As a PEERS member, once you have earned five years of credit with PEERS, you are vested and can receive lifetime retirement benefits when eligible. In most cases, the retirement benefits paid to PEERS members greatly exceed the funds they contribute to the System while working. In fact, most PEERS retirees recover all their contributions within the first five years of retirement.
PEERS Membership Advantages
- Disability benefits are available if you have five years of eligible employment and cannot work due to a disability that appears to be total and permanent.
- Survivor benefits may be payable upon your death with as little as two years of credit.
- Purchasing credit with PEERS may allow you to reach vested status, retirement eligibility or qualify for a larger benefit.
- Reinstating credit allows you to buy back credit for a membership you previously forfeited by taking a refund of your account.
- During retirement, you receive cost-of-living adjustments (COLAs) on your retirement benefits.
The Importance of a Defined Benefit Plan
As a PEERS member, you are a member of a defined benefit, or DB, retirement plan. DB plans provide members like you predictable income for life, no matter how long you live. The term “defined benefit” is derived from the fact that your lifetime retirement benefits are determined by a pre-defined formula that includes:
- A formula factor or percentage set by the Missouri Legislature,
- Your compensation (salary plus employer-paid health, dental and vision insurance premiums), and
- Your credit earned while employed by PEERS-covered employers and credit purchased.
Unlike defined contribution, or DC, retirement plans such as IRAs, 403(b) or 401(k) plans, you don’t have to make investment decisions regarding your retirement funds. As a DB plan, PEERS can more effectively reduce investment risk, and investment decisions are handled by PEERS’ professional investment staff and managers.
And, because PEERS is a DB plan, your retirement benefits are payable for your lifetime. The amount of money in your PEERS account when you retire does not have a bearing on the amount of benefits you can receive. While DC plans are an important piece of your overall retirement savings, they can be less effective, because they provide benefits based on account balances in those plans at retirement. That means a retirement based on DC plan savings alone can run out and leave you without the retirement income you need.