TRS vs ORP What HR Liaisons Should Know

TRS vs. ORP What HR Liaisons Should Know June 27, 2013 Follow us on:

Overview Basics of Teachers Retirement System (TRS) vs. Optional Retirement Program (ORP) ORP Notification Process ORP Election/Enrollment Process HR Liaison – Your Role TRS Legislative Update Human Resources June 27, 2013 | Page 2

TRS Basics TRS eligibility is working 50% for 4. 5 months during the fiscal year (FY) Excludes Student Titles Automatic enrollment on date of hire/eligibility Current employee contribution is 6. 4% Vested at 5 years TRS service credit Service credit earned for 90 working days each FY Human Resources June 27, 2013 | Page 3

TRS Basics Continued Defined benefit plan Receive monthly annuity upon reaching retirement criteria Retirement criteria contingent on various factors A withdrawn account ONLY receives employee contributions and NOT the employer contributions. Human Resources June 27, 2013 | Page 4

ORP Basics Requires ORP eligible title Requires 100% effort for at least 4. 5 months One-time irrevocable decision Vested at 1 year, 1 day from ORP participation date (not hire or eligibility date) Requires enrollment forms to elect ORP in lieu of TRS Defined contribution plan Human Resources June 27, 2013 | Page 5

ORP Notification Process Benefits Services receives weekly report of potential ORP eligibility based on employment data in BPP after EPA completes Benefits Services verifies ORP eligibility Benefit Services sends ORP packet to eligible employees Human Resources June 27, 2013 | Page 6

ORP Election/Enrollment Process Employee choosing to elect ORP must: q select ORP vendor and complete the vendor application forms q complete forms in the ORP packet including the TRS 28 Notice of Election to Participate in Optional Retirement Program q Submit completed forms to Payroll Services q Must be completed within 90 -day election window Human Resources June 27, 2013 | Page 7

HR Liaison – Your Role Refer employees to Benefit Services Process EPA documents timely Impacts enrollment window Impacts payroll deductions Work with Benefits Services for special situations or early notifications Enter accurate appointment term especially during summer Human Resources June 27, 2013 | Page 8

TRS Legislation TRS must address unfunded liability Ordered to conduct a comprehensive study Evaluated many options including: Increase minimum age from 60 to 62 Increase average salaries from 5 to 7 Change benefit calculator from 2. 3% to 2. 0% Change member contribution rate Human Resources June 27, 2013 | Page 9

TRS Legislation Passed SB 1458 and HB 1884 passed during legislative session Effective September 1, 2014 Changes impact several key areas Changes to eligibility criteria effect those who do not have 5 years with TRS as of 9/1/2014 Does not impact the retirement eligibility rules for Texas A&M University System retiree status Human Resources June 27, 2013 | Page 10

TRS Legislation – Key Changes Decreases the interest rate from 5% to 2% Increases the minimum age for full, normal age (unreduced annuity) retirement from 60 to 62 for “non-grandfathered” Adjusts the employee contribution rate in phases: Remains 6. 4% for FY 14 6. 7% for FY 15 7. 2% for FY 16 7. 7% for FY 17 Human Resources June 27, 2013 | Page 11

TRS Legislation – Key Changes FY 14 FY 15 FY 16 FY 17 6. 4% 6. 7% 7. 2% 7. 7% $2, 560 $2, 680 $2, 880 $3, 080 Amount of annual employee TRS member contribution based on annual salary of $40, 000. Human Resources June 27, 2013 | Page 12

Final Thoughts Timely and accurate processing of EPA is critical Strict timelines apply and timing of the ORP election has consequences for the employee TRS Legislative changes passed recently Effective September 1, 2014 Grandfathered with 5 years of TRS service credit HR Liaisons play an important role in the process; please help HR by forwarding information found in HR Liaison Network News Human Resources June 27, 2013 | Page 13

How may we help you? Judy Kurtz Retirement Specialist 979 -862 -4028 jkurtz@tamu. edu Sarah Tobola Employee Benefits Manager 979 -862 -4956 S-tobola@tamu. edu Resources: http: //employees. tamu. edu/employees/benefits/ Human Resources June 27, 2013 | Page 14

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