only 22,630 days until retirement pre-retirement planning you can never start too early…
Post on 15-Jan-2016
217 views
TRANSCRIPT
Only 22,630 Days Until Retirement
Pre-retirement
Planning
You can never start too early…
“My report is entitled ‘Why Mrs. Fina Should Take Her Early Retirement Package.”
How the Benefits Affect YOU
Teachers’ Fund for Retirement
July 2009
Teachers’ Fund for Retirement1930 Burnt Boat Drive
PO Box 7100Bismarck ND 58507-7100
Telephone: 701-328-9885Toll free: 800-952-2970Fax: 701-328-9897E-mail: [email protected]: www.nd.gov/rio
TFFR Website
www.nd.gov/rio
Individual 30 minute benefits counseling appointments available to all members to discuss TFFR benefits and other personal retirement concerns.
2009-2010 Outreach Services
Divide County Aug. 18, 2009Stanley Aug. 19, 2009Williston Sept. 2, 2009Grand Forks Sept. 16-17, 2009New Rockford Sept. 23, 2009Wahpeton Sept. 29, 2009West Fargo Sept. 30, 2009Hettinger Sept. 30, 2009Valley City Oct. 1, 2009
Jamestown Oct. 6, 2009 Cavalier Oct. 7, 2009Rugby Oct. 8, 2009Fargo Nov. 2-3, 2009
Devils Lake Nov. 16, 2009Turtle Lake/Mercer Nov. 17, 2009
Dickinson Nov. 18, 2009 Minot Dec. 2-3, 2009Bismarck Dec. 7 & 9, 2009
Benefits Counseling Program
To register, call the Administrative Office at 800-952-2970 or 701-328-9886.
Topics include: TFFR benefits, financial planning, estate planning, Social Security
benefits and health insurance.
Bismarck July 14, 2009
Grand Forks July 15, 2009
Conferences and Conventions
Invest ND Seminar Bismarck July 22, 2009
Career & Tech Ed Convention Bismarck Aug. 10, 2009
NDRTA Convention Dickinson Aug. 25-26, 2009
NDEA Instructional Conference Grand Forks Oct. 21-22, 2009
NDCEL Convention Bismarck Oct. 22-23, 2009
Pre-retirement Seminars
Governing BoardsTFFR Board of Trustees
Mike Gessner, PresidentRepresents Active Teachers
Bob TosoRepresents School Administrators
Kim FranzRepresents Active Teachers
Lowell LatimerRepresents Retired Members
Clarence CorneilRepresents Retired Members
Kelly SchmidtState Treasurer
Wayne SansteadState Superintendent
State Investment Board
Jack Dalrymple, Lt. Governor, Chair
Clarence Corneil, TFFR Board, Vice Chair
Bob Toso, TFFR Board
Kelly Schmidt, State Treasurer
Cindy Ternes, Workforce Safety & Ins
Gary Preszler, Board of Univ & School Lands
Adam Hamm, State Insurance Dept
Mike Gessner, TFFR Board
Ron Leingang, PERS Board
Mike Sandal, PERS Board
Levi Erdmann, PERS Board
TFFR Mission The mission of TFFR, a trust fund, is to
advocate for, develop, and administer a comprehensive retirement program for all fund members within the resources available.
Type of PlanTFFR is a qualified defined benefit public pension plan covered under Section 401(a) of the Internal Revenue Code (IRC). In simpler terms, TFFR is a tax-exempt pension plan where benefits are defined by state law.
North Dakota Century Code (NDCC) Chapter 15-39.1 contains the actual language governing the Fund, along with Title 82 of the North Dakota Administrative Code (NDAC).
The TFFR plan is funded on an actuarial reserve basis. That is, money is invested for future retirement benefits while members are actively teaching. Benefit funding comes from three sources:
Employee contributions – 7.75% of salary Employer contributions – 8.25% of salary (8.75% effective July 1, 2010) Investment earnings
Sources of TFFR RevenueFY 1990-2008
Employee Contributions
19%
Employer Contributions
18%
Actual Investment Earnings
63%
TFFR Revenues and Distributions1990-2008
(200,000,000)
(100,000,000)
0
100,000,000
200,000,000
300,000,000
400,000,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Employee Contributions
Employer Contributions
Actual Investment Earnings
Benefits Distributed
Investments
■ TFFR Board determines asset allocation and investment guidelines.
■ Investment assumption is 8% per year.■ Investment program is administered by State
Investment Board.
