rollover – An indirect rollover means that the funds are paid to the employee and then transferred into a different tax-deferred plan by the employee. An indirect rollover may result in the employee paying an early withdrawal IRS penalty on untaxed amounts if the member is under age 59 ½ at the time of withdrawal.
3. Withdraw the Funds – A member leaving the DCP also has the option of withdrawing his or her funds and having PERA pay the account value to him or her directly. The withdrawal is subject to federal and state taxation and, possibly, an IRS early withdrawal penalty tax. Under current rules, PERA must withhold federal tax of 20% on amounts over $200 before issuing payment to the member. For information on possible IRS penalties for withdrawal of tax-deferred funds, employees should consult with the IRS or a qualified tax advisor.