160 likes | 176 Views
This article provides an overview of the Teachers' Retirement System (TRS) client base, financial condition, and investment performance. It also highlights recent legislation and retirement trends in America.
E N D
OREA ANNUAL CONVENTION October 3, 2018 Tom Spencer, Executive Director Teachers’ Retirement System
Client Overview(June 30, 2018) • Total Clients – 177,888 • 88,534 Active Clients • 63,796 Retired Clients (incl. beneficiaries) • 12,243 Inactive Vested Clients • 13,315 Inactive Non-vested Clients
Client Overview (FY 2017) • Average Active Client • $46,878 Salary • 46.0 Years of Age • 11.1 Years of Service • Average Retired Client • $20,908 Annual Benefit (regular ret’ees) • $20,443 (reg. & disab. ret’ees, benefic. & spouses)
Financial OverviewActuarial Condition • 2017 Funded Ratio • 70.4% on actuarial basis (65.7% in FY 2016) • 70.1% on a market value basis (62.2% in FY 2016) • Funding Period • 17 Years (23 years in FY 2016) *Board lowered investment return assumption from 8.0% to 7.5% for FY 2016 actuarial report
Financial Overview • FY-2018 Contributions - $1.07 Billion • Client Contributions - $312.8 M • Employer Contributions - $415.9 M • State Contributions (& grants) - $344.6 M • FY-2018 Expenditures - $1.4 B • Benefit Payments - $1.36 B • Refunds - $42.9 M • Administrative Expenses - $4.2 M *Ratio of Contrib. to Expenditures – 76.2%
Financial OverviewInvestments • FY-2018 Investment Earnings/Loss $1.49 Billion (10.00% rate of return) • Income: $417.5 M • Appreciation: - $1.14 B • Investment Expenses - $69.3 M
Financial OverviewInvestments • Positives in Recent TRS Performance (thru 6/30/18 • Earned 8.7% for last 10 years (1st percentile) • Earned 9.50% for last 5 years (5th percentile) • Earned 10.00% for last 12 mos. (9th percentile) • Long term returns good from active domestic equity managers and private equity. Very difficult to get returns from fixed income investments as interest rates rise. Source: Oklahoma State Pension Commission, NEPC Consultant
Financial OverviewInvestments • SUMMARY • System is underfunded but trending higher. Very good returns in last two fiscal years. • Funding period is 17 years down from infinity • Long-term financial performance is still very good • Contributions & Revenue almost equal Actuarially Determined Contributions
Legislation 2018 • HB 1340 (Rep. McDaniel, et al; Sen. Treat, et al)One-time stipend to members retired as of 10/1/13. Two percent of the gross benefit up to $1,000. Minimum $350 for those with at least 20 years. (Eff. 10/1/18). • HB 2553 (Rep. McDaniel; Sen. Pugh)TRS request bill. Section One - Permits the TRS Board to gradually wind down the TRS 403(b) plan. Transition to local plans. Section Two - TRS staff approves disability retirements after Medical Board approval. The TRS Board hears denials. Section Three – Eliminates a loophole in ESIP that a few higher education members had. (Eff. 8/2/18). • SB 527 (Sen. Stanislawski; Rep. McDaniel) Permits TRS members employed in higher education to purchase up to two years of service credit toward retirement at full actuarial cost, if within two years of retirement. (Eff. 11/1/18)
“Retirement in America:Out of Reach for Working Americans?”Nat’l Inst. on Retirement Security Nearly 60% of the 100 million working Americans have no retirement account assets Typical worker with retirement account has a balance of $40,000 68.3% of those between ages 55 to 64 have retirement savings less than their annual income Some states are offering retirement savings plans to their residents. (California, Oregon, Washington & Illinois) (President Trump issued executive order (8/31/18) for U.S. Labor Department to look at relaxing regulations to permit employers to create multi-employer plans to hold down costs)
Tom Spencer Executive Director (405) 521-4745