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YEA – HA RETIREMENT

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

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YEA – HA RETIREMENT

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  1. YEA – HA RETIREMENT

  2. 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?

  3. 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

  4. What is Gain-Sharingand 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.

  5. Gain Sharing Can you afford not to have IT?

  6. Retirement • Review of Plans 1-3

  7. 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 Contribution Rate Fixed 6% member contribution rate (regardless of plan costs) • 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 • Uniform COLA • Is not based on inflation, but includes gain-sharing distributions • Is only provided for retirees over age 66

  8. 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

  9. Plan II Qualifications for Normal Retirement • Minimum of 5 years of service + age 65 • Must be age 65 to receive full benefits • Contribution Rate • Contribution 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)

  10. Plan 2 Example Reduced Benefits Sam is 60 and has… • 35 Years of Service • $50,000 Average Final Compensation (AFC) • 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 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!

  11. Plan III Qualifications for Normal Retirement • Minimum of 5 years of service + age 65 • Must be age 65 to receive full benefits Contribution Rate Contribution rates are fixed upon entrance between 5-15% of pay • 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)

  12. Plan 3 Example Full Benefits Tom is 65 and has… • 35 Years of Service • $50,000 Average Final Compensation (AFC) • 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 To Match Plan 2:Retiree’s investment account must have $150,000 to purchase a Plan 2 equivalent annuity.

  13. Comparisons to Other States • Rule of 75 Kansas plan B - New Mexico* • Rule of 80 • Missouri, Texas, Arizona, Colorado** • Rule of 85 • Indiana, 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.

  14. Do we deserve the Rule of 85?

  15. Do we deserve a 2.5% per year of service Defined benefit?

  16. Do all members, active and retired, deserve an annual cola?

  17. Do we deserve a capped health care cost for retirees?

  18. Or is this going to beour retirement plan?

  19. Washington State Isn’t it Time to TAKE THE LEAD?

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