1 / 35

State Universities Retirement System

State Universities Retirement System. Pension Reform (PA98-599). PensionReform– 03.06.14. IMPORTANT. The following information is for informational purposes only Uncertainties regarding PA98-599 (pension reform/SB1) still exist

ethel
Download Presentation

State Universities Retirement System

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. StateUniversities Retirement System Pension Reform (PA98-599) PensionReform– 03.06.14 Serving Employees of Illinois Community Colleges and Universities

  2. IMPORTANT Serving Employees of Illinois Community Colleges and Universities • The following information is for informational purposes only • Uncertainties regarding PA98-599 (pension reform/SB1) still exist • Further legislation or the outcome of pending lawsuits could result in changes

  3. DISCLAIMER Serving Employees of Illinois Community Colleges and Universities On the advice of counsel, SURS is unable to provide specific advice about the implications of the new law with respect to individual situations. All responses to questions are the opinions of SURS staff and professionals and should not be considered definitive representations of SURS. All SURS responses to any questions, or comments from SURS, are subject to modification by a court interpretation of the applicable provisions of the newly enacted law.

  4. IMPORTANT • PA98-599 (Pension Reform/SB1) • Signed by Governor Quinn on December 5, 2013 • Changes primarily impact SURS members who are in Tier I • Tier I members are participants with SURS or another eligible Illinois retirement system who certified prior to 01/01/11. Serving Employees of Illinois Community Colleges and Universities

  5. CHANGES • Employee Contributions • Retirement Age Eligibility • Maximum Pensionable Earnings Cap • Effective Rate of Interest • Money Purchase Actuarial Changes • Automatic Annual Increase (AAI) • New Defined Contribution Plan • Funding Changes • Closed to new private employers as of June 1, 2014 Serving Employees of Illinois Community Colleges and Universities

  6. EMPLOYEE CONTRIBUTIONS Tier I • Effective date July 1, 2014 • Traditional & Portable Plans - 7% • 6% “normal” retirement • 1% survivor (Traditional) or portability (Portable) • Police/Firefighter -8.5% • 7.5% “normal” retirement • 1% survivor • Self-Managed Plan - 8% • No change Serving Employees of Illinois Community Colleges and Universities

  7. RETIREMENT AGE ELIGIBILITY Tier I Serving Employees of Illinois Community Colleges and Universities

  8. MAXIMUM PENSIONABLE EARNINGS Tier I • Effective June 1, 2014 • Greater of: • Adjusted Tier II earnings limitation • $110,631.26 for FY2015 • Annualized salary as of June 1, 2014 • SURS is using actual FY2014 earnings (07/01/13-06/30/14) • Includes overtime, overloads, and summer • Annualized salary immediately before the expiration, renewal, or amendment of a collective bargaining agreement in effect on June 1, 2014 Serving Employees of Illinois Community Colleges and Universities

  9. EFFECTIVE RATE OF INTEREST (ERI) Tier I & II • Tied to U.S. 30-yr. Treasury Bond rates plus 0.75% as of July 1, 2014 • U.S. 30-yr. Treasury Bond rate as of January 8, 2014 was 3.9% • Change will affect: • Actuarial Factors • Money Purchase Formula Calculations • Waivers • Refunds • Lump-Sum Retirements • Service Credit Purchases • Overpayments Serving Employees of Illinois Community Colleges and Universities

  10. MONEY PURCHASE ACTUARIAL CHANGES Tier I • Effective July 1, 2014 • Lower effective rate of interest (ERI) will result in changes to actuarial assumptions • Based on estimated changes to actuarial factors, approximate 20-30% decrease to Money Purchase calculation • SURS continues to calculate other formulas • SURS will pay the highest benefit Serving Employees of Illinois Community Colleges and Universities

  11. Tier I CURRENTFACTORS Serving Employees of Illinois Community Colleges and Universities

  12. Tier I FUTUREESTIMATED FACTORS Serving Employees of Illinois Community Colleges and Universities

  13. MINIMUM MONEY PURCHASE Tier I • Money purchase annuity will never be lower than the money purchase annuity the retiree would have received had he/she retired during the fiscal year preceding June 1, 2014 • Member must meet all eligibility requirements on or before June 30, 2013 • Unpaid sick leave and vacation not used in this calculation • Applies to the monthly annuity only • Does not apply to excess waivers due to maximum benefit Serving Employees of Illinois Community Colleges and Universities

  14. OTHER FORMULAS • SURS will also calculate all other applicable formulas: • General Formula • House Bill Minimum • Police/Firefighter • SURS will pay highest benefit to member Serving Employees of Illinois Community Colleges and Universities

  15. GENERAL FORMULA (2.2% Calculation) Serving Employees of Illinois Community Colleges and Universities

  16. Tier I FORMULA COMPARISON Serving Employees of Illinois Community Colleges and Universities

  17. AUTOMATIC ANNUAL INCREASE (AAI) Tier I • Applies to all Tier I members (current and future retirees) • First new increase effective January 1, 2015 • First increase is prorated based on the number of months retired • AAI skipping applies if retired on or after July 1, 2014 • Survivor and disability recipients AAI is unchanged Serving Employees of Illinois Community Colleges and Universities

  18. AAI CALCULATION Tier I • New AAI is 3% of the lesser of the following: • Total annual annuity (including any previous AAI), or • Total years of service x $1,000* • *Each year, starting January 1, 2016, $1,000 multiplier will be adjusted by the Consumer Price Index for Urban Consumers (CPI-U) Serving Employees of Illinois Community Colleges and Universities

