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NYSTRS A Defined Benefit Plan

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NYSTRS A Defined Benefit Plan

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    1. NYSTRS – A Defined Benefit Plan By Michael R. Corn Teacher Member to the Board NYSTRS’ 2006 Annual Delegates Meeting

    2. Pension – Defined Benefit Plan Employer assumes risk of investments. Offers disability and death benefits. Credits prior service. No benefit entitlement until vested. Retirement benefit based on final average salary at retirement. Easy to plan for retirement.

    3. Pension – Defined Benefit Plan (continued) Potential for supplemental benefits after retirement. Limited portability. Favors long-service employees. Guaranteed lifetime income in retirement.

    4. State of New York Constitution Article V, §7 {Membership in retirement systems; benefits not to be diminished nor impaired.} §7. After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired. (New Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.)

    5. New York State Teachers’ Retirement System Funding Sources: Employee Contributions (3% for Tiers 3 and 4) Investment Income Employer Contribution Rate (ECR)

    6. ECR - The Last 30 Years ‘77 -’78: 20.40% ‘87 -’88: 16.83% ‘97 -’98: 1.25% ‘78 -’79: 21.40% ‘88 -’89: 14.79% ‘98 -’99: 1.42% ‘79 -’80: 22.49% ‘89 -’90: 6.87% ‘99 -’00: 1.43% ‘80 -’81: 23.49% ‘90 -’91: 6.84% ‘00 -’01: 0.43% ‘81 -’82: 23.49% ‘91 -’92: 6.64% ‘01 -’02: 0.36% ‘82 -’83: 23.49% ‘92 -’93: 8.00% ‘02 -’03: 0.36% ‘83 -’84: 22.90% ‘93 -’94: 8.41% ‘03 -’04: 2.52% ‘84 -’85: 22.80% ‘94 -’95: 7.24% ‘04 -’05: 5.63% ‘85 -’86: 21.40% ‘95 -’96: 6.37% ‘05 -’06: 7.97% ‘86 -’87: 18.80% ‘96 -’97: 3.57% ‘06 -’07: 8.60% Slide #12 - Here are the ECR’s over the last 20 years. Both the highest and lowest ECR’s in the 77 year history of the Retirement System have been set during this 20 year period. The ECR was much higher in the early ‘80’s. This is primarily because the full brunt of the cost impact of the major benefit improvements of 1970, such as the career plan and three-year FAS, was being felt. Additionally the rates of return on the capital markets during the ‘70’s was less than stellar. The rate has steadily declined since then, however, and has been in the single digits for the last ten years.Slide #12 - Here are the ECR’s over the last 20 years. Both the highest and lowest ECR’s in the 77 year history of the Retirement System have been set during this 20 year period. The ECR was much higher in the early ‘80’s. This is primarily because the full brunt of the cost impact of the major benefit improvements of 1970, such as the career plan and three-year FAS, was being felt. Additionally the rates of return on the capital markets during the ‘70’s was less than stellar. The rate has steadily declined since then, however, and has been in the single digits for the last ten years.

    7. 5-Yr. Average Rate of Return at 6/30/06 Market Value ’01 -’02 -6.8% ’02 -’03 4.0% ’03 -’04 16.1% ’04 -’05 10.6% ’05 -’06 11.8% 5-yr: 6.8%

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