They're taking your contributions and the state's contributions on your behalf and investing them. Their ROI has historically been very good.

It's still a defined benefit plan if you're already in it which means that you will be entitled to a guaranteed pension based on your salary and years of service. The pension benefit is computed by taking the average of your five highest earning years with the state multiplied by .025 (2.5%) multiplied by the number of years of service. For example, if your highest earning average is $50,000 and you retire after 20 years, your pension would be .025 x 20 x 50,000 = $25,000.

There are some minimum age requirements to retire but those can be flexible in return for a reduced benefit. You can also name a beneficiary to receive your pension after you die for the rest of the beneficiary's life. Read the handbook for details. A defined-benefit plan like this is the Cadillac of pensions. You can also invest in a deferred comp 457 plan (similar to a 401K) while working for the state.

This post was edited on 1/29/13 at 1:09 pm

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Posted by Hu_Flung_Pu

Central, LA

Member since Jan 2013

22217 posts

Posted on 1/29/13 at 1:31 pm to Layabout

thanks for the info. is this the new one? I heard it changed

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Posted by GFunk

Denham Springs

Member since Feb 2011

14966 posts

Posted on 1/29/13 at 1:32 pm to Layabout

Don't forget the Drop program. You can work for 3 years while putting your paycheck into an interest bearing account while drawing your pension as payment while working after achieving retirement age (20-25 years).

At the end of three years, that 36 months of compounded salary is paid out in a lump sum.

I've been considering buying a few years of service credit. I think it would cost me around $12K right now and allow me to retire in my mid 50's.

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