PERS 2 retirement plan

The Public Employees’ Retirement System Plan 2 (PERS 2) is a traditional, defined-benefit pension plan — when you meet plan requirements and retire, you’re guaranteed a certain monthly income for the rest of your life. After working at least five years, you’re eligible to receive your retirement benefit starting at age 65.

Both you and the UW contribute money to PERS 2. However, these contributions don’t determine your retirement benefit. Instead, the income you receive from PERS 2 during retirement depends on both your final salary and your years of service.

Enroll in PERS 2

To be eligible for PERS 2 you must be working in an eligible job that is scheduled to work for at least five months of 70 or greater hours during a 12-month period. If your initial schedule doesn’t meet this eligibility requirement your hours will be tracked by UW Benefits and will contact you directly if you meet this requirement.

If you are newly eligible to participate in PERS 2, retirement elections can be made in Workday. For step-by-step instructions on making retirement plan elections, reference this Benefits – Enrollment – Retirement – Classified and Eligible Temporary Hourly user guide. If you are eligible to change retirement elections because of a change in employment, UW Benefits will contact you directly.

If you’re a new UW employee or newly eligible for retirement benefits, your deadline for enrolling in PERS 2 is 90 days from the start of your eligibility date. If you made a prior PERS 2 election, you will be placed in PERS 2 and no further action is needed.

Calculate your retirement benefit

At retirement, the income you receive from PERS 2 depends on two factors — how long you’ve worked and how much money you made. The formula for calculating your monthly retirement benefit is:

2% x service credit years x average final compensation

Service credit

Service credit is based on the number of hours you work each month and how long you have participated in the retirement plan. The UW reports your hours and earnings to the Washington state Department of Retirement Systems (DRS) every payday.

There’s no limit to the amount of service credit that you can earn. Plus, you keep your service credit if you leave your job. That way, you can continue to build your service credit should you return to work at UW or another state agency.

Generally, you need to work at least 90 hours per month for 12 months to earn a service credit year. In some cases, you can earn a service credit year for working a minimum number of hours during a nine-month-long “school year.”

Average final compensation

This is your average monthly salary calculated over the 60 consecutive months (five years) where your salary was the highest. In most cases, this is your final five years before retiring; though, some people may have higher salaries during other points in their career.


Suppose you’re 65 years old, and in 2017 after working at UW for 32 years, you’re retiring. This is what you would need to know to calculate your PERS 2 retirement income:

Years of service credit: 32
Five consecutive years where your salary was highest: 2012 salary: $52,000 ($4,333.33 per month)
2013 salary: $52,000 ($4,333.33 per month)
2014 salary: $57,000 ($4,750 per month)
2015 salary: $60,000 ($5,000 per month)
2016 salary: $60,000 ($5,000 per month)
Average final compensation: $4683.33 per month
Retirement income: $2,997.33 per month (0.02 x 32 x $4,683.33)

When you become vested

After working at UW for five years, your PERS 2 retirement funds are fully vested, which means you have earned the right to receive income from PERS 2 at retirement. Once you’re vested, you can access your retirement benefit funds at age 65.

If you leave UW before you’re vested, you won’t receive income from PERS 2 at retirement. You do, however, retain ownership of the money you’ve contributed to PERS 2. You also keep the service credit you’ve earned, which you can later apply toward vesting should you return to work at UW or at another state agency.

Time you spend working for other Washington state agencies, either before or after your time at UW, may also count toward vesting.

What you contribute

Each paycheck, you contribute 6.36 percent of your gross salary to PERS 2. These contributions are taken out on a pretax basis. This lowers your taxable income, which in turn lowers the amount of taxes your pay.

The UW also contributes to PERS 2 on your behalf. These aren’t matching funds, and you have no access to them. The rates at which both you and UW contribute are specified by the state legislature. They periodically adjust the rates to reflect the overall cost of the plan.

While these contributions help fund PERS 2, they do not determine how much income you receive at retirement. Use the PERS 2 formula to calculate your monthly benefit.

Leaving UW before retirement

When you leave your job at UW, you have two options concerning the money you’ve contributed to PERS 2: leave the money in your account or withdraw it.

If you leave the money in your account it will continue to accrue interest. Your service credit will remain intact, so should you return to work at UW (or another state agency), you can earn more service credit. (Remember, you’re not vested in PERS 2 until you’ve earned five years of service credit.)

Your other option is to withdraw the funds that you have contributed (plus interest). There are, however, Internal Revenue Service tax implications to withdrawing your contributions, so check with a tax advisor before withdrawing. In most cases, you can transfer your funds to a qualified retirement account, such as an IRA, without facing a tax penalty.

Early retirement

If you’re vested, you’re eligible to retire at age 65. You also have the option to retire earlier, but your defined benefit will be reduced. To retire early, you must be at least 55 and have 20 or more years of service credit. For full details about early retirement, read the PERS Plan 2 Handbook.

Retirement plan loans

You can’t take out a loan from your PERS 2 funds or otherwise access them while working at UW. Leaving work at UW is the only way to withdraw your PERS 2 contributions before retirement.

Retirement Savings Education & Resources

The Department of Retirement Systems (DRS) offers a wide range of resources to help you understand your retirement plan and meet your retirement savings goals. Visit DRS Education to find webinars, seminars, calculators and more.