This alternative plan was established in recognition of the fact that many university level faculty members transfer from state to state a number of times prior to retirement and that such mobility in employment severely limits the ability to build a meaningful retirement benefit under a defined benefit plan such as PERS. This alternative plan is structured to be portable and transferable as teaching and administrative faculty staff move from one state to another.
If you choose to enroll in the Optional Retirement Plan, your account will be credited with employee contributions equal to 7.25 percent of earned compensation up to the employee compensation limit set pursuant to Section 401(a)(17) of the Internal Revenue Code for the calendar year in which the fiscal year begins. The total employer contribution on your behalf is 12.0 percent*, of which 9.405 percent will be credited to your account and 2.595 percent will go to PERS to offset the unfunded accrued liability and the cost of administering ORP.
If you elect to participate in ORP, your retirement benefits will be determined solely based on the value of your investment account at the time of retirement. In ORP, there are different annuity providers, offering a host of funds from which to build your portfolio. Since ORP is a defined contribution plan, you will be responsible for deciding how to invest your funds.
Portability is an important feature of this plan. Under ORP, your account is 100 percent vested on day one. If you relocate to another state with a similar plan, you may be eligible to transfer your account balance to your new employer's plan. If you terminate employment, you can apply for and receive your ORP account balance, subject to applicable penalties for early withdrawal.
In order to participate in the Optional Retirement Plan, an employee must first be eligible to participate in PERS and be employed in a qualifying position. Employees who participate in the ORP cannot elect to switch to the PERS at a later time.
*Subject to change.