YEA – HA RETIREMENT

Why Care About Retirement?

Do you want to retire at 65 or sooner?

Do you want medical coverage as soon as you retire?

Do you want to be compensated as promised by the State?

Do you want to have a retirement check that allows you to live

in the same style of living as you have become accustomed to?

Largest Take Away in History

Gain Sharing

* The state wants to take it away!

• We must have a dollar for dollar trade

• The state wants to trade at 50 cents on the dollar

What is Gain-Sharing and

Why is it Important to Me?

• Gain-sharing is a pension benefit for PERS and TERS Plan 1 & 3 members.

• When the average return of the State Investment Funds exceeds 10% over the previous four years.

• Half of the excess permanently boosts the annual increase of the Uniform COLA (Un-COLA) for Plan 1.

• The other half is distributed to Plan 3 members as a lump sum to their defined contribution account, pro-rated to your years of service.

Gain Sharing

Can you afford not to have IT?

Retirement

• Review of Plans 1-3

Plan IRewards a Career of Service

Qualifications for Normal Retirement• 30 years of service + any age, or• 25 years of service + age 55, or• 5 years of service + age 60

Uniform COLA• Is not based on inflation, but includes gain-sharing distributions• Is only provided for retirees over age 66

Benefit Formula• 2% of Average Final Compensation (AFC) X # of years of service• Maximum benefit of 60%• For some, may provide the equivalent to a Rule of 80

Contribution RateFixed 6% member contribution rate (regardless of plan costs)

Plan 1 Example

Pat has… • 30 Years of Service• $50,000 Average Final Compensation (AFC)

Pat’s benefit is calculated as follows:• 30 Years of Service X 2% = 60% of AFC• 60% X $50,000 (AFC) = $30,000 as your Maximum

Annual Benefit

Plan IIQualifications for Normal Retirement• Minimum of 5 years of service + age 65• Must be age 65 to receive full benefits

Contribution RateContribution rates fluctuate based on the cost of the plan

• Current TRS 2 rate is 2.48%• Current SERS 2 rate 2.75%

Benefit Formula• 2% of Average Final Compensation (AFC) X # of years of service• No maximum benefit (Yipee )Uniform COLA• No gain-sharing distribution component• Annual COLA of 3% or rate of inflation (whichever is lower)

Plan 2 Example Reduced Benefits

Sam is 60 and has… • 35 Years of Service• $50,000 Average Final

Compensation (AFC)

Oops! Don’t forget Sam is 60… there is the 3% per year penalty for each year in advance of age 65 ($35,000 X 15% = $29,750) Poor Sam lost $5,250 a year!

Sam’s benefit is calculated as follows:• 35 Years of Service X 2% = 70% of AFC• 70% X $50,000 (AFC) = $35,000 as your Annual Benefit

Plan IIIQualifications for Normal Retirement• Minimum of 5 years of service + age 65• Must be age 65 to receive full benefits

Benefit Formula• 1% of Average Final Compensation (AFC)

X # of years of service• No maximum benefit (Yipee )

Uniform COLA• Gain-sharing distributions are included• Annual COLA of 3% or rate of inflation (whichever is lower)

Contribution RateContribution rates are fixed upon entrance between 5-15% of pay

Plan 3 Example Full Benefits

Tom is 65 and has… • 35 Years of Service• $50,000 Average Final Compensation (AFC)

To Match Plan 2: Retiree’s investment account must have $150,000 to purchase a Plan 2 equivalent annuity.

Tom’s benefit is calculated as follows:

• 35 Years of Service X 1% = 35% of AFC

• 35% X $50,000 (AFC) = $17,500 as your Annual Benefit

Comparisons to Other States• Rule of 75

Kansas plan B - New Mexico*

• Rule of 80 •Missouri, Texas, Arizona, Colorado**

• Rule of 85Indiana, Kansas plan A, West Virginia, Montana, Missouri, Nebraska,

North & South Dakota, Wyoming, New York

• Rule of 90 •Pennsylvania, Nevada, North Carolina, Vermont, Minnesota,

Oklahoma, Idaho

25 years of service – any age:

Mississippi, Connecticut, Maine, Alabama, Arkansas

New Mexico requires a minimum age of 60 to qualify for retirement.** Colorado requires a minimum age of 55 to qualify for full retirement.

Do we deserve the

Rule of 85?

Do we deserve a2.5% per year of service Defined benefit?

Do all members, active and retired, deserve an

annual cola?

Do we deserve a capped health care cost for

retirees?

Or is this going to beour retirement plan?

Washington State

Isn’t it Time to

TAKE THE LEAD?