TFFR Asset Allocation
Domestic Fixed Income, 12%
Domestic Small Cap Equity, 10%
High Yield Bonds, 7%
Alternative Investments, 5%
Real Estate, 9%
Domestic Large Cap Equity, 28%
Emerging Markets Equity, 5%
International Equity, 18%
International Fixed Income, 5%
Cash Equivalents, 1%
TFFR Investment Performance and Asset Allocation as of June 30, 2008
Total Assets $1,846,113,411
Equity65%
Fixed Income35%
Total 1 Year 3 Years 5 Years 10 YearsFund -7.51% 8.42% 11.50% 6.36%
TFFR Investment Performance-Annual1989 - 2008
15.03%
8.25%8.27%
13.65%
15.40%
1.57%
13.70%
15.29%
19.35%
14.04%
11.06%11.63%
-7.00%-8.88%
2.33%
19.30%
13.35%
14.79%
20.05%
-7.51%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Per
cen
tag
e
Year Ended June 30
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
81.9%
Year
Fu
nd
ed
Ra
tio
Notes: 1) 1977-1990 TFFR actuarial consultant was Martin Segal Company.2) 1991-present TFFR actuarial consultant was Watson Wyatt, now known as Gabriel, Roeder, Smith & Company (GRS).
TFFR Funded Ratio1977 - 2008
Will TFFR’s Funding Level Decline?
■ Public pensions plans are not immune to the current financial crisis.
■ Volatility in the financial markets makes it very difficult to estimate future returns.
■ Lower investment returns will have a dramatic impact on funding levels.
■ TFFR funding levels are expected to decline quickly and significantly.
Projected TFFR Funding Levels (AVA)2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
0
10
20
30
40
50
60
70
80
90
100
8%
-24%
Fiscal Year Ending June 30
Funded R
ati
o 2009 InvestmentReturn Estimate
NOTE: Funded ratio estimates using actuarial value of assets (AVA) are based on following assumptions: Variable investment returns for 2009 (8% or -24%) and 8% investment returns for 2010 and all future years.
Conclusion■ As a result of the recent market declines, and anticipated funding
level declines, most public pension plans around the country are expected to experience higher required contributions.
■ Predicting the magnitude of increased costs is difficult and will depend on factors unique to the ND TFFR plan, as well as performance of investment markets over the next few years.
■ TFFR funding improvement legislation is needed in 2011. The Board is studying various options to deal with falling funding levels. It is likely that legislation will be proposed in 2011 to modify contributions and/or benefits to offset investment losses.
TFFR Approved Legislation 2009
House Bill 1022 – NDRIO Budget
HB 1022 includes an employer/school district contribution increase of 0.5% (8.25% increase to 8.75%) effective July 1, 2010. This increase is intended to offset the cost of the one-time TFFR retiree supplemental benefit payment outlined in SB 2277 and begin improving TFFR funding levels which have declined due to investment losses and economic conditions.
TFFR Approved Legislation 2009(continued)
House Bill 1080 – TFFR Administrative Changes
HB 1080 includes technical and administrative changes to the TFFR program. The changes have no financial impact on the Fund.
Most of the amendments are needed to incorporate federal tax law changes as they relate to qualified governmental plans. Other changes include clarification that non-contracted substitute teaching does not apply to the annual hour limit for re-employed retirees. In addition, confidentiality provisions are modified to allow disclosure of retirement information in certain limited situations outlined in the bill.
TFFR Approved Legislation 2009(continued)
House Bill 1360 – Regional Education Association (REA) Changes
HB 1360 clarifies TFFR statutes by including licensed and contracted employees of REAs in the definition of “teacher” for TFFR participation and benefit eligibility purposes. This clarification does not change current TFFR practices.
TFFR Approved Legislation 2009(continued)
Senate Bill 2277 – Supplemental Retiree Benefit Payment
SB 2277 provides a one-time supplemental retiree benefit payment to all TFFR retirees and beneficiaries who retired before January 1, 2009 and are receiving annuity benefits on December 1, 2009. The supplemental payment is equal to an amount determined by taking $20 per year of service credit, plus $15 per number of years since the member’s retirement. The supplemental payment can not exceed the greater of 10% of the member’s annual annuity or $750. The supplemental payment will be made in December 2009 and will be paid from the TFFR trust fund.
MembershipIndividual MembershipCertified to teachUnder contract
Dual MembershipYou may qualify as a dual member if you have
service credit in TFFR and the Public Employees Retirement System (PERS) or Highway Patrol Retirement System (HPRS).
