Are you part of the Statewide Retirement Plan: Defined Benefit Component? Whether you’re just starting out or nearing retirement, it’s crucial to understand the ins and outs of your Plan benefits. Here are five things to know about the Defined Benefit Component.
Lifetime Benefit
Your pension is not just a one-time payout—it’s a monthly benefit that lasts for as long as you live. This means you can’t outlive your benefit. Additionally, you have the option to cover a survivor for a second lifetime (more on that later). Your pension amount is determined by factors such as your service in the plan, your age at retirement, and your Highest Average Salary.
Portability
Your benefit is portable, meaning you’ll continue to earn service credit if you move to another FPPA-enrolled department across Colorado. So, if you change jobs or relocate, your pension benefits can move with you, providing continuity and security.
Minimum Contribution Return
You’ll always receive at least what you’ve contributed to the Plan. After working for five years, you become fully vested, making you eligible to receive a monthly benefit at the age of 55, or younger if you meet the Rule of 80. If you opt for a refund after you stop working for your department, you’ll receive your member contributions plus five percent as interest.
Customized Features
The Defined Benefit Component offers various features to align with your individual goals. You can choose to defer your retirement to increase your monthly pension amount or participate in the Deferred Retirement Option Plan (DROP) to accumulate a lump sum of cash in your last five years of work. Additionally, you can opt for payment options that extend your pension to cover a second lifetime, purchase service credit to boost your benefits, or contribute additional voluntary funds into a self-directed investment account.
Clear Visibility and Planning
With the Defined Benefit Component, you have a clear vision of what you’re working toward. Check out the benefit chart in the Component brochure to estimate what your pension might look like based on your estimated retirement age and years of service. You can also leverage the Member Account Portal at FPPAco.org to run retirement estimates, manage beneficiaries, and plan for your retirement with confidence.
Do you have questions about your Defined Benefit Component membership? Visit FPPAco.org or contact us for more information and resources to secure your financial future.
Watch: 5 Things to Know About the Defined Benefit Component
Disclaimer
The plain language descriptions in this post are not official definitions. Official rules, regulations and statutes apply.