Summary of 2008 Law Changes
Setting contribution rates
SF2424 directs IPERS to adjust contribution rates for members who are currently working in the regular membership class (about 96 percent of all working members) based on an annual actuarial valuation, which is a snapshot of IPERS’ finances. The contribution rate is the percentage of wages employees and their employers pay to IPERS.
In the past, only the legislature could adjust contribution rates for regular members. The legislature has set rates for regular members through June 2011, so this change is effective July 1, 2011.
IPERS already sets rates for Special Service members, who make up IPERS’ other two membership classes (sheriffs/deputies and protection occupations). IPERS knows from experience that small and timely adjustments to contribution rates keep benefits fully funded and contribution rates stable over time. Although the rates have varied from year to year, current contribution rates for Special Service members are about equal to their rates ten years ago.
The contribution rate for each membership class can increase or decrease no more than 0.5 percentage point each year. IPERS will announce the rates at least six months before the rates are effective.
Effective July 1, 2011
Iowa Code Section Amended: 97B.11 and related sections
IPERS is prefunded, which means that while members are working they contribute to IPERS for their own future retirements. Contributions from employees and their employers, plus investment income, must be enough to cover the costs of future benefits that IPERS promises to pay. |
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