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 an HPORS HPORS Designation of Beneficiaries form and returning it to MPERA either by file transfer or by mail. 

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

Members must contribute 13.05% of their gross pay to HPORS.

Interest: Your HPORS account earns interest each month. Although you would receive your interest if you withdraw your account, if you retire the interest credited to your account will not affect the amount of your monthly retirement benefit. Interest will be credited on service purchase payments at the same rate as regular contributions. All interest credited is tax-deferred.

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

Employer Contributions*

The State contributes an amount equal to 38.33% of its total HPORS-covered payroll to the pension trust fund.

• 28.15% is paid by the Department of Justice as provided in § 17-7-502, MCA.
• 10.18% is paid from the General Fund.

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

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

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.

The amount of time you work and contribute to HPORS affects the amount of your retirement benefit. The monthly benefit you receive will depend on the number of years you work in a HPORS-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 HPORS benefits. You earn one month of membership service for any month you contribute to HPORS, regardless of the number of hours you worked or the pay you received during that month.

Vesting

• For members hired before July 1, 2013: You are “vested” after you accumulate five years of membership service.
• For members hired on or after July 1, 2013: You are “vested” after you accumulate 10 years of membership service.

After you are 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 HPORS 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.

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 a sick/annual 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.

If hired on or before June 30, 2023, you are eligible for lifetime service retirement benefits when you complete 20 years of membership service at any age. If hired on or after July 1, 2023, you are eligible for service retirement benefits when you complete 20 years of membership service and are at least age 50.

The factors used to calculate your benefit are:

• Years of Service Credit - the amount of service you earned.
• HAC* - (Highest Average Compensation) is the average of your highest consecutive 36 months of compensation.
• A Factor - the factor determines how much of your highest average compensation you get for each year of service credit. Starting July 1, 2013, the factor is 0.026 (2.6%) for all members.

The formula for a monthly service retirement benefit in HPORS is: 2.6% x Years of Service Credit x HAC

Early Retirement

If you were hired before July 1, 2013, after having completed five years of membership service but before reaching normal retirement age, you can apply for an early service retirement benefit. The benefit is the actuarial equivalent value to a service retirement based on a retirement age of 60.

If you were hired on or after July 1, 2013, after having completed 10 years of membership service but before reaching normal retirement age, you can apply for an early service retirement benefit. The benefit is the actuarial equivalent value to a service retirement based on a retirement age of 60.

Service Retirement - 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: 2.6% x Service Credit (years) x HAC

0.026 x 20 x $3,000 = $1,560 per month

Kenny will receive a monthly benefit of at least $1,560 per month, 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). A dependent child is one who is unmarried and under the age of 18, or under 24 and attending an accredited postsecondary educational institution as a full-time student.

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 beneficiary would receive a lump sum payment of the balance in his account.

Early Retirement - Wanda
Age At Retirement = 55
Service Credit = 15 years
Highest Average Compensation (HAC) = $2,500 per month
Account Balance at Retirement = $25,495

Wanda is vested but has less than 20 years of membership service. She may receive an early retirement benefit. The retirement benefit would be calculated using an early retirement factor: 2.6% x Years of Service Credit x HAC x Early Retirement Factor

Scenario 1: Wanda retires at age 55 and immediately draws a retirement benefit. Using the above formula, we calculate: 0.026 x 15 x $2,500 x 0.6191 = $603.00 per month.

Wanda will receive a monthly benefit of $603.00 plus GABA increases when eligible, for life.

Scenario 2: If Wanda stops working at age 55, but waits until age 57 to draw a benefit, her benefit would be: 0.026 x 15 x $2,500 x 0.7473 = $728.00 per month.

Wanda would receive a monthly benefit of $728.00 plus GABA increases when eligible, for life.

Scenario 3: If Wanda stops working at age 55, but waits until she was age 60, her retirement benefit would not be reduced by an early retirement factor. Her benefit would be calculated as follows: 0.026 x 15 x $2,500 = $975.00 per month.

Survivor and beneficiary benefits would be paid for an early retirement benefit the same as for a service retirement benefit.

