Tacoma Employees’ Retirement System

1. Tacoma Employees’ Retirement System Tacoma Employees’ Retirement System Your TERS Benefit Retirement Planning

2. Disclaimer • This presentation is a summarized description of the plan, and does not fully capture all the details and exceptions • Please see the Tacoma Municipal Code - Chapter 1.30 on Retirement and Pensions for a full review of the ordinances • TERS does not provide professional investment, tax or legal advice

3. Most Common Questions • When can/should I retire? • How can I estimate how much my monthly benefit will be? • Should I purchase “extra” years to increase my monthly benefit? • Which option should I choose?

4. Tacoma Employees’ Retirement System • Provides a Defined Benefit at retirement, typically based on member’s final average salary and the number of Membership years in the plan • 3000 active members, 2000 retired members

5. employer contributions $ $ $ investments $ $ $ $ $ $ $ $ $ $ $ $ $ Assets $ $ $ $ $ $ PENSION FUND employeecontributions $ $ $ $ $ $ $ expenses $ $ benefits Defined Benefit Funding Principles Ultimately:Contributions + Investment Earnings= Benefit Payments + Expenses

6. TERS Contribution Rates (as a percent of pay) Note: Long-standing ratio of employer to employee contributions is 54% / 46%

7. Estimating Your Monthly Benefit • You can use the NEW user friendly web calculator to get a rough estimate • If you are within 6 months of retirement, TERS staff will provide you a more accurate estimate • Request an application for retirement, final estimate and one-on-one counseling 60 days prior to retirement

8. How is the Benefit Calculated? Service Retirement, based on highest 24 month salary and years of service and a factor OR Accumulated Normal Contributions, using an annuity factor based on your age at retirement You will receive the higher of these two benefits

9. Sample Calculation ServiceRetirement Unmodified benefit for a 30 year member Formula 30 years x 2% = 60% 60% x highest 24 month average salary = monthly benefit payment Example 60% x $5,000 = $3,000/month

10. Retirement Eligibility Full Benefit AGE 60, ANY NUMBER OF YEARS OF SERVICE (full benefit – 2% factor) ANY AGE, 30 YEARS OF SERVICE (full benefit – 2% factor) RULE OF 80 (AGE + YEARS OF SERVICE = 80) (full benefit – 2% factor) Reduced Benefit AGE 55 OR OLDER, 10 YEARS OF SERVICE (reduced benefit – see Table) AGE 40 OR OLDER, 20 YEARS OF SERVICE (reduced benefit – see Table)

11. Factor Table

12. Other factors affecting the benefit • Retirement Option Chosen • Purchase of Time • Portability • Social Security Modification

13. Retirement Options 13

14. Purchase of Time Individuals may purchase up to 5 years of service, provided the member is vested (five or more years) and that no purchase shall exceed a total of 30 credited years. Benefits of purchasing additional service: Increase retirement benefit Ability to retire earlier Increases your base for cost of living adjustments Payments shall be made in a lump sum via: A direct trustee-to-trustee transfer from a qualified 457 or 403 (b) plan A direct rollover from an Individual Retirement Account (IRA) qualified under Internal Revenue Code Section 408 Personal check ( on an after tax basis) Purchase of time must be made at the time of retirement upon completing application. 14

15. Portability What is portability? Portability refers to retirement service that can be utilized in conjunction with another retirement system (Dual Membership).

16. Portability (Continued) • Systems included: • TRS, PERS, PSERS, SERS, SCERS, WSPRS, LEOFF II, SEATTLE, SPOKANE & TACOMA • Service Requirement • Must be met for each system • Average Final Salary • Highest base salary will be used for all calculations • Retirement Eligibility • Years of service under portability may be used for purposes of eligibility and benefit formula 16

17. Portability (Continued) For example: Sam, who is age 55, has 20 years of service and a salary of $40K a year with the City. He also has 5 years of service and had a salary of $30K a year with his prior employment with the State. What kind of retirement benefit is he eligible for under each retirement system?

18. Social Security Modification • A member retiring from service, who has not reached the age of 62, may elect to receive an additional pension allowance that will continue until he or she reaches the age of 62. • At age 62, the member’s pension will be permanently reduced by an amount that is the actuarial equivalent of the additional pension paid the member. • If the member dies leaving a beneficiary entitled to an allowance, the allowance shall be the same as the beneficiary would have received had the member not selected this modification.

19. Pension Calculator The pension calculator will allow you to calculate estimated retirement benefits and the cost of purchasing additional time. The Pension Calculator is located under Member Tools/Pension Calculator on the our website at: www.cityoftacoma.org/ters 19

20. TERS Retirement Calculator

21. Password Instructions • Default Username is your six digit Employee # • Default Password is first five characters of your last name, followed by first two letters of your first name, followed by eight digit birth date (mmddyyyy) • Use “*” if your last name is fewer than 5 characters

22. Calculator Password Examples Example 1Name: Sally DayDate of Birth: 9/3/1962Default password: day**sa09031962 Example 2Name: Gregory Lee-JohnsonDate of Birth: 3/4/1956Default password: lee-jgr03041956

23. Legal Disclaimer

24. Password Change Screen

25. Initial Screen

26. Basic Information Screen

27. Contributions Screen

28. Service and Salary Screen

29. Benefit Elections Screen

30. Results Screen – Part 1 of 6

31. Results Screen – Part 2 of 6

32. Results Screen – Part 3 of 6

33. Results Screen – Part 4 of 6

34. Results Screen – Part 5 of 6

35. Results Screen – Part 6 of 6

36. Cost of Living Adjustment (COLA) Post Retirement income adjustments • Annual change up to 2.125% (based on Seattle CPI) • Effective July 1 after first full year of retirement, and every July 1 thereafter • Floor of 50% of purchasing power

37. Termination of Employment • Less than 5 years: - Lump sum equal to refund of your contributions plus interest on accumulated normal benefit contributions OR • 5 years or more (vested): - Lump sum equal to your contributions, plus interest on accumulated normal benefit contributions plus an additional 50% of accumulated normal contributions plus interest - Option to defer retirement to age 60 Withdrawals are taxable unless rolled directly to an Individual Retirement Account (IRA) or qualified plan.

38. Contact and Website Information Other Public Retirement Systems WA State – Department of Retirement Systems Toll Free 1-800-547-6657 or (360) 664-7000 Website http://www.drs.wa.gov Seattle City Employees’ Retirement System Ph: (206) 386-1293 Website http://www.seattle.gov/retirement Spokane Employees’ Retirement System Ph: (509) 625-6330 Website http://www.spokanecity.org/departments 38

39. Contact Information OFFICE LOCATION Tacoma Public Utilities Administration Building North, Ground Floor 3628 South 35th Street, Tacoma 98409 Ph: (253) 502-8200 Fax: (253) 502-8660 Toll Free (888) 404-3787 Email: TERSretirement@cityoftacoma.org Website: http://www.cityoftacoma.org/ters 39