  19. AAI EXAMPLE Tier I Annual retirement annuity on January 1, 2015, is $42,000 Years of service – 22.00 AAI calculation is lesser of the following: 22 years of service x $1,000 = $22,000 $22,000 x 3% = $660 annual increase OR $42,000 total annual annuity $42,000 x 3% = $1,260 annual increase Member’s annual increase would be $660.00 Serving Employees of Illinois Community Colleges and Universities

  20. AAI SKIPPING BASED ON AGE Tier I AAI skipping applies to all Tier I members who retire on or after July 1, 2014 Serving Employees of Illinois Community Colleges and Universities

  21. NEW DEFINED CONTRIBUTION PLAN Tier I • Many unknowns at this time; more details to be determined • Subject to IRS approval • Available for 5% of Tier I members who were active on June 1, 2014 • First-come-first-serve basis • New plan available no sooner than July 1, 2015 Serving Employees of Illinois Community Colleges and Universities

  22. NEW DEFINED CONTRIBUTION PLAN Tier I • Tier I member elects to “freeze” current defined benefit plan benefit accruals • Employee contributions credited to the new defined contribution account will be reduced to cover the “cost” of the plan • Cost of the plan will be shared among the participating members • Employer match will range from 3% to the normal cost of the defined benefit plans • State of Illinois will adjust the rate annually Serving Employees of Illinois Community Colleges and Universities

  23. VACATION & SICK LEAVE New employeeshired on or after June 1, 2014 • No vacation pay included in calculations • No unused/unpaid sick leave included as service credit Serving Employees of Illinois Community Colleges and Universities

  24. FUNDING CHANGES • PA98-599 incorporates funding changes that will allow the state to payoff 100% of the Unfunded Accrued Actuarial Liability (UAAL) by 2044 • Changes include, but not limited to: • State must make annual payments on time or SURS Board can sue • Retirement systems to receive two forms of supplemental payments until SURS is 100% funded • For more information regarding funding changes visit: • www.surs.org Serving Employees of Illinois Community Colleges and Universities

  25. FISCAL IMPACT • 30-year state contributions savings estimated to be $29.279 billion* (SURS only) • *This figure is based on a 12/20/2013 SURS actuarial study on the fiscal impact of PA98-599 Serving Employees of Illinois Community Colleges and Universities

  26. SEVERABILITY • The following are an inseverable block: • New AAI and AAI skipping • Employee contributions and employer funding • 10% Pension savings and pension stabilization fund • New defined contribution plan • New defined contribution plan-related provisions in the Retirement Systems Reciprocal Act • All other provisions are severable from the rest: • Retirement age delays • Maximum pensionable earnings cap • Effective rate of interest • Unused vacation/sick leave • Private employers

  27. EFFECTIVE DATES RECAP Official effective date of PA98-599 is June 1, 2014 • Effective June 1, 2014 • Pensionable earnings cap • No unused vacation or sick leave for new hires • No private employers • Effective July 1, 2014 • Effective rate of interest (ERI) • Employee contribution rate • Retirement age • Funding changes • Effective January 1, 2015 • New AAI starts but skipping applies to retirements on or after July 1, 2014 • Effective no earlier than July 1, 2015 • New defined contribution plan opens Serving Employees of Illinois Community Colleges and Universities

  28. EMPLOYMENT AFTER RETIREMENT • No changes with PA98-599 • No limitations for non SURS-covered employment • SURS-covered employment • 60-day waiting period • Earnings limitation • Before age 60, monthly limitation • Age 60+, annual limitation • Does not apply to Self-Managed Plan • Further employer restrictions may apply • Contact your employer for more information Serving Employees of Illinois Community Colleges and Universities

  29. RETIREMENT ESTIMATES • Eligibility • Must be eligible to retire before 07/01/14 • Limit one request per 12-month period • Type of Estimates • Written • Appointment • Due to unprecedented demand SURS is offering Group Counseling Sessions beginning March 21 • Individual counseling sessions are very limited at this time • Process • Complete retirement estimate form online, or • Contact SURS to initiate request • Submit completed form to SURS • Call SURS to schedule Serving Employees of Illinois Community Colleges and Universities

  30. BENEFIT SUMMARY STATEMENT: PAGE 1 Serving Employees of Illinois Community Colleges and Universities

  31. BENEFIT SUMMARY STATEMENT: PAGE 2 Serving Employees of Illinois Community Colleges and Universities

  32. BENEFIT SUMMARY STATEMENT: PROJECTED RETIREMENT ANNUITY Serving Employees of Illinois Community Colleges and Universities

  33. HOW TO CONTACT US SURS 1901 Fox Drive Champaign, IL 61820 (800) 275-7877 (217) 378-8800 www.surs.org Serving Employees of Illinois Community Colleges and Universities

  34. SURS WEBSITE Serving Employees of Illinois Community Colleges and Universities

  35. DISCLAIMER On the advice of counsel, SURS is unable to provide specific advice about the implications of the new law with respect to individual situations. All responses to questions are the opinions of SURS staff and professionals and should not be considered definitive representations of SURS. All SURS responses to any questions, or comments from SURS, are subject to modification by a court interpretation of the applicable provisions of the newly enacted law. Serving Employees of Illinois Community Colleges and Universities

More Related