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

Highway patrol officers who were active members of HPORS before July 1, 1997, could elect to be covered under GABA. Members who elected GABA, and those who became active members on or after July 1, 1997, will receive GABA retirement benefit increases.

For members hired before July 1, 2013: GABA ensures an increase of 3% over the previous year’s benefit. 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 members hired on or after July 1, 2013: GABA ensures an increase of 1.5% over the previous year’s benefit. Before you receive an increase under GABA, you need to have received your benefit for at least 36 months.

Once eligible, you will receive your first increase in your retirement benefit payment that following January.

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.

The GABA applies to:

• Service Retirement Benefits
• Early Retirement Benefits
• Disability Retirement Benefits
• Survivorship Benefits

GABA also applies to recipients, other than members, such as survivors. It does not apply to a person receiving the lump-sum death payment as an annuity.

Members do not receive GABA on their accrued DROP retirement benefit. GABA starts January 1 immediately following retirement for initial and subsequent benefits.

Minimum Retirement Benefit Increases for Non-GABA Electors

If you were hired before July 1, 1997, and did not elect to be covered under the Guaranteed Annual Benefit Adjustment (GABA), a minimum retirement benefit increase is provided for you or your survivor if one of the following conditions are met:

• You are retired, aged 55 or older, and not currently employed in a position covered by another Montana public retirement system.
• You are retired and receiving a disability retirement benefit.
• You are a recipient of a survivorship benefit.

The minimum annual amount payable to eligible recipients is:
2% x Years of Service Credit x Current base salary of a probationary highway patrol officer.

Monthly benefits for non-GABA members are increased each July if the amount of the benefit falls below the statutory guaranteed minimum. The annual increase may not exceed 5% of the current monthly benefit paid to you or your survivor. The maximum monthly benefit paid may not exceed 60% of the current base compensation of a probationary highway patrol
officer.

If you become disabled, you may be entitled to a disability retirement benefit.

Disability means the inability to perform your work due to physical or mental incapacity, even with reasonable accommodation. The disability does not have to be work-related, but the disability must occur while employed in an HPORS-covered position and be of permanent or extended and uncertain duration. The monthly disability retirement benefit will begin on the day following your termination from service.

Disability Benefit

Line of Duty: If you become disabled as a direct result of service in the line of duty and have less than 20 years of membership service, you may receive a disability retirement benefit equal to one-half of your Highest Average Compensation (HAC).

If you have more than 20 years of membership service, you may receive a disability retirement benefit equal to 2.6% of your HAC for each year of service credit.

Non-Duty Related: If you become disabled outside of work, you may receive a non-duty disability retirement benefit. This disability benefit is the actuarial equivalent of the service retirement benefit standing to your credit at that time. You must be vested to receive a non-duty related disability.

Disability Reviews

At its discretion, the Board may review the medical condition of any member receiving a disability benefit. Periodic reviews are performed to decide 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.

Disability Benefit Cancellation

The Board will cancel your disability retirement if you are no longer disabled; or you refuse to submit to a current medical exam or provide updated medical records. Contact us for complete details about disability benefits and how to apply.

NOTE: If you are still disabled when you reach normal retirement age, we will convert your disability retirement to a service retirement. The benefit amount will not be adjusted. Converting to a service retirement will end medical reviews.

Active Member

If you die as a direct result of injuries received in the course of service, your surviving spouse or dependant child is entitled to a monthly survivorship benefit equal to 50% of your HAC.

If you die in a non-duty related death, your surviving spouse or dependant child is entitled to a survivorship benefit that is the actuarial equivalent to an early retirement benefit.

If you have neither a surviving spouse nor dependent child, your designated beneficiary will receive a death payment of your accumulated contributions (contributions plus interest).

Inactive Member

If you die as an inactive, vested member, your surviving spouse or dependant child may be able to receive a monthly survivorship benefit for their lifetime.

If you die as an inactive, non-vested member, MPERA will pay a lump-sum death payment to your surviving spouse, dependant child or beneficiary. This death payment will be your accumulated contributions.

