The Public Employees’ Retirement System Plan 2 (PERS 2) is a traditional, defined-benefit pension plan — when you meet plan requirements and retire, you\u2019re guaranteed a certain monthly income for the rest of your life. After working at least five years, you\u2019re eligible to receive your retirement benefit starting at age 65.<\/p>\n
Both you and the UW contribute money to PERS 2. However, these contributions don\u2019t 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.<\/p>\n
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 more hours during a 12-month period. If your initial schedule doesn’t meet this eligibility requirement your hours will be tracked by UW Benefits who will contact you directly if you meet this requirement.<\/p>\n
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 \u2013 Enrollment \u2013 Retirement \u2013 Classified and Eligible Temporary Hourly<\/a> user guide. If you are eligible to change retirement elections because of a change in employment, UW Benefits will contact you directly.<\/p>\n If you\u2019re 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.<\/p>\n At retirement, the income you receive from PERS 2 depends on two factors — how long you\u2019ve worked and how much money you made. The formula for calculating your monthly retirement benefit is:<\/p>\n 2% x service credit years x average final compensation<\/strong><\/p>\n Service credit is based on the number of hours you work each month and how long you have participated in the retirement plan.\u00a0The UW reports your hours and earnings to the Washington state Department of Retirement Systems (DRS) every payday.<\/p>\n There\u2019s 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.<\/p>\n 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 \u201cschool year.\u201d<\/p>\n 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.<\/p>\n Suppose you\u2019re 65 years old, and in 2025 after working at UW for 32 years, you\u2019re retiring. This is what you would need to know to calculate your PERS 2 retirement income:<\/p>\n 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\u2019re vested, you can access your retirement benefit funds at age 65.<\/p>\n If you leave UW before you\u2019re vested, you won\u2019t receive income from PERS 2 at retirement. You do, however, retain ownership of the money you\u2019ve contributed to PERS 2. You also keep the service credit you\u2019ve earned, which you can later apply toward vesting should you return to work at UW or at another state agency.<\/p>\n Time you spend working for other Washington state agencies, either before or after your time at UW, may also count toward vesting.<\/p>\n Each paycheck, you contribute 5.38% 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.<\/p>\n The UW also contributes to PERS 2 on your behalf. These aren\u2019t 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.<\/p>\n 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.<\/p>\n When you leave your job at UW, you have two options concerning the money you\u2019ve contributed to PERS 2: leave the money in your account or withdraw it.<\/p>\n 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\u2019re not vested in PERS 2 until you\u2019ve earned five years of service credit.)<\/p>\n Your other option is to withdraw the funds that you have contributed (plus interest). There are, however, Internal Revenue Service tax implications to withdrawing<\/a> 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.<\/p>\n If you\u2019re vested, you\u2019re 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<\/a>.<\/p>\n You can\u2019t 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.<\/p>\nCalculate your retirement benefit<\/h4>\n
Service credit<\/h5>\n
Average final compensation<\/h5>\n
Example<\/h5>\n
\n\n
\n \nYears of service credit:<\/th>\n 32<\/td>\n<\/tr>\n<\/thead>\n \n Five consecutive years where your salary was highest:<\/th>\n 2020 salary: $52,000 ($4,333.33 per month)
\n2021 salary: $52,000 ($4,333.33 per month)
\n2022 salary: $57,000 ($4,750 per month)
\n2023 salary: $60,000 ($5,000 per month)
\n2024 salary: $60,000 ($5,000 per month)<\/td>\n<\/tr>\n\n Average final compensation:<\/th>\n $4683.33 per month<\/td>\n<\/tr>\n \n Retirement income:<\/th>\n $2,997.33 per month (0.02 x 32 x $4,683.33)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n When you become vested<\/h4>\n
What you contribute<\/h4>\n
Leaving UW before retirement<\/h4>\n
Early retirement<\/h4>\n
Retirement plan loans<\/h4>\n
Retirement Savings Education & Resources<\/h4>\n