| Active Member |
One who has made contributions to IPERS during the current calendar year and has not applied for a retirement benefit or a refund. |
| Accumulated Contributions |
A member’s (or employer’s) total contributions and the interest earned thereon. By law, interest is granted at 1% above the one-year certificate of deposit rate. |
| Average Salary |
One of the important elements of the benefit formula. It is the average of the member’s highest three calendar years of covered wages. |
| Bona Fide Retirement |
The period during which an IPERS member ends IPERS-covered employment, files a completed application for retirement, and demonstrates the member is entitled to retirement benefits. |
| Buy-Back |
A service purchase when a member who previously took a refund from IPERS purchases the refunded service. The person must be a vested IPERS member at the time the person buys back. |
| Buy-In |
A service purchase when a member who worked for an eligible employer or served in the armed forces of the United States purchases credit for equivalent service time with IPERS. |
| Calendar Year |
The 12-month period beginning January 1 and ending December 31. |
| Canadian Governmental Educational Entity |
An elementary school, secondary school, college, or university that is organized, administered, and primarily supported by the provincial, territorial, or federal governments of Canada, or any combination of the same. |
| Computed Year |
Part of IPERS’ retirement benefit formula that helps determine a member’s average salary when the member’s last year of employment is not a complete calendar year. IPERS “fills in” the empty quarters of a member’s final calendar year with the value of the average quarter from the member’s highest calendar year of wages not used to figure the average salary. The value of the computed year cannot exceed 103 percent of the member’s actual highest year of reported wages. |
| Contingent Annuitant |
A person, named by the member, who is guaranteed lifetime payments upon the death of the member. A member designates a contingent annuitant (in place of a beneficiary) if the member chooses Option 4 or 6 at retirement. Once the member’s first benefit check is issued, a contingent annuitant cannot be changed. |
| Covered Employment |
Any employment for which a person accrues benefits under IPERS. Includes nontemporary employment with the State of Iowa, its counties, municipalities, agencies, public school districts, and political subdivisions. There are specific exceptions found in Iowa Code Sections 97B.1A, 97B.42, 97B.42A, and 97B.42B. |
| Covered Wages |
The compensation eligible for IPERS coverage. Any compensation in excess of a set maximum is not used in determining contributions or calculating a retirement benefit. |
| Defined Benefit Plan |
A qualified employer pension plan that guarantees a specified benefit at retirement. As a defined benefit plan, IPERS provides guaranteed benefits using a formula based on a member’s age, years of service, and covered wages. |
| Disability Benefits |
Benefits provided to eligible members of any age with a qualified disability. Disability benefits are not adjusted for early retirement.
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| Dividends |
Lump-sum payments distributed with the regular monthly benefit payment. Dividends are intended to help compensate for the eroding effect of inflation over time. There are two types of dividends: November dividends and Favorable Experience Dividends (FEDs). |
| Early Retirement |
Starting to receive benefits before normal retirement age. Benefits will be reduced with an early retirement adjustment. |
| First Month of Entitlement (FME) |
The first month a member qualifies for a monthly benefit. This usually is the month following the month in which a member terminates employment (regardless of the day of the month the member terminates). If the member’s final paycheck is paid within the same quarter or within one quarter after termination and wages are reported under the normal pay schedule, the first month of entitlement will be the month following termination. Under no circumstances shall trailing wages result in more than one quarter of service credit being added to retiring members’ earning records. A member must live into the first month of entitlement in order to qualify for retirement benefits. |
| Former Member |
A person who, following termination from public employment, has taken a refund. By doing so, this person has forfeited membership and all other rights in IPERS for the period covered by the refund. |
| Formula Multiplier |
The value of each year of service used in calculating a member’s retirement benefit. The formula multiplier is as follows:
For regular members, it reflects a value of 2.0 percent for each year of service in the 30-year formula, up to 60 percent once a member has completed 30 years of service. The multiplier will increase 0.25 percent for each quarter of service beyond 30 years, but cannot exceed an additional 5 percent, or 65 percent total.
