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What the TDC to TRS Pension Transfer Means to You! Presented by WVSSPA & AFT-WV

What the TDC to TRS Pension Transfer Means to You! Presented by WVSSPA & AFT-WV. Why is the Selection Important?.

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What the TDC to TRS Pension Transfer Means to You! Presented by WVSSPA & AFT-WV

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  1. What the TDC to TRS Pension Transfer Means to You!Presented by WVSSPA & AFT-WV

  2. Why is the Selection Important? Because there are major design and structure differences between the TDC (new plan) and the TRS (old plan) and your selection will ultimately determine how well you live when you retire

  3. Outline of TDC plan • State contributes 7.5% • Employee contributes 4.5% • The amount of funds at retirement is based on contributions and market performance • Employee assumes all risk • 4.59% average rate of return last 7 years

  4. Outline of TRS plan • State contributes 7.5% • Employee contributes 6% • Retirement is based on formula • Years of Service X 2% X AFS • State assumes all risk • 7.74% average rate of return last 7 years

  5. TDC (new plan) TRS (old plan) Major Design Differences between TDC (new plan) and TRS (old plan)

  6. Major Design Differences between TDC (new plan) & TRS (old plan)

  7. First Question - Can You Afford to Retire?TDC (new plan) vs. TRS (old plan) Benefits • The new plan projections are based on SPIA rates and are not guaranteed.

  8. First Question - Can You Afford to Retire? TDC (new plan) vs. TRS (old plan) Benefits • The new plan projections are based on SPIA rates and are not guaranteed.

  9. First Question - Can You Afford to Retire? TDC (new plan) vs. TRS (old plan) Benefits • The new plan projections are based on SPIA rates and are not guaranteed.

  10. First Question - Can You Afford to Retire? TDC (new plan) vs. TRS (old plan) Benefits • The new plan projections are based on SPIA rates and are not guaranteed.

  11. Selection Process - Two Thresholds • If at least 65% but less than 74.9% of the TDC (new plan) members elect to transfer to TRS (old plan), then the transferring employee will retain 75% of their service credit after moving to the old plan.  • Transferring employees will have the option to purchase the remaining 25% of their service credit by paying the actuarial value reserve (the short definition is the remaining 25% of service credit you will receive in future benefits calculated to today’s dollars).

  12. Selection Process- Two Thresholds • If 75% or more of the TDC (new plan) members elect to transfer to TRS (old plan), then the transferring employee will retain 75% of their service credit after moving to the old plan.  • Transferring employees will have the option to purchase the remaining 25% of their service credit by paying the contribution difference (1.5%) plus 4% interest (computation based on salary for every year of service in the new plan). 

  13. Service Purchase Examples 65% through 74.9% ThresholdEstimated Actuarial Reserve • SalaryService YearsEstimated BuybackAge • $50,000 15 $27,328 50 • $40,000 10 $9,846 40 • $40,000 5 $4,923 40 • $30,000 5 $2,494 30 • $20,000 15 $10,931 50 • $20,000 10 $4,923 40

  14. Service Purchase Examples 75% Threshold1.5% Makeup Contribution for Remaining 25% Service Credit with 4% Interest • SalaryService YearsEstimated Buyback • $50,000 15 $11,843 • $40,000 15 $9,475 • $30,000 15 $7,106 • $20,000 15 $4,737 • $50,000 10 $7,727 • $40,000 10 $6,177 • $30,000 10 $4,633 • $20,000 10 $3,089

  15. Service Purchase Examples 75% Threshold1.5% Makeup Contribution for Remaining 25% Service Credit with 4% Interest • SalaryService YearsEstimated Buyback • $50,000 5 $3,776 • $40,000 5 $3,021 • $30,000 5 $2,226 • $20,000 5 $1,510 • $50,000 3 $2,246 • $40,000 3 $1,797 • $30,000 3 $1,347 • $20,000 3 $898

  16. Contribution Difference • 4.5% (new) versus 6.0% (old) • HB 101 allows “make-up” provision • With a transfer, participants have the option to “make-up” the contribution difference or have TDC service credit reduced by 25% (choice is yours)

  17. Ways to “make-up” difference • Roll over $ from any supplemental retirement account (e.g. IRA, 403 (b), 401 (k), 457), not including TDC • Take a loan from TRS and pay 7.5% interest (based on legislative language) • Take a loan from a credit union or bank and pay applicable interest • Transfer unused sick days upon retirement to increase retirement benefit

  18. The 25% Difference

  19. Education/Selection Takes Place April 1 Through May 12 • The education/selection period will take place between April 1st and May 12th. • Time will be set aside during work hours on May 5th for school employees to make selection. • If selection is completed through the mail, submission must be postmarked by May 12th. • Selection documents may be provided to a supervisor on or before May 9th. • Between May 6th -9th, the supervisor shall make every effort to verbally contact TDC participants to remind them of the deadlines.

  20. Selection Process • Selection outcome will be reported by June 5th, 2008 by the Retirement Board. • Employees will be required to work at least one hour after July 1, 2008 in order to retire with benefits from TRS. • Employees will be required to make a contribution to CPRB on or after July 1, 2008 to become eligible to retire on September 1, 2008. • Employees must notify their employer by July 1st of their intent to retire.

  21. Education Campaign • Active TDC (new plan) participants will receive the following information: • Projected account balance if he or she retires at age sixty and age sixty-five; • Account balance needed to purchase a certain monthly annuity under the TDC; • The monthly annuity that the member would receive under TRS (old plan) • A summary to include his or her most recent account balance; • Information booths will be set up at each work site and attended by trained employees, whenever possible.

  22. Education Campaign (cont.) • The TRS benefit (old plan) if the member chooses to purchase the full service credit and retire at age sixty; • The monthly annuity under the TRS (old plan) if the participant chooses not to purchase the full service credit and retires at age sixty and age sixty-five. • The potential cost to the member of purchasing the Actuarial Reserve or the one and one-half percent contribution plus interest, whichever the case may be.

  23. Education Campaign (cont.) • Education efforts will be conducted through: • CPRB/Buck Consultants website, • Computer programs, • Written and/or electronic materials, • At the discretion of the board, through a program of individual counseling which is optional on the part of the member; • Classes and Seminars will be conducted at the school or worksite and can be held during work time if it does not conflict with instructional activities (e.g., Faculty Senate days). • CPRB/Consultant will conduct a training session during the work day for a minimum of 60 minutes.

  24. Information Sites and Sources • www.aftwv.org (1-800-222-9838) • www.wvretirement.com (1-866-413-3985) • www.benefitmodeling.com/wv/chooseyourplan

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