Dixie L Moody Director of Client Services Plan

Dixie L. Moody Director of Client Services Plan for Tomorrow - Today

Outline System Overview n Defined Benefit Plan n Funding /Contributions to Member Account n Retirement Eligibility n Retirement Benefit Formula n Retirement Plans /Partial Lump Sum Option n Preparing for Retirement n Post Retirement Employment n Questions n 1

Retirement System Overview n Largest State Pension Fund n n Average Active Member n n Established July 1, 1943 175, 000 members $16. 4 billion assets 46 Years of Age 11. 0 Years of Service $46, 819 Salary Average Retired Member n n Retires with 25 Years of Service $20, 242 Annual Benefit ($1, 687 per mo. ) 2

Retirement System Overview Defined Benefit Plan n Defined Benefit Plan 401(a) Government & Public Sector Employees n Retirement benefit is guaranteed for your lifetime; possibly the lifetime of your joint annuitant n Retirement benefit you receive based on a formula n Benefit is independent of contributions and investment returns n Plan Sponsor bears all risks: longevity, inflation, investment, etc. n 3

Retirement System Overview How Is TRS Funded Funding Source: Member Contributions (7% of Total Compensation) Employer Contributions Dedicated State Revenue Investment Income Account: Member Account Retirement Benefit Fund 4

Member Account What You Need to Know n What happens to the money in my retirement account if I should die while actively contributing to the System? Contributions + Accrued Interest n $18, 000 Death Benefit n Designated Beneficiary(ies) n n Is your beneficiary designation up to date? Website: Forms – Personal Data Form 1 A n Registration Desk n 5

Retirement Eligibility When do I qualify? 6

Retirement Eligibility When do I qualify? Rule of 80 Rule of 90 Entry Date Eligibility Prior to July 1, 1992 – October 31, 2011 Age + Service = 80 Age + Service = 90 or or Age 62 + 5 Years 7

Retirement Eligibility When Do I Qualify? Rule of 90 / Minimum Age 60 Entry Date Eligibility (with unreduced benefit) With Unreduced Benefit On or After November 1, 2011 Age + Service = 90 Minimum Age 60 Age 65 + 5 Years 8

Retirement Eligibility When Do I Qualify? Rule of 90 / Minimum Age 60 Entry Date On or After November 1, 2017 Eligibility Age + Service = 90 Minimum Age 60 (with unreduced benefit) With Unreduced Benefit Age 65 + 7 Years 9

Retirement Eligibility (Under Rule of 80 or 90) n Early Retirement Ages 55 – 61 n Must be vested in System n 5 Years contributory Oklahoma service n NOT age 62 nor eligible under rule of 80 or 90 n 11

Retirement Eligibility (Under Rule of 80 or 90) Early Retirement Adjustment Factors Age % of Reduction 55 48. 0 56 43. 0 57 38. 0 58 32. 0 59 25. 0 60 18. 0 61 9. 0 12

Retirement Eligibility (Rule of 90/Minimum Age 60) n Early Retirement Ages 60 - 64 n Must be vested in System n 5 or 7 Years contributory Oklahoma service n NOT age 65 nor eligible under rule of 90/Minimum Age 60 n 13

Retirement Eligibility (Rule of 90/Minimum Age 60) Early Retirement Adjustment Factors Age % of Reduction 60 35. 00 61 27. 00 62 20. 00 63 14. 00 64 7. 00 65 0. 00 14

Retirement Benefit Formula How is my benefit calculated? 15

Retirement Benefit Formula How is my benefit calculated? n Final Average Salary n Rule of 80 n Highest n 3 Salaries Earned During Career Rule of 90 n Highest 5 Salaries Earned Consecutively During Career n Rule of 90 / Minimum Age 60 n Highest 5 Salaries Earned Consecutively During Career 16

Retirement Benefit Formula How is my benefit calculated? n Basic Formula n n Final Average Salary x 2% x Years of Service Prior to July 1, 1995 Contributions were paid on max salary of either $25, 000 or $40, 000 n Those years are capped n n Results in a Two-Tiered Benefit Calculation n Salary caps removed July 1, 1995 17

Retirement Formula Benefit Calculation Tiers Tier 1 Tier 2 (Capped Years of Service) (Uncapped Years of Service) Years Salary Base Benefit To June 30, 1995 Up to $25, 000 or $40, 000 FAS x 2% x Years of Service through June 30, 1995 Since July 1, 1995 Total Compensation FAS x 2% x Years of Service since July 1, 1995 Add capped benefit amount & uncapped benefit amount to determine total benefit. *Will be different for Higher Ed employees. 18

Retirement Formula Benefit Calculation Tiers Tier 1 Tier 2 (Years Capped Salary) Prior to July 1, 1995 (Years Uncapped Salary) After July 1, 1995 Years 10 20 Salary Base FAS = $40, 000 FAS = $50, 000 Benefit $40 K x 2% = $800 $50 K x 2% = $1, 000 $800 x 10 = $8, 000/12= $1, 000 x 20 = $20 K/12 = $667 per month $1, 667 per month $667 + $1, 667 = $2, 334 per month / $28, 008 annual benefit 19

Education Employees Service Incentive Plan (EESIP) EESIP also known as Wear-Away n Converts Capped Years of Service to Uncapped n n Must reach full retirement eligibility n Rule n of 80, 90 or Age 62 Each additional year worked beyond eligibility n Moves 2 years from Capped Salary Benefit Calculation (Tier 1) to Uncapped Salary Benefit Calculation (Tier 2) n EESIP can increase benefit significantly 20

EESIP Calculation After Conversion of Capped Years Example: 10 Yrs Capped & 20 Yrs Uncapped Work 5 additional years = Uncapped 10 Years 35 Years Uncapped FAS $50, 000 X 2% = $1, 000 x 35 years = $35, 000 annually $2, 917 monthly ($2, 334 with salary caps in place) 21

