Indiana Senate Bill 14 (SB14) recently passed the state legislature and has been signed by Governor Mike Braun. Under SB14, there are several minor changes to TRF and PERF, but the most notable is that the law creates an opportunity for current TRF and PERF “My Choice” Defined Contribution Plan members to make a one-time election to switch from their current DC plan over to the TRF or PERF Hybrid Plan. The window for members to make this election begins July 1, 2026, and will remain open for six months.
Given that both the My Choice DC plan and Hybrid plan are pre-existing plans, we are offering this scorecard to provide members with a comparison between the two options to help inform their decisions over whether to make the switch. As such, we refrain from making an assessment as neither plan has been made better or worse by SB14. Instead, we offer the positive and negative elements of each plan design below.
How Indiana SB14 Affects Members’ Retirement Benefits
The enacted bill affects the retirement benefits of Indiana Teachers’ Retirement Fund (TRF), Indiana Public Employees’ Retirement Fund (PERF) – Local, and Indiana Public Employees’ Retirement Fund (PERF) – State members as follows:
- Creates the opportunity for current members enrolled in the “My Choice: Retirement Savings Plan,” the stand-alone defined contribution plan, to make a one-time, irrevocable election to switch to the TRF or PERF Hybrid plan
- Adopts rules designed to prevent salary spiking for pensions
- Adjusts DC plan forfeiture rules
- Adjusts how Indiana provides healthcare to retirees
For more details, view our interactive Equable Retirement Security Policy Scorecard below. Use the worker group drop-down menu to choose your plan, and select a length of service to see how plans compare across key metrics.
Comparison: My Choice DC vs. TRF/PERF Hybrid
Like all retirement plans, there are positives and negative elements that members should be aware of.
Positives of the My Choice DC Plan
- Under typical market return assumptions, the My Choice plan would produce higher annual benefits for all three of our member profiles. The totals are almost $3,500 more on average for TRF members, roughly $1,200 more on average for PERF – State members, and roughly $1,000 more on average for PERF – Local members.
- The My Choice DC plan has a shorter vesting period, which means that members will have ownership of their retirement savings and can take them with them should they leave TRF/PERF. This makes the My Choice DC a much more portable benefit.
Negatives of the My Choice DC Plan
- The My Choice DC plan has relatively low fixed contribution rates compared to best-practice DC designs, which may limit retirement adequacy.
- DC plans expose members to investment and longevity risk. Investment risk means that if markets perform poorly, members’ benefits can be substantially lower. Longevity risk means that even if markets perform well, a member is responsible for managing their retirement income to ensure they do not outlive their savings.
Positives of the TRF/PERF Hybrid Plan
- According to our estimates, the total value of the TRF/PERF Hybrid plan will be higher for Medium-Term Workers and Full Career Workers. While the total value of Hybrid benefits is higher on average, the PERF hybrid normal retirement starts earlier, which spreads payments over more years, explaining why annual benefits are estimated to be lower.
- The TRF/PERF Hybrid includes a defined benefit pension component that provides a guaranteed lifetime income, providing protection from market downturns or the risk of outliving retirement savings.
Negatives of the TRF/PERF Hybrid Plan
- Vesting requirements for the pension component of the TRF/PERF Hybrid are 10 years, and withdrawing from the hybrid requires forfeiting pension benefits, which makes this a less portable plan.
- The pension component of the TRF/PERF Hybrid has a 1.1% multiplier. This produces a modest pension benefit, meaning that a sizable share of a member’s benefits are still subject to the same risks as the My Choice DC plan.
