Pension Reform

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Pension reform was enacted in 2012 to address an unbalanced funding ratio. This reform resulted in an immediate savings of $674 million.

IPERS continues to administer the system to exceed important benchmarks of fiscal soundness. For example, a funded ratio of 80% indicates a strong and secure pension plan. In FY2020, IPERS funded ratio was 83.96%. 

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Key details of the pension reform bill include:

  • Lengthened vesting period for regular members.
  • Reduced future benefit accruals for Regular members by replacing the highest three-year average salary with the highest five-year average salary.
  • Increased the early-retirement penalty for Regular members.
  • Allowed IPERS flexibility in setting contribution rates for Regular members.


In the years since the passage of the pension reform bill, contribution rates have remained stable and IPERS’ funding ratio is more closely in balance. IPERS’ goal is to become 100% funded.

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