Your surviving spouse is the beneficiary of your retirement benefit. Upon your death he or she will receive the same benefit paid to you for his or her life. If you do not have a surviving spouse, your benefit will continue to your dependent children, until they are no longer dependent. A dependant child is a child of a deceased member who is not married and:

• is under 18 years of age, or
• is under 24 years of age and a full-time student enrolled in an accredited postsecondary educational institution.

If you do not have a surviving spouse or dependent child(ren) at the time of your death, your designated beneficiary would then be eligible to receive the balance in your account. You can designate any persons, charitable organization, your estate, or a trust (for the benefit of a living person) as a beneficiary(ies).

You can change your beneficiary designation by completing a FURS Designation of Beneficiaries form and sending it to MPERA either by regular mail or by file transfer.

Any beneficiary change is not effective until the new form is received in our office.*

NOTE: Advise your beneficiary to contact MPERA for complete details about benefits upon your death.

* If your current designation is subject to a temporary restraining order issued under § 40-4-121, MCA, changes will not be effective.

Member Contributions

All members must pay part of their gross compensation to FURS. The current contribution rate is as follows:

• If you were hired after June 30, 1997, you contribute 10.70%.
• If you were hired before June 30, 1997, and elected the Guaranteed Annual Benefit Adjustment (GABA), you contribute 10.70%.
• If you were hired prior to July 1, 1997 and did not elect GABA, you contribute 9.50%.

Interest: Your FURS account earns interest each month. The interest credited to your account will not affect the amount of your monthly retirement benefit. All interest credited is tax-deferred.

Taxation: Contributions made before July 1985 to FURS were taxed. If you have taxed money on account, then part of your refund or monthly benefit will not be taxed when you take a lump sum refund or retire.

Contributions made after July 1985, are made tax deferred. This means state and federal taxes are not paid until you receive the money as a benefit or refund.

Employer Contributions*

Your employer contributes an amount equal to 14.36% of their total FURS covered payroll to the pension trust fund. 

The state of Montana annually contributes an amount equal to 32.61% of the total compensation paid to all active FURS members each year.

* Employer contributions are not refundable and provide “pooled” funds for service retirement, disability retirement, and survivor benefits.

The amount of time you work and contribute to FURS affects the amount of your retirement benefit. The monthly benefit you receive will depend on the number of years you work in a FURS-covered position, whether you work full- or part-time, any purchases of service and your highest average compensation.

Membership Service
We use membership service to determine if you are eligible for vesting, retirement, or other FURS benefits. You earn one month of membership service for any month you contribute to FURS, regardless of the number of hours you worked or the pay you received during that month.

Vesting
You are “vested” after you accumulate five years of membership service. Once vested, you are entitled to any retirement benefits for which you are eligible. If you withdraw your accumulated contributions, you are no longer vested and you will give up your right to any FURS benefits.

Service Credit
We use service credit to calculate the amount of your benefit. If you work 160 hours or more in any month, you get one month of service credit. If you work less than 160 hours, you will receive proportional service credit.

For example, if you work 80 hours you would earn one-half of a month of service credit. However, if you work at least 2,080 non-overtime hours in a fiscal year and are reported as working less than 160 hours in any months during that year, you will receive one full year of service credit. Service credit is granted when you are paid, not when it is earned.

Part-time Service
If you work part-time, we will adjust either your service credit or your Highest Average Compensation (HAC) at retirement. We adjust one or the other to prevent a double reduction of your benefit. You will not see the adjustment to your service credit until retirement.

HAC - (Highest Average Compensation) the average of your highest consecutive 36 months of compensation. 

For members hired on or after July 1, 2013, HAC will be capped at 110% on compensation earned during the highest average compensation period.

Wondering how termination pay impacts the calculation of your retirement benefit? Lump-sum payments at termination that are includable as compensation for retirement purposes based on your retirement system, are included in the calculation of your HAC.

HIGHEST AVERAGE COMPENSATION (HAC) - your highest average monthly compensation during 36 consecutive months of membership service is used in the calculation of your retirement benefit.

How Does A Lump Sum Payment Affect Your Retirement Calculation? 

Each system defines compensation slightly differently. If, for example, payout of sick and vacation are considered compensation in your retirement system under Montana Law, then those portions of your payout will be included in the calculation of your HAC, by replacing lower compensation months with the same number of higher compensation months based upon your salary at the time of retirement.

Contributions you make to a VEBA account at termination are not considered compensation for retirement purposes and will not be included in the calculation of your HAC.

Example:

In the following example, Wanda has her highest 36 months of compensation from 2010-2012.

2010: 12 months x $1500 per month = $18,000
2011: 12 months x $1800 per month = $21,600
2012: 12 months x $2000 per month = $24,000

$18,000 + $21,600 + $24,000 = $63,600 / 36 = $1,766

Before Payout: HAC = $1,766.

She then received an annual non-sick leave payout of $20,000. If we divide that amount ($20,000) with her normal month’s salary ($2,000), we come up with 10 months at the higher $2,000. MPERA will drop the lowest 10 month’s salary ($1,500) (at the beginning of the 36 month period) and add 10 months at the highest salary ($2,000).

Payout = $20,000; $20,000 divided by $2000 = 10 months;
10 months of $2000 HAC is added
10 months of $1500 HAC is dropped

02 months x $1500 = $3,000
12 months x $1800 = $21,600
12 months x $2000 = $24,000
10 months x $2000 = $20,000

$3,000 + $21,600 + $24,000 + $20,000 = $68,600 / 36 = $1,905

After Payout: HAC = $1,905. When recalculated, Wanda’s HAC is $1,905 ($139 greater than the original HAC).

Compensation Limit - For a member hired on or after July 1, 2013, the following amounts of excess earnings in the calculation of a member’s highest average compensation are not included:

• for the first year included in the calculation, any compensation that is greater than 110% of the compensation paid to the member in the previous year; and
• for each subsequent year included in the calculation, any compensation that is greater than 110% of the compensation included in the calculation for the previous year.

SERVICE RETIREMENT

You are eligible for service retirement benefits when you complete 20 years of membership service at any age, or you have 5 years of membership service and are 50 years of age.
The factors used to calculate your lifetime benefit are:

• Years of Service Credit - the amount of service you earned through employment 
• HAC - (Highest Average Compensation) the average of your highest consecutive 36 months of compensation.
• Retirement Factor - a percentage defined in law currently 2.5% that determines how much of your HAC you receive for each year of service credit.

The basic formula for a FURS monthly service retirement is: 2.5% x Years of Service Credit x HAC

HAC Capped: There is now a 110% cap on compensation considered as part of a member's highest average compensation. This applies to members of all systems who are hired on or after July 1, 2013. Also, bonuses have been removed from the definition of compensation for all retirement systems effective for bonuses paid on or after July 1, 2013.

Service Retirement Example: Kenny
Age At Retirement = 45
Service Credit = 20 years
Highest Average Compensation (HAC) = $3,000 per month
Account Balance at Retirement = $35,450

Benefit Formula: 2.5% x Service Credit (years) x HAC

0.025 x 20 x $3,000 = $1,500 per month

Kenny will receive a monthly benefit of at least $1,500, plus the Guaranteed Annual Benefit Adjustment increases when eligible, for life.

If he dies, a monthly benefit equal to the amount of Kenny’s benefit will continue to his surviving spouse for life. If he has no surviving spouse, the benefit will continue to a dependent child* (or children, collectively).

In the absence of a surviving spouse or dependent child, and if Kenny had not received benefits equal to at least $35,450 (his account balance at retirement) by the time of his death, his designated beneficiaries would receive a lump sum payment of the balance in his account.

The Guaranteed Annual Benefit Adjustment (GABA) will increase your retirement benefit every year if you are eligible.

If you were an active member of FURS before July 1, 1997, you could choose to be covered under GABA. If you elected GABA, or you became an active member on or after July 1, 1997, you will be eligible for a 3% GABA.

Before you receive an increase under GABA, you need to have received your benefit for at least 12 months. Once eligible, you will receive your first increase in your retirement benefit payment that following January.

For example: If you retire on July 1, 2021 you will meet the 12-month requirement on July 1, 2022. You will then receive your first GABA increase beginning with your January 1, 2023 benefit.

Other events which increase your benefit will reduce the amount you will get from GABA. If the other increases are greater than your GABA amount, then you will not receive a GABA increase.

GABA applies to:

• Service Retirement Benefit
• Disability Retirement Benefit
• Survivorship Benefit

GABA does not apply to a person receiving the lump-sum death payment as an annuity.

Disability is the total inability even with reasonable accommodation to perform your work due to physical or mental incapacity. The disability does not have to be work-related. To qualify for a disability retirement, you must meet the following requirements:

• must occur while you were employed in a FURS-covered position, and
• be of permanent or extended and uncertain duration.

Disability Benefit
If you are disabled before earning 20 years of membership service, you will receive a disability retirement benefit equal to one-half your highest average compensation.

