TRS vs. ORP What HR Liaisons Should Know

1. TRS vs. ORP What HR Liaisons Should Know June 27, 2013

2. Overview • Basics of Teachers Retirement System (TRS) vs. Optional Retirement Program (ORP) • ORP Notification Process • ORP Election/Enrollment Process • HR Liaison – Your Role • TRS Legislative Update

3. TRS Basics • TRS eligibility is working 50% for 4.5 months during the fiscal year (FY) • Excludes Student Titles • Automatic enrollment on date of hire/eligibility • Current employee contribution is 6.4% • Vested at 5 years TRS service credit • Service credit earned for 90 working days each FY

4. TRS Basics Continued • Defined benefit plan • Receive monthly annuity upon reaching retirement criteria • Retirement criteria contingent on various factors • A withdrawn account ONLY receives employee contributions and NOT the employer contributions.

5. ORP Basics • Requires ORP eligible title • Requires 100% effort for at least 4.5 months • One-time irrevocable decision • Vested at 1 year, 1 day from ORP participation date (not hire or eligibility date) • Requires enrollment forms to elect ORP in lieu of TRS • Defined contribution plan

6. ORP Notification Process • Benefits Services receives weekly report of potential ORP eligibility based on employment data in BPP after EPA completes • Benefits Services verifies ORP eligibility • Benefit Services sends ORP packet to eligible employees

7. ORP Election/Enrollment Process • Employee choosing to elect ORP must: • select ORP vendor and complete the vendor application forms • complete forms in the ORP packet including the TRS 28 Notice of Election to Participate in Optional Retirement Program • Submit completed forms to Payroll Services • Must be completed within 90-day election window

8. HR Liaison – Your Role • Refer employees to Benefit Services • Process EPA documents timely • Impacts enrollment window • Impacts payroll deductions • Work with Benefits Services for special situations or early notifications • Enter accurate appointment term especially during summer

9. TRS Legislation • TRS must address unfunded liability • Ordered to conduct a comprehensive study • Evaluated many options including: • Increase minimum age from 60 to 62 • Increase average salaries from 5 to 7 • Change benefit calculator from 2.3% to 2.0% • Change member contribution rate

10. TRS Legislation Passed • SB1458 and HB1884 passed during legislative session • Effective September 1,2014 • Changes impact several key areas • Changes to eligibility criteria effect those who do not have 5 years with TRS as of 9/1/2014 • Does notimpact the retirement eligibility rules for Texas A&M University System retiree status

11. TRS Legislation – Key Changes • Decreases the interest rate from 5% to 2% • Increases the minimum age for full, normal age (unreduced annuity) retirement from 60 to 62 for “non-grandfathered” • Adjusts the employee contribution rate in phases: • Remains 6.4% for FY14 • 6.7% for FY15 • 7.2% for FY16 • 7.7% for FY17

12. TRS Legislation – Key Changes FY14 FY15 FY16 FY17 Amount of annual employee TRS member contribution based on annual salary of $40,000.00.

13. Final Thoughts • Timely and accurate processing of EPA is critical • Strict timelines apply and timing of the ORP election has consequences for the employee • TRS Legislative changes passed recently • Effective September 1, 2014 • Grandfathered with 5 years of TRS service credit • HR Liaisons play an important role in the process; please help HR by forwarding information found in HR Liaison Network News

14. How may we help you? Judy Kurtz Retirement Specialist 979-862-4028 jkurtz@tamu.edu Sarah Tobola Employee Benefits Manager 979-862-4956 S-tobola@tamu.edu Resources: http://employees.tamu.edu/employees/benefits/