TFFR ACCOUNT COPY First Name: J oe Person ID: 999999 Last Name: Teacher Plan Status: Active Address: PO Box 1 Employment Status: Active Bismarck, ND 58501 Date of Hire: J uly 01, 1975 Max Day Worked: Date of Birth: March 25, 1953 Credited Service: 9.120 Vested Service: 9.120 Calculation Date: J anuary 10, 2006 Current Age: 52.791 Purchase in Progress: No Taxed Contributions: $11,831.61 Tax Deferred Contributions: $13,399.11 Interest as of 01/10/2006 $3,200.24 Account Value: $28,430.96
STATUS & FLAGS Status or Flag Type DATE Status
ACTI VE & CONTI NGENT BENEFI CI ARI ES Name SSN Percent Date of Birth Relationship J ane Teacher 888-88-8885 33.34 05-03-1978 Other Martha Teacher 888-88-8889 33.33 04-03-1980 Other Bob Teacher 888-88-8887 33.33 07-12-1983 Other
Last Name/First Name: Joe Teacher L/R Date Type Employer Service Taxed Tax Deferred Salary 06/01/1976 01 15-006 1.000 $336.00 $0.00 $8,400.00 05/01/1981 01 15-007 0.060 $105.47 $0.00 $1,687.50 05/01/1982 01 15-007 0.060 $63.75 $0.00 $1,020.00 05/01/1987 Payment to Member (1.120) ($505.22) ($359.63) 05/01/1993 01 48-028 1.000 $1,239.38 $0.00 $18,361.16 05/01/1994 01 48-028 1.000 $1,321.90 $0.00 $19,583.68 04/01/1995 Payment to Member (2.000) ($2,561.28) ($227.47) 05/01/1996 01 45-013 1.000 $0.00 $1,129.73 $16,736.66 02/01/1997 Payment to Member (1.000) $0.00 ($1,187.55) 05/01/2001 01 08-001 1.000 $0.00 $2,171.70 $28,022.00 05/01/2002 01 08-001 1.000 $0.00 $2,349.81 $30,320.00 05/01/2003 01 08-001 1.000 $0.00 $2,570.65 $33,170.00 05/01/2004 01 08-001 1.000 $0.00 $2,704.65 $34,899.00 08/11/2004 P Refunded TFFR Service Cre 1.120 $5,056.16 $0.00 05/01/2005 01 08-001 1.000 $0.00 $2,862.32 $36,933.00 06/23/2005 P Refunded TFFR Service Cre 3.000 $6,775.45 $0.00 99/99/9999 01 08-001 0.000 $0.00 $739.98 $9,548.23
Service CreditEarned Service Credit
700 compensated hours = 1 year If compensated for less than 700 hours, service credit is
granted in proportion to 700 hours
Example: 650 hours/700 = .929 year
Vesting Three years of earned service – Five years for new hire
after 7-01-2008 Entitled to lifetime benefit when eligible Public employment included for vesting and eligibility
Purchase of Service CreditActive members may purchase eligible service credit for:
Refunds previously taken from TFFR Air time Government agency teaching Leave of absence Legislative service Military service Out-of-state teaching Non-public school teaching
** TFFR may accept tax deferred money by direct rollover from eligible retirement plans for the purchase of service credit. Eligible retirement plans include IRAs (not Roth IRA), qualified 401(a) and 401(k) plans, 403(b) tax-sheltered annuity plans, and 457 governmental plans.
Salary“Salary” means your earnings in eligible employment for teaching, supervisory, administrative, and extracurricular services during a school year reported as salary on your federal income tax withholding statements plus any salary reduction or salary deferral amounts under 26 U.S.C. 125, 132(f), 401(k), 403(b), 414(h), or 457. Eligible salary includes bonus amounts paid to you for performance, retention, experience, and other service-related bonuses, unless amounts are conditioned on or made in anticipation of your retirement or termination.
“Salary” Also Includes: In addition to your regular contract earnings, salary for TFFR purposes also
includes additional pay received from your employer. Examples include:
Adult education program Info. Technology coordination & servicesChaperoning school events In-service/workshops/conferencesClub advisor (not reimbursed for expenses) Coaching and assisting In-staff subbing Consortium type work Lunch room monitorCurriculum development MentoringDriver’s education School programsDrug free school program (Latch key, gifted and talented) Indian education program Summer school
Note: This list is not all-inclusive. Contact the administrative office if you have questions on whether payments made to you should be reported to TFFR.
“Salary” Does NOT Include: Fringe benefit or side, non-wage benefits which accompany or are in addition to
your employment, including insurance programs; annuities; transportation, housing, and expense allowances; meals; lodging; or other benefits provided by your employer.
Insurance programs including medical, dental, vision, disability, life, long-term care, workers compensation, or other insurance premiums or benefits.
Payments for unused sick, personal, vacation, or other unused leave.
Early retirement incentive or severance pay, or other payments conditioned on or made in anticipation of retirement or termination.
Teacher’s aide, referee, bus driver, ticket taking or janitorial pay.
