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TRS vs. ORP What HR Liaisons Should Know

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

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TRS vs. ORP What HR Liaisons Should Know

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  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• Receive monthly annuity upon reaching retirement criteria • Retirement criteria contingent on various factors • A withdrawn account ONLY receives employee contributions and NOT the employer contributions.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/

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