Transcript of video:
Anchor: Welcome back everyone. For public employees in Iowa navigating retirement also involves navigating something called IPERS. And Michele Bjorkman from Compass Financial is here to tell us more about IPERS. For people who aren’t familiar with what this is, tell us a little bit more about it.
Michele Bjorkgren: Sure, thanks for having me. IPERS is the Iowa Public Employees Retirement System. It’s kind of a mouthful for basically a pension plan for the public employees of the State of Iowa. So it’s teachers, it’s clergy, it’s government and public safety employees. It’s typically a plan that employers and employees will contribute to to essentially build an income stream for them in retirement that will last a lifetime.
Anchor: There’s a lot of people in Iowa who are a part of this.
Michele Bjorkgren: Actually there’s one in 10 Iowans who are IPERS members and the average age of retirees is age 61 with 22 years of service. So it’s a really big deal for the State of Iowa and IPERS does a really nice job.
Anchor: So for people who are part of IPERS and are looking to retirement, you mentioned 61 was the average age, when could they start drawing from IPERS then?
Michele Bjorkgren: They can start as early as age 55 but it’s very important for them to understand that if they’re not fully vested they will not get dollar for dollar what they earned in the IPERS program. So there’s a couple of formulas that IPERS and financial advisors like us we overlay to make sure are you fully vested? And one is we’ve heard often of the rule of 88 and that is is the employees, the sum of the employees age and their years of service does it equal or exceed 88?
Anchor: That’s the magic number.
Michele Bjorkgren: Absolutely. If it does, then they’re fully vested. The other one we don’t hear too much about is the rule of 6220. And that is similar where if you’re age 62 and have 20 years of service then you are also qualified and are considered a fully vested employee. So it’s pretty important to navigate those distinctions because it makes a big difference and you could actually be having a reduction of benefits if you’re not fully vested.
Anchor: OK yeah that’s important. And you said that IPERS is unique in another way too. There are several different options about when you can start withdrawing funds.
Michele Bjorkgren: Yeah, figuring out if you’re fully vested, that’s the easy part. The tough part is figuring out what option now that I’ve reached this age of retirement, I’m collecting a pension, I’ve worked all these years, it’s a pretty big deal. Now there are six options right now that IPERS offers, they do a pretty nice job, ranging from full pension benefit, dollar for dollar what you’ve earned, all the way through 5 variations of leaving a survivor something, leaving a loved one a death benefit, leaving a survivor something. So it’s really crucial to dig deep in each of those options and it becomes, as I work with clients, it becomes a pretty emotional decision because it’s irreversible for one thing.
Anchor: Right, a major life decision.
Michele Bjorkgren: So you mark that box, you send it in and it’s a done deal. So, it can cause some stress.
Anchor: Well if you have questions that you would like Michele to answer about IPERS or any other financial issues, you can contact her at any time at Compass Financial Services in West Des Moines. The number there, 515-327-1020. Michele, thanks so much for your time.
Michele Bjorkgren: Thanks so much for having me.