Amounts received by you in lieu of previously employer-provided benefits or payments that are made on an individual selection basis.
Recruitment bonuses.
Other benefits or payments not defined above that the Board determines to be ineligible TFFR salary.
Service Retirement Benefits
Eligibility Vested member Cease covered employment
Retirement Classifications Normal retirement Early retirement Deferred retirement
Benefit FormulaFinal average salary* x 2.0% x service = monthly Single Life
Annuity.
*Tier 1 Members FAS – three high fiscal year salaries ÷ 36.*Tier 2 Members FAS – five high fiscal year salaries ÷ 60.
What percent of your Final Average Salary (FAS)will you receive under the 2.0% multiplier?
Years of Service101520253031323540
Percent of FAS20%30%40%50%60%62%64%70%80%
Tier 1 MembersTier 1 (Active, inactive, and retired members with TFFR service on July 1, 2008)
Benefit Minimum Age Minimum Service Benefit Calculation
Unreduced Retirement Rule of 85 or age 65 3 FAS X Service X 2%
Reduced Retirement 55 3 FAS X Service X 2% (less age reduction)
Disability Retirement N/A 1 FAX X Service with 20 year minimum X 2%
Refund N/A N/A Member Contributions plus 6% interest
*Note: If Tier 1 member refunds, then returns to TFFR employment, the member becomes a Tier 2 member.
Benefit Minimum Age Minimum Service Benefit Calculation
Unreduced Retirement Rule of 90 or age 65 5 FAS X Service X 2%
Reduced Retirement 55 5 FAS X Service X 2% (less age reduction)
Disability Retirement N/A 1 FAS X Service with 20 year minimum X 2%
Refund N/A N/A Member Contributions plus 6% interest
Tier 2 MembersTier 2 (New members and returning refunded members beginning July 1, 2008)
Summary of Benefits
Benefit Options Refund of Account Value
Single Life Annuity
100% Joint and Survivor
50% Joint and Survivor
10 Year Certain and Life
20 Year Certain and Life
Level Income Option
Partial Lump Sum Option
Level Income Example:
Calculation of Level Income Supplement/TFFR Retirement Age 55 Estimated Social Security Benefit = $800 at age 62/$800 x 52% = $416
Calculation of Single Life Annuity: Single Life Annuity Non-Level Income $1,000Level Income Supplement + 416Level Income Single Life Annuity (before age 62) $1,416At age 62 TFFR annuity is reduced by - 800Level Income Single Life Annuity (after age 62) $ 616
Partial Lump Sum Option (PLSO) Example:
Jane retires on June 1, 2009, with the Rule of 85. Her Single Life Annuity benefit is $1,700/month. She may elect the regular retirement option and receive $1,700/month for life or receive a PLSO distribution of $20,400 ($1,700 x 12) and a lifetime benefit of $1,530/month. Generally, the actuarial reduction for a PLSO is approximately 10%.
Retirees using the PLSO may also select a Joint & Survivor Option or Term Certain Option to provide a continuing benefit to a beneficiary. These options would require another actuarial reduction to the $1,530.
Teachers’ Fund for RetirementService Retirement Options
2008-09Retirement OptionNumberSingle Life 131100% Joint & Survivor 17250% Joint & Survivor 2810 Year Certain & Life 520 Year Certain & Life 12Total 348Note: Of total, 11 members (3%) selected level income option. Of total, 18 members (5%) selected partial lump sum option.
Single Life38%
100% Joint & Survivor49%
50% Joint & Survivor8%
10 Year Certain & Life
1%
20 Year Certain & Life
4%
Employment After Retirement 30 calendar days must elapse from retirement date Return to covered employment for maximum number of hours based on length of
contract:
9 month contract = 700 hours
10 month contract = 800 hours
11 month contract = 900 hours
12 month contract = 1000 hours
Non-contracted substitute teaching is unlimited Extracurricular duties and professional development do not count toward the limit
The annual hour limitation applies to ND public schools and state institutions covered by TFFR. It does not apply to ND public colleges and universities, private schools, employment outside of education, or out-of-state employment.
Exceptions: Critical Shortage Area and Benefit Suspension and Recalculation
Return to Teach Statistics for 2008-09
Teachers226
Superintendents26
Other Admin
32
Total Retirees: 284 Average Age: 60 Average Salary: $22,000
General Rule Critical Shortage Suspend & Recalculation0
20
40
60
80
100
120
140
160
180
200
220
240
260
280265
154
Employers: 130
Survivor BenefitsEligible Survivors Designated beneficiary; if none, Surviving spouse; if none, Surviving children, if none, Estate
Death Prior to Retirement Nonvested