TRS Funding and Pension Benefits GSSA Spring Bootstrap

TRS Funding and Pension Benefits GSSA Spring Bootstrap April 19, 2017 L. C. (Buster) Evans Executive Director

TRS FACTS Governed by Georgia Law Title 47 – Chapters 1, 3 and 20 Defined Benefit Plan Years of Creditable Service X 2% Multiplier X 2 -Year Final Avg. Salary = Maximum Plan Benefit COLA – 1. 5% each Jan. 1 st and July 1 st subject to CPI base As of March 1, 2017: 69. 4 Billion in Assets ( $3. 9 Billion Fiscal Y-T-D) Ranked 24 th largest retirement fund by Pensions & Investments 226, 930 (02/06/17 issue date) Actively Contributing Member Accounts 24, 870 (11%) Eligible to Retire (Normal and Early Retirement) 264, 028 Active Status Accounts 119, 467 Retired Members 2

TRS FACTS (continued) Fiscal Year 2015 -16 Median age of new members - 28 years Retirees with 25+ years of service: Average years of service - 30. 5 years Average at retirement – 58. 8 years Average benefit: $3, 209/month $38, 508/year $4. 2 billion - benefits paid Average benefit of all retirees: $3, 213/month or $38, 556/ year 7, 218 members retired 2, 329 retirees passed away 3

Funding Status $50. 3 Billion Present Value of Future Benefits Payable to Retired Members 42. 7 “ Present Value of Future Benefits Payable to Active Members 93. 0 “ Total Liabilities - 10. 2 “ Present Value of Future Contributions $82. 8 “ Actuarial Accrued Liability $65. 5 “ Actuarial Value of Assets ($17. 3) “ Unfunded Actuarial Accrued Liabilities 79. 1% Funded as of June 30, 2015 4 Data Based on June 30, 2015 Actuarial Valuation

Sources of Funding for Fund Sustainability Contribution rates are determined by the Board of Trustees in accordance with Georgia law. Employee Contributions - 6% O. C. G. A. § 47 -3 -41 5% Minimum – 6% Maximum Employer Contributions O. C. G. A. § 47 -3 -43 based on System’s liabilities as shown by actuarial valuation FY 2017 – 14. 27% FY 2018 – 16. 81% Investment Earnings 7. 50 % Assumed Rate of Return 5

Employer Contributions Include Base Salary and T&E for State Earned Positions Other Considerations Positions Paid with Federal Funds May Debit the Federal Fund Categories Provided Funds Are Available Employers Would Be Picking Up The Employer Cost for Positions Above QBE Earnings and the Amounts of the Local Teaching/Responsibility Supplements Paid By the Employers Impacted the Least Will be Those With Fewer Positions Above the State Earnings and With No or Lower Supplements Paid 6

Contribution Rates Fiscal Year Employer Rate Employee Rate 1980 10. 51 6 2000 11. 29 5 1981 11. 11 6 2001 11. 29 5 1982 11. 47 6 1983 12. 07 6 2002 9. 24 5 1984 12. 55 6 2003 9. 24 5 1985 12. 71 6 2004 9. 24 5 1986 12. 71 6 2005 9. 24 5 1987 13. 43 6 2006 9. 24 5 1988 13. 43 6 2007 9. 28 5 1989 13. 63 6 2008 9. 28 5 1990 13. 63 6 2009 9. 28 5 1991 12. 64 6 2010 9. 74 5. 25 1992 11. 81 6 2011 10. 28 5. 53 1993 11. 81 6 2012 10. 28 5. 53 1994 11. 81 6 2013 11. 41 6 1995 11. 81 5 2014 12. 28 6 1996 11. 81 5 2015 13. 15 6 1997 11. 81 5 2016 14. 27 6 1998 11. 81 5 2017 14. 27 6 1999 11. 95 5 2018 16. 81 6 7

80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 19 Employer Contribution Rate History 18 16 14 12 10 8 6 4 2 0 8

Factors Impacting Contribution Rates Actuarial Price Assumption Changes and Wage Inflation Option Factors Demographics: withdrawals, pre-retirement mortality, disability retirement, service retirement, post-retirement mortality, etc. Investment Earnings Assumption Changes Increases/Decreases in Actively Contributing Members Increases/Decreases in Member Salaries 9

Actual to Expected Total Investment Rate of Return 20, 0% 15, 0% 10, 0% 7, 5% 5, 0% 0, 0% Assumed Rate 3 Year 5 Year 10 Year-5, 0% 20 Year 2000 7, 5% 13, 8% 15, 9% 13, 7% 13, 4% 2001 7, 5% 4, 3% 11, 5% 12, 0% 13, 0% 2002 7, 5% -0, 8% 6, 1% 10, 1% 12, 9% 2003 7, 5% -1, 6% 2, 6% 9, 2% 11, 2% 2004 7, 5% 3, 3% 2, 4% 10, 3% 12, 0% Assumed Rate 2005 7, 5% 7, 4% 2, 5% 9, 0% 10, 8% 2006 7, 5% 7, 9% 4, 8% 8, 1% 9, 5% 3 Year 2007 7, 5% 9, 5% 8, 5% 7, 3% 9, 7% 2008 7, 5% 5, 5% 6, 8% 4, 7% 9, 5% 5 Year 10 2009 2010 7, 5% -1, 3% -2, 3% 2, 0% 2, 6% 2, 2% 2, 5% 8, 0% 7, 9% 2011 2012 2013 7, 5% 5, 4% 11, 2% 12, 0% 5, 3% 3, 0% 6, 3% 5, 0% 5, 7% 6, 6% 8, 4% 7, 9% 10 Year 2014 7, 5% 10, 7% 12, 8% 7, 2% 8, 8% 2015 7, 5% 11, 2% 11, 3% 6, 8% 7, 9% 2016 7, 5% 7, 2% 7, 4% 6, 3% 7, 2%

Membership Statistics June 30 th Active Members Retirees Inactive 250 000 218 141 225 024 226 560 222 046 211 167 213 675 208 616 209 855 214 015 218 215 200 000 150 000 100 000 76 133 69 317 78 633 73 687 82 382 77 968 87 017 92 180 86 401 82 163 97 323 88 815 101 139 93 481 108 100 94 749 113 066 93 233 117 918 97 038 50 000 0 2005 2007 2009 2011 11 2013 2015 2017 Data Based on June 30 th Independent Auditors’ Report

Economic Impact March 1, 2017 Monthly Benefit Payroll 119, 467 Retirees = $370, 681, 556 $239 million in direct economic impacts are supported by retirees’ initial expenditures. $164 million in indirect impacts results from these businesses purchasing additional goods and services. $131 million in induced impacts occur when employees hired by businesses as a result of the direct and indirect impacts make expenditures. Total Economic Impact - $534 Million 12