Retirement Plans 5 Options n Each Provides Lifetime monthly income to member n $5, 000 Death Benefit n n Payable to designated beneficiary(ies) n Not Life Insurance n Taxable Income n Please keep beneficiary designation updated 22

Retirement Plans n Maximum Plan n Lifetime Benefit for Member n Single Life Annuity n Highest Monthly Benefit Amount n Member Account balance reduced each month by monthly benefit payment n Any Balance in Member Account upon member’s death is paid to Beneficiary(ies) or Estate n Account balance generally exhausted after 2 years 23

Retirement Plans n Retirement Option 1 n Lifetime Benefit for Member n 99. 0% of Maximum Benefit n Slower use of Member Account to pay benefits n Any Balance in Member Account upon member’s death is paid to Beneficiary(ies) or Estate n Account balance generally exhausted after 10 years 24

Retirement Plans n Retirement Option 2 n Lifetime Benefit for Member n Member designates Joint Annuitant at retirement n Must be spouse or someone who is within 10 years of age n 100% n Survivor Annuity After Member’s death Joint Annuitant continues to receive same benefit as Member n 85%-95% of Maximum Benefit n Pop-up Provision 25

Retirement Plans n Retirement Option 3 n Lifetime Benefit for Member n Member designates Joint Annuitant at retirement n 50% Survivor Annuity n After Member’s death Joint Annuitant continues to receive one-half (50%) the Member’s benefit n 91%-97% of Maximum Benefit n Pop-up Provision 26

Retirement Plans n Retirement Option 4 n Lifetime Benefit for Member n Single Life Annuity / 10 Year Term Certain n Guarantees Member’s full benefit for 120 months n If Member dies within 120 month of retirement, Beneficiary continues to receive the Member’s full benefit until the 120 th month after retirement n 96%-99% of Maximum Benefit 27

Partial Lump Sum Option (PLSO) n To Qualify: n n Allows Member to Elect Lump Sum n n Must have 30 Years of Service Equal to 12, 24, or 36 months of Retirement Benefit Payments Reduces the Monthly Retirement Benefit associated with the 5 Retirement Plans n Reduction based on Age and PLSO option 28

Partial Lump Sum Option Adjustment Factors Age 12 Months 24 Months 36 Months 50 91. 44% 82. 88% 74. 32% 55 91. 06% 82. 12% 73. 17% 60 90. 50% 80. 74% 71. 52% 65 89. 72% 79. 45% 69. 18% 70 88. 62% 77. 23% 65. 85% 75 86. 96% 73. 93% 60. 89% 29

Preparing for Retirement q Step 1 - Complete and return: Pre-Retirement Information Verification (PIV) along with all required documentation q Registration Desk q Online @ www. ok. gov/trs q Contact the Oklahoma Teachers Retirement System q q 405. 521. 2387 q 1. 877. 738. 6365 30

Preparing for Retirement q Step 1 – PIV q The Following Information is Required q Your name and complete mailing address q Your Social Security Number q Proof of Birth for Joint Annuitant (if necessary) q Marriage License q Requested Retirement Date q Sick Days (Verification Required for 120 days) q Must be received no later than 90 days before requested retirement date 31

Preparing for Retirement n Unused Sick Leave Days at Retirement 120 days verified = 1 year of service credit n Anything less than 120 days = fractional year of service credit n n Example: n 60 days / 120 days = 0. 50 year of service credit 32

Preparing for Retirement Step 2 – Application to Retire 36

Preparing for Retirement q Step 3 – Complete the Application to Retire q Decide which Retirement Plan is best for you q Sign and Date q Return to the Oklahoma Teachers Retirement System no later than 60 days before your effective retirement date (state law) q Schedule an in-house or phone consult 37

Preparing for Retirement q Step 4 – Final Retirement Contract q After receipt of Application to Retire, a Final Retirement Contract will be mailed q Sign, date and have it notarized q Return the Contract at least 30 days prior to your retirement 38

Preparing for Retirement q Retirement Timelines q Retirement Timeline Example – June 1 Submit PIV March 1 Submit Intent to Retire Submit Contract Effective Retirement Date First Retirement Check April 1 May 1 June 1 July 1 39

Preparing for Retirement q Contract Changes for Plan Options 1 – 4 must occur within 60 days of effective date of retirement. However, you may not change your retirement date, or your joint annuitant. 40

Preparing for Retirement q Step 5 – Relax and Enjoy a Well Earned Retirement 41

Post-Retirement Employment n Earnings Limits apply to Oklahoma Teachers Retirement System Contributory Employment: Oklahoma Public Schools (K-12 & Higher Ed) n Other Reporting Entities n n Oklahoma State Department of Education n Oklahoma Regents for Higher Education n Oklahoma Teachers Retirement System n Must be Retired for at least 60 Calendar 42

Post-Retirement Employment n If Retired Less than 36 Months: n Prior to Age 62 n May Earn the Lesser of $15, 000 or One-half of Final Average Salary n Age 62 to and over n May Earn the Lesser of $30, 000 or One-half of Final Average Salary Earnings are Pro-rated by calendar year n If Retired More than 36 Months: n n No Earnings Limit 43

Noteworthy n November 1, 2017 n n Retiree One-time Stipend (HB 1340) n n 7 Years of Service to Vest October Client Portal (www. ok. gov/TRS) n Log on today! n Account Balance n Years of Service n Salary History n Retirement Projection 44

Question & Answer I will do my very best to address all of your questions. n www. ok. gov/trs n n Related Topics n PIV Form n Retirement Presentation n Client Portal – My OTRS 45