Last Updated on March 2, 2023 by George
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Idaho Teachers Retirement is a one-of-a-kind retirement plan that gives Idaho teachers the tools they need to achieve financial independence later.
With various investment options, benefits, and an entire team of dedicated professionals working hand-in-hand with educators across the state, it’s no surprise that those participating in it hold this program in such high regard.
Idaho Teachers Retirement is an excellent option for anyone looking to secure their future and ensure their retirement years are secure and stable.
Idaho teachers are covered by the Public Employee Retirement System of Idaho, a state-run pension system established in 1963. The state’s most extensive public retirement system is not limited to educators.
The primary distinction between this and other retirement funds is how pension wealth is calculated at retirement. Contributions made by the teacher and their employer – whether from the state or the school district – have no bearing on their value.
It is instead determined by a formula based on years of experience and final salary. Though those contributions are invested, the returns on those investments do not determine the final amount owed to retirees.
How are Teacher Pensions Calculated in Idaho?
A formula is used to calculate pension wealth. The figure below depicts how teacher pensions are calculated in Idaho. Understanding that an educator’s final salary is calculated using their average salary over the previous 42 months is critical. A teacher, for example, who has worked for 25 years and earned an average salary of $70,000 would be eligible for an annual pension benefit equal to 50% of their final salary.
Calculating Teacher Pension Wealth in Idaho
2% Multiplier x Avg. salary over consecutive 42 months x Years of service
Who Qualifies for a Teacher Pension in Idaho?
Teachers in Idaho are eligible for retirement benefits after five years of service. They must, however, wait until they reach the state retirement age before they can begin receiving the pension. Even so, it may not be worth much.
Those who want to retire sooner than 55 can take advantage of an early retirement plan with a minimum of 5 years of service.
However, their benefits will be reduced based on the years served and how early they retire compared to the state’s standard age-90/5-year threshold.
How Much Does Idaho’s Teacher Pension Plan Cost?
Teachers and their employers in Idaho must contribute to the pension fund. In 2018, the system received 19.03 percent of a teacher’s salary, with 7.04 percent coming from the teachers themselves and 11.99 percent from the state. Only 7.83 percent of the state contribution is used to pay for benefits; the remaining 4.16 percent is used to pay down debt in the pension fund.
Unfortunately, unlike in some other states, Idaho teachers cannot take their benefits with them if they leave PERSI or move across state lines. Those who do so may end up with two separate pensions worth significantly less than one accumulated over a long career in one place
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 proportion of a teacher’s annual income paid to the pension fund.
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 is expressed as a proportion of teacher pay, and these costs do not include debt.
Amortization cost
A pension fund’s annual payment toward any unfunded liabilities. This may also be considered the pension fund’s debt service expense.
Frequently Asked Questions
What will my monthly income be if I retire from teaching in Idaho?
Your monthly benefit is calculated based on the number of credited years of service and your final average salary.
Is there anything else available to retired Idaho teachers?
All qualified teachers who retired on or after July 1, 1995, are eligible for an annual COLA (Cost-of-Living Adjustment) that increases their monthly benefit amount.
Members can also get free legal services from the ERP Legal Services Program and discounts on prescription medications, long-term care insurance, and other services from participating businesses across the state.
What more should I know about the pension I receive as a teacher?
You must keep up with ERP news and events by visiting their website or subscribing to their newsletter.
Pros & Cons
Pros                                                    
Retirement savings are tax-free in the state and federal government, allowing educators to keep more earnings.
- The plan has no ongoing fees and only charges a one-time administrative fee.
- For each individual’s retirement goals, investment options are flexible and customizable.
- There are no minimum contribution requirements or time limits for withdrawing funds.
- Beneficiaries receive a tax-free lump sum payment upon death to the named beneficiaries.
- Employers can contribute to their employees’ retirement funds and match up to 5% of their annual salary (check with your employer for eligibility requirements).
- A financial adviser is available to all members at no additional cost to assist them in managing their accounts and making informed investment decisions.
Cons                                                    
- Because of the lack of diversity in available investments, returns on investment may be lower than in other retirement plans (the Idaho plan only offers four asset classes).
- Educators must retire before age 65 to be eligible for full plan benefits; otherwise, they will forfeit some or all of their benefits (check with your employer for specific rules regarding early retirement).
- Because the plan does not automatically adjust payments for inflation rate increases or decreases, inflation could reduce the value of benefits over time if not appropriately managed by an experienced adviser or financial planner.
- If an educator dies before reaching full retirement age, there is no comprehensive survivor benefit, which means that their contributions will not be passed on after death
Final Thought – Idaho Teachers Retirement
Idaho Teachers Retirement offers a safe way for teachers to save for retirement and provides benefits that can be used when needed.
Idaho Teachers Retirement is an excellent choice for those looking to retire comfortably, with a secure pension plan, various investment options, and helpful customer service from qualified experts.
Idaho Teachers Retirement ensures financial security and peace of mind, allowing teachers to reach their retirement goals easily.
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