PERSI rate change goes into effect
State employees who participate in the Public Employee Retirement System of Idaho (PERSI) began contributing slightly more to their account effective July 1. The rate for general member employees will increase by .37 percent, or from 5.86 percent of their gross salary to 6.23 percent.
State employees should notice slightly higher PERSI withholdings in this month's checks as a result of the increase.
Although the PERSI fund remains very healthy and continues to grow, it still is slightly short of being fully funded. During the rapid economic growth of the late 1990s, the fund grew to 116 percent of full funding which allowed administrators to initiate a gain sharing plan for employees, retirees and members. PERSIs Unfunded Actuarial Liability (UAL resources needed to meet retirement commitments) now is 83.5 percent of the total required (as of June 30, 2003).
To meet those obligations and to conform to Idaho law, the PERSI retirement board voted to increase employee contributions in 2002. But to ease the impact on members and employers, the board delayed the increase for two years and chose to phase the increase in over three years, beginning July 2004.
One of PERSIs primary goals, explains retirement board chairman Jody B. Olson , is to maintain stable contribution rates at levels required to fund benefits.
When PERSIs funding was at an all-time high a few years ago, your retirement board decided to share the wealth with you by reducing contribution rates and granting $155 million to members, retirees and employers as gain sharing, Olson explains.
Now that our funding status is lower, we hope that you understand the need to raise rates at this time. We realize that employees have ever greater health care and insurance costs and raises have been low or nonexistent for many. To ease the impact of our rate increase on members and employers, we delayed the increase for two years and phased it in over three years. When fully phased in by 2006, rates will be back to 1997 levels.