For sheriffs, deputy sheriffs, and members in protection occupations, it reflects a value of approximately 2.7272 percent for each year of service, up to 60 percent, once a member has completed 22 years of service. The multiplier will increase 0.375 percent for each quarter of service beyond 22 years, but cannot exceed an additional 12 percent, or 72 percent total. |
| Inactive Member |
One who has left public employment, has not made any contributions during the calendar year, and who has not yet applied for a retirement benefit or a refund. |
| Iowa General Assembly |
The legislative branch of Iowa state government with the authority to make laws. Also known as the Iowa Legislature, the General Assembly consists of the House of Representatives and the Senate. The General Assembly passes the laws that govern IPERS. |
| Membership Service |
Service rendered by a member after July 4, 1953. Years of membership service are counted to the quarter of the calendar year. Membership service also includes credit for service purchases and service qualifying for free credit, such as certain military time. For any calendar quarter in which a member receives both regular and Special Service wages, the quarter will be coded based on the type of employment that generated the majority of reported wages for that quarter. |
| Normal Retirement |
The time when a member begins receiving benefits that are not subject to an early retirement adjustment. |
| Pretax Contributions |
Also called employer pick-up, pretax contributions are employee contributions that the employer pays on behalf of the employee. Employers are required to reduce employees’ wages for federal and state income tax purposes by the appropriate contribution amount. |
| Prior Service |
Service for a covered employer in Iowa before July 4, 1953. |
| Protection Occupation Members |
The members of this group have benefits calculated differently than the majority of IPERS’ membership, regular members. Includes airport firefighters, airport safety officers, airport security officers, conservation peace officers, designated correctional officers, DOT peace officers, fire prevention inspector peace officers, marshals, police officers (including part-time police officers), and firefighters. |
| Qualified Domestic Relations Order (QDRO) |
A special court order that individuals obtain in divorce that specifies how IPERS pension assets will be divided. |
| Qualified Plan |
A status under the federal Internal Revenue Code that conveys certain tax advantages to the members of the plan, among them the privilege of individual member accounts being treated on a tax-deferred basis. IPERS has a qualified plan status under federal Internal Revenue Code Section 401(a). |
| Reemployment Comparison Amount Formula |
A benefit limitation that applies to Special Service members who receive disability benefits. |
| Required Beginning Date |
Internal Revenue Code Section 401(a)(9) requires a member to begin benefits by April 1 of the year following the year in which the member reaches age 70½, or terminates covered employment, whichever is later. IPERS is required to make mandatory distributions to members when they reach their required beginning date.
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| Retired Member |
A member who has applied for and begun receiving IPERS benefits is considered retired. |
| Retirement |
Retirement means applying for and beginning to receive benefits.
A member’s retirement will be revoked if the member returns to employment with an IPERS-covered employer without satisfying the bona fide retirement requirement. A member who has severed the employee/employer relationship, but has not taken the steps above, is not retired for IPERS’ purposes. The member has simply terminated employment. |
| Rule of 88 |
One way members can reach normal retirement age. A member must be age 55 or older, and the sum of the member’s age at the last birthday and years of membership service must equal or exceed 88. (This applies only if these qualifications are met on the member’s first month of entitlement to benefits.) A member who qualifies for the Rule of 88 without at least 30 years of service will still receive a reduced benefit because of the less-than-30 years of service component of the benefit formula. |
| Rule of 62/20 |
One way members can reach normal retirement age. A member with 20 or more years of membership service may retire at age 62 without an early retirement adjustment. A member who qualifies for the Rule of 62/20 without at least 30 years of service will still receive a reduced benefit because of the less-than-30 years of service component of the benefit formula. |
| Special Service Members |
Include sheriffs, deputy sheriffs, and members in protection occupations. See protection occupation members for more details. |
| Vested Member |
A member will establish rights to IPERS benefits and will be vested if the member meets either of the following conditions. The member:
- Must have completed at least four years of service.
- Must have attained at least age 55 while in active employment in an IPERS-covered position regardless of termination date or length of service.
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