Legislators' Guide to IPERS Important Information for IPERS' Plan Sponsors

The Importance of IPERS

For more than 50 years, IPERS has provided a core retirement plan covering most Iowa local and state public employees. With approximately 300,000 members and almost 2,400 covered employers, IPERS is the largest public retirement system in Iowa.

The Legislature designed IPERS to provide monthly lifetime annuities that supplement social security benefits and personal savings, enabling public employees to care for themselves in retirement. The Legislature also intended for IPERS to be an employee benefit that would help Iowa’s public employers recruit and retain qualified personnel.

As a defined benefit plan, the monthly benefit IPERS members receive is calculated using a formula. A member’s benefit increases as his or her years of service and salary increase.

Because IPERS is a defined benefit plan, the Legislature is assured that the money contributed by public employees and their employers for retirement is used as intended. The benefit is paid as a lifetime monthly annuity. IPERS members cannot borrow or withdraw their money while in public employment.

IPERS Membership

Most public employees in Iowa automatically become members of IPERS when they start employment with a covered employer. Members also include a Special Services class of public safety employees. There are two Special Services groups: 1) sheriffs and deputy sheriffs and 2) other protection occupations, including city police, firefighters in cities not covered by Chapter 411, correctional officers, airport firefighters, airport safety officers, airport security officers, and DOT weight officers. You, as a legislator, also have the choice of being a participating member of IPERS.

Covered employers are established by law and include:

Investments

As an institutional investor, IPERS is able to use professional investment managers and invest in funds that are not accessible to the individual investor. As a result, IPERS is able to pool and better manage its investment risk, maximize investment returns, and reduce transaction fees.

The law restricts the amount IPERS can spend on investment expenses. In fiscal year 2005, IPERS spent about one-third less than the law allows on investment expenses.

Iowa Investments

IPERS’ first responsibility under Iowa law is to act in the exclusive interest of the System’s members. IPERS must invest the Trust Fund’s assets to gain the highest returns within the parameters of reasonable risk. Although IPERS cannot give preference to Iowa-based companies unless the investments meet required standards, IPERS is committed to supporting Iowa’s businesses and communities.

At the end of fiscal year 2005, IPERS held investments valued at over $945 million in companies that were Iowa-based or that had Iowa-based operations and/or employment. IPERS also uses an Iowa-based company, Principal Global Investors, as one of its 3 core plus fixed income investment managers. Principal manages approximately $1.1 billion in this asset class.