DEFINED CONTRIBUTION RETIREMENT PLAN (DCRP)

The Defined Contribution Retirement Plan puts members in the driverís seat. Both members and employers contribute members' individual accounts. Members then control how their contributions are invested choosing from the investment options available in the plan. Members' benefits will depend on the size of their individual account balances at retirement. Their account balance, in turn, depends on contributions and investment earnings. Investment earnings can be either positive or negative during any period of time. In the Defined Contribution Retirement Plan Members assume the investment risk, but are also entitled to all investment returns. Members' accounts will grow over time, depending on the following:

  • Contributions
  • Investment earnings (either positive or negative) and
  • Length of time invested

Members of the DCRP have had an increase in the employer portion of contributions allocated to their accounts. The unfunded actuarial liability (UAL) created by PERS members who elect to participate in the DCRP has been fully paid off.  Employer contributions that were allocated to that liability are now redirected to DCRP members’ individual accounts. The increase in employer contributions to the individual accounts (3.84% of compensation) started on the first pay date of the first month after the Public Employees’ Retirement Board certified that the UAL has been satisfied.

Members Contributions
Members contribute 7.9% of their compensation to their individual accounts.[1] The 7.9% contribution is calculated based on gross compensation, before any pre-tax deductions. This means contributions are made on a pre-tax basis and grow tax deferred until a withdraw them. At that time, members pay taxes on the amount they withdraw at the tax rate/bracket then applicable.

Employers Contributions
Employers will contribute the following, for a total of 8.37%[2] to PERS:

  • The Member’s Individual PERS DCRP account – 8.03%[3]  Funds the DCRP retirement account.
  • Education Fund - 0.04% Funds various PERS member education programs.
  • Long-term Disability Plan Fund - 0.3% Provides DCRP members a disability benefit over and above their contributions.

The portion of employer contributions credited to the “employer contribution” component of the individual’s account increased from 4.19% to 8.03%. Once members have five years of membership service, they are vested in the employer contributions credited to the individual account, as well as any investment earnings on those contributions.

If members terminate PERS-covered employment or dies before attaining five years of membership service, they will forfeit the employer contributions and associated investment earnings on those contributions.

Remember: Member contributions and other contributions are always vested. Employer contributions are only vested once members have earned 5 or more years of membership service.

[1] PERS member contributions will be decreased to 6.9% on January 1 if the annual actuary valuation results show the amortization period has dropped below 25 years and remains below 25 years following the reduction of both the employer and member contribution rates.

[2] PERS employer contributions will increase by .1% each July 1 through July 1, 2023 or until the annual actuary valuation results show the PERS Defined Benefit Retirement Plan’s amortization period has dropped below 25 years and remains below 25 years following the reduction of both the employer and member contributions.  At that time PERS employer contributions will decrease to 6.9%.

[3] PERS employer contributions into member accounts will increase by .1% each July 1 through July 1, 2023 or until the annual actuary valuation results show the PERS Defined Benefit Retirement Plan’s amortization period has dropped below 25 years and remains below 25 years following the reduction of both the employer and member contributions.  At that time PERS employer contributions into member DCRP accounts will decrease to 6.56%.

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