Last Updated on March 2, 2023 by George
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The Iowa Public Employees’ Retirement System (IPERS) is a defined benefit retirement plan with approximately 328,975 members receiving retirement, disability, and survivor benefits. Almost half of these members are teachers. The IPERS plan covers 80,743 active and 51,884 retired school employees and beneficiaries. Teachers contribute 5.38% of their salary to the plan and are eligible for early retirement at 55 if they are no longer working. Pension payments, health insurance subsidies for retirees, death benefits for survivors of deceased members, and other benefits are available. IPERS also provides financial education services to members to help them understand their rights and responsibilities under the plan and how to maximize their benefits.
IPERS is a $43.3 billion retirement plan that pays members a monthly lifetime retirement benefit based on their earnings and service years. The average IPERS pension benefit is currently $40.13 billion. Other benefits available to Iowa retirees include health insurance, disability coverage, and survivor benefits.
IPERS is dedicated to providing its members with certain retirement benefits while ensuring that the funds are managed responsibly. They maintain an active social media presence, providing system performance updates and answering member questions.
How are Teacher Pensions Calculated in Iowa?
Teachers in Iowa are covered by the Iowa Public Employees’ Retirement System (IPERS). Because IPERS is a defined benefit plan, retirement eligibility is determined by age and years of service in IPERS-covered employment. Pension benefits are accrued, so all members are treated equally, regardless of their salary or other factors. For a teacher with 30 years of service, the IPERS pension replaces 60% of pre-retirement income.
Retired teachers in Iowa can also receive Social Security benefits if they worked in jobs covered by Social Security for at least ten years. However, many teachers are ineligible for Social Security because they spent years working in a job or a career other than teaching before becoming educators.
While IPERS provides a secure retirement option for Iowa educators, some experts believe teachers should be allowed to opt-out and choose another retirement plan. It would enable them to manage their retirement funds better and ensure they have enough saved for their golden years.
Calculating a teacher’s pension in Iowa is pretty simple. When calculating pension benefits, educators must consider their final salary and the years they have worked for the state. IPERS participants should consider other retirement plan options in addition to opting out.
Calculating Teacher Pension Wealth in Iowa
2% Multiplier x Avg. 5 years of highest salary x Years of service
Who Qualifies for a Teacher Pension in Iowa?
In 2018, the average pension value for Iowa teachers was $20,263, with a median pension value of $15,036. The contribution rate for teachers’ pensions is set at 6.29%.
Iowa provides a decent retirement package to educators who have worked in the state for seven years or more. However, before deciding when to retire, it is critical to consider all available options.
How Much Does Iowa’s Teacher Pension Plan Cost?
Teachers and their employers must contribute to the plan as they work. The state legislature sets these contribution rates, which are subject to change yearly. Teachers contributed 6.29 percent of their salary to the pension fund in 2018, with the state contributing 9.44 percent. In total, 15.73 percent of teacher salaries in Iowa were spent on the state’s teacher pension fund. However, not all of that money is spent on benefits. While individual teachers contribute the full 6.29 percent of their salary for help, the state contributes only 4.2 percent. The remainder of the 5.24 percent state contribution will be used to pay off the pension fund’s debt.
Finally, teacher pensions are not portable in Iowa, as in most other states. If teachers leave the IPERS system, they will lose their benefits, even if they remain in the teaching profession. As a result, someone who quits teaching or moves across state lines may have two pensions, but the total value of those two pensions is likely to be less than if they stayed in one system throughout their career. In other words, the lack of benefit portability will harm any educator who quits teaching or moves across state lines to work in another state’s retirement system.
As with most state pension funds, Iowa’s teacher retirement system favors teachers who stay the longest while providing insufficient benefits to everyone else. With this in mind, new and current Iowa teachers should carefully consider their career goals and how they will interact with the state’s retirement plan.
Glossary of Financial Terms
Vesting Period
The minimum number of years a teacher must work to be qualified for a pension. Although vesting periods vary by state, they typically last five years. Every state allows teachers who quit their positions before they are vested to withdraw their contributions, sometimes with interest. However, just a few jurisdictions permit these workers to receive any employer contributions made on their behalf.
Employee Contribution
The pension fund takes a portion of a teacher’s annual income.
Employer Contribution
The proportion of a teacher’s annual income that the state, a school district, or both contribute to the pension fund.
Average Cost
The annual retirement benefit expense as a proportion of teacher pay is expressed without debt included.
Amortization Cost
The pension fund pays an annual amount towards any unfunded liabilities, which may be considered its debt service expense.
Frequently Asked Questions
Who is eligible to apply for IPERS?
All state employees in Iowa are eligible to participate in IPERS.
What are my IPERS membership rights?
You have certain rights as an IPERS member regarding your vested interest in District-provided benefits upon retirement. You can contact the Administrator if you have any questions about your rights.
Are there any other retirement plans available besides IPERS?
Yes, employees at the University of Iowa are automatically enrolled in IPERS unless they opt out within 60 days of their hire date.
Pros & Cons
Pros 
Iowa Teacher’s Retirement provides numerous benefits to the state’s educators. The Iowa Public Employees’ Retirement System (IPERS), which provides a defined benefit plan that pays lifetime benefits to teachers upon retirement, is one of the most appealing features. Teachers can also choose a fully portable primary pension plan with vesting in three years or less.
- IPERS provides teachers with lifetime benefits upon retirement.
- There is a fully portable primary pension plan available.
- Teachers are eligible to vest in three years or less.
Cons 
- Teachers are paid 14.3% less than comparable workers in the private sector.
- For a teacher with 30 years of service, the IPERS pension replaces 60% of pre-retirement income.
- There are only a few times when teachers can retire with benefits based on their age and years of experience.
Final Thought – Iowa Teachers Retirement
Iowa teachers have many options regarding retirement planning, including the Iowa Public Employees’ Retirement System (IPERS) and other private sector plans. Teachers can ensure a secure retirement that meets their needs with careful planning.
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