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 at 1:09 pm