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Wednesday, August 05, 2009
Throw A Stone
As is normal for this Board, whenever they issue good news (keeping the 8%) rate, they always seem to dilute the excitement by providing offsetting bad news. Today's adventure has to do with the calculation of the mortality factors. PERS has posted a general explanation of how the new method ("generational mortality") will affect members who retire on or after January 1, 2010. Basically, you can expect that your monthly benefit under Money Match will decrease by about 2%, while the Formula+Annuity retirees will see their benefit decrease by 1%. PERS suggests that if members want to retain the benefit under the current mortality tables, they can either retire before 1/1/2010 (i.e. 12/1/2009) or plan to work an additional 3 or 4 months. You can read PERS' own explanation on their web site, which you can reach via a link on the left side of this blog.
If you were planning to retire anyway I would advise you to do everything possible to make your retirement effective on 12/1/2009 (i.e. get your papers in before 12/1 and separate from your employer no later than 11/30/2009). This will have a minimal effect on your benefit and preserves your mortality factors under those currently in force. The challenge for those who want to wait to see what the actual impact will be under the new mortality tables, be aware that the new factors won't be voted on until the November 2009 meeting. You would have to act fast if you don't like what you see. Keep in mind that the older you are, the greater the effect the change in methodology will have. You can see this clearly in the illustration provided at PERS' website.
My advice is to be very careful in making your decision. If it is a no brainer to retire at the end of November; it requires some careful thought to wait longer unless you have no choice. Leave it to PERS to keep members constantly on their toes watching out for their own interests. So much for the concept of a trustee looking out for your own good.