Kansas Public Employees Retirement System

So, you've been a state of Kansas employee for a year. You get your paycheck and are shocked to learn it's not as much as it should be. What is this KPERS that is taking your hard earned money? Kansas Public Employees Retirement System (KPERS) is a 401(a) defined benefit pension plan that was put in place by the Kansas legislature to assist public employees with retirement. This program is mandatory for all public employees and consists of three benefit plans: KPERS, KP&F and Judges. KP&F is the Kansas Police and Firemen's Retirement System. Judges is the Kansas Retirement System for Judges.

KPERS takes the money you contribute and invests it. Once you hit retirement age, you receive a monthly benefit that is dependent on your final salary and years of service. It's important to note that the amount of money you have in your account does not equal the amount of money you receive. This is not an IRA where you take distributions from your account. You are guaranteed a monthly benefit regardless of the amount you have contributed. Your benefit amount is your final average salary multiplied by your years of service and the statutory multiplier. For additional information on calculating your benefit, see the KPERS website.

KPERS is made up of tiers: tier 1 and tier 2. Your particular tier depends on your start date. You can contact your human resources office to find out what tier you are. Generally speaking, if you started contributing to KPERS after July 1, 2009 you are a tier 2 member.

Your KPERS retirement age is based on a combination of your years of service (service credit) and your age. Tier 1 members can retire: at age 65 with one year of service, at age 62 with ten years of service or when you reach 85 points. Tier 2 members can retire at age 65 with five years of service or age 60 with 30 years of service. You can retire at anytime with 85 points. This means when your years of service and age are at least 85 you can retire. For example, you can retire at age 55 with full benefits if you have 30 years of service. You can also receive reduced benefits at age 55 with ten years of service.

So, I'm automatically guaranteed a benefit? No, not exactly. In order to be guaranteed a benefit you have to be "vested". Vestment comes with five years of service credit. If you leave covered employment before five years, you can roll that money into a qualified retirement plan or you can withdraw it and be hit with tax penalties. You can leave your money in the KPERS plan for five years after you leave covered employment. If you return to covered employment in that time, you immediately start contributing again and maintain previous service credit.

Vestment is not a requirement of receiving a benefit. Confused? All vesting does is guarantee that you will receive a benefit someday. This means if you are vested with KPERS and leave covered employment, when you reach retirement you are guaranteed a benefit.

There are downsides to KPERS. Specifically, you cannot opt out of it. This program is mandatory for all state employees. Also, the state legislature is notorious for spending money in the KPERS fund. There is some concern as to whether there's going to be money in the fund when you retire.