Retired Member

Your retirement benefit will be paid to your surviving spouse. If you do not have a surviving spouse, or your surviving spouse dies before 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.

DROP Participation

If you are an active member of HPORS and eligible for service retirement, you have the opportunity to participate in the DROP. If hired on or before June 30, 2023, you are eligible to participate in the DROP when you complete 20 years of membership service at any age. If hired on or after July 1, 2023, you are eligible to participate in the DROP when you complete 20 years of membership service and are at least age 50. The DROP allows you to begin accumulating your retirement benefit without terminating employment for up to 60 months. If you are eligible and choose to join the DROP, while you are working your monthly retirement benefit and your HPORS employee contributions will go into your individual DROP account.

Your employer and the state will pay the regular contributions to HPORS. You will not earn additional membership service or service credit.

Distribution of DROP Benefits

If you terminate employment at the end of your DROP Period you will begin receiving your HPORS monthly retirement benefit. At that point, you will receive your DROP Benefit as a lump sum payment or a direct rollover to another eligible retirement plan (as allowed by the IRS).

If you do not designate a distribution method within 60 days after termination of employment, your DROP benefit will be paid in a taxable lump sum less required withholding for taxes.

If you become disabled during the DROP Period, you will not be eligible for HPORS disability benefits. If you terminate your service, your service retirement benefit will be paid to you rather than to your monthly DROP Account. You will also be eligible to receive your DROP benefit.

DROP Survivor Benefits

If you die before the end of your DROP Period, your surviving spouse or dependent children are entitled to your DROP Benefit and a survivorship benefit. If you do not have a surviving spouse or dependent children, your designated beneficiary receives the balance of your retirement account and a lump-sum payment of the DROP Benefit.

HPORS-covered Employment After DROP

You may continue to work after your DROP Period ends and remain vested in HPORS. Upon termination of employment, you will receive your initial HPORS monthly retirement benefit; an additional benefit based on your service credit and highest average compensation earned after DROP participation; and your DROP Benefit. Your DROP account will earn an interest rate equal to the actuarial assumed rate of return, which is fixed at the end of each fiscal year.

If you leave your job and request a refund of your accumulated contributions (contributions plus interest) and later return to a HPORS-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 HPORS.

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 HPORS at actuarial cost. You cannot buy service from another public retirement system that will make you eligible for retirement in HPORS until you receive a refund of the service from the other public system.

You must be an active HPORS 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 HPORS membership service) to purchase Montana Public Service.

You can purchase time that you are absent from work due to a work-related injury or illness if you did not refund your account.

Upon return to work, you and your employer need to file a written application to buy the time. MPERA needs to receive certification the injury was work-related within one year of your return to work.

The time which can be purchased may not exceed five years. If you are eligible and pay the contributions and interest, the absence will count as both membership service and service credit.

You do not need to be vested (have five years of HPORS membership service) to purchase Absence Due to Illness or Injury.

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 HPORS membership service) to purchase Military/Reserve Military Service.

You may purchase one year of out-of-state law enforcement employment for each year of service credit, up to a maximum of five years. You may not purchase the service if you are eligible to receive a retirement benefit in another system or plan for that same service. This service may not be used as membership service to allow a member to purchase military service.

Also, it cannot be used in calculating a member’s retirement benefit unless the last five years of service credit were earned in an HPORS-covered position.

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 HPORS membership service to purchase "One-for-Five" service.

If you are called to duty for a period of time in the armed services, you have the option to pay the retirement contributions once you’ve returned to employment. You will repay the retirement contributions missed during the time you were out on USERRA.

Contributions are not required, but it will make your salary history “whole,” with no gaps.  This is particularly important if the absence is during your Highest Average Compensation (HAC) period, and you are considering retirement.

USERRA requires you pay the contributions back within three times the amount of time you were called away. For example, if you were called to active duty for one year, you will have three years to pay the missed contributions.

If you choose to make contributions, your employer is required to pay the employer share as well. 

For more information about USERRA, click here.