If you are disabled after earning more than 20 years of membership service, you will receive a disability retirement benefit calculated at the same rate as a service retirement benefit. This benefit may not be less than half your HAC.

Disability Reviews
At its discretion, the Board may review the medical condition of any member receiving a disability benefit. Periodic reviews are performed to determine if the member still qualifies for disability retirement. The Board may require the recipient of a disability retirement benefit to undergo a medical examination at the Board’s expense.

If the Board determines you are no longer disabled, you must be reinstated to the position you held immediately before retirement or to a position comparable in pay and benefits with duties within your capacity, whichever is first available. If you become an active member within 30 days of being notified of reinstatement, you will be considered to have been continuously employed during the time of your disability.

Disability Benefit Cancellation
The Board will cancel your disability retirement in the following cases:

• You are no longer totally disabled and have been offered a position with your employer; or
• You refuse to submit to a medical examination.

Upon notification of your eligibility to return to work, your employer may request a medical or psychological review of your ability to return to work. If the Board’s findings are upheld, your employer must pay the cost of the review.

Payment of Disability Benefit
Unless canceled by the Board for reasons described above, your disability benefit will be paid for the rest of your life. Upon your death, the benefit will be paid to your surviving spouse or dependent child.

This is the same as provided for under a service retirement benefit. In addition, you (or your survivors) will receive applicable benefit increases, such as GABA.

Active Member
If you die as an active member, your surviving spouse (or dependent child if you do not have a surviving spouse) will receive the following benefits:

• Less than 20 years of membership service:  The monthly survivorship benefit will be equal to one-half of your Highest Average Compensation.

• More than 20 years of membership service:  The monthly survivorship benefit is the benefit amount to which you were entitled on the date of your death. If you do not have a spouse or dependent child, a lump-sum payment will be paid to your beneficiary.

Inactive Member
As an inactive member with more than 20 years of membership service, your survivor is entitled to the benefit amount you were entitled to on the date of your death.

Retired Member
Your retirement benefit will be paid to your surviving spouse upon your death. If you do not have a surviving spouse, or your surviving spouse dies while receiving the benefit, the benefit will be paid to your surviving dependent children.

If you have no surviving spouse or dependent children, your designated beneficiary will receive your remaining account balance (the sum of your contributions plus interest on the date of your retirement, minus any retirement benefit payments you had received). If you have no designated beneficiary, the amount will then be paid to your estate.

Death Benefit Claim
Upon notification of your death, MPERA will send a death benefit claim form to your surviving spouse, dependent child, or designated beneficiary. To claim a death benefit, your beneficiary must return the completed form to MPERA along with a certified copy of your death certificate.

If you leave your job and request a refund of your accumulated contributions (contributions plus interest) and later return to a FURS-covered position, you can purchase the refunded service at anytime prior to retirement if you are an active member.

You must be vested to purchase refunded service if you are inactive, which means you have terminated employment and are no longer contributing to FURS.

To purchase the refund, you must repay the accumulated contributions you received and pay the interest at the actuarial assumed rate of return in effect at the time of the redeposit.

Refunded service is both membership service and service credit.

If you refunded (or you are eligible to receive a refund) from other public service employment with the state of Montana or a political subdivision, you may be eligible to purchase that service in FURS at actuarial cost. You cannot buy service from another public retirement system that will make you eligible for retirement in FURS until you receive a refund of the service from the other public system.

You must be an active FURS member to be eligible to purchase this service. Documentation from your prior retirement administration showing the dates of your employment is required.

Montana public service is both membership service and service credit.

You do not need to be vested (have five years of FURS membership service) to purchase Montana Public Service.

For each five-year period of membership service, you can buy one year of service credit. You may buy up to five years of “One-for-Five” years. You could also buy less than a full year.

“One-for-Five” service is not membership service and cannot be used to make you eligible to retire or to purchase other types of service.

You will need to have at least five years of FURS membership service to purchase "One-For-Five" service.

At any time prior to retirement, you may purchase up to five years of your active military or reserve military service at the actuarial cost. You can purchase reserve military time prior to your separation from service in the reserves. You cannot purchase military time if you are receiving a retirement benefit from the military or from another retirement system or plan, for that same period of time.

Reserve military service cannot be purchased if you have already received service credit under USERRA for that time period.

You will need to provide a DD-214 to MPERA to purchase this service.

This service is both membership service and service credit.

You must be vested (have five years of FURS membership service) to purchase Military/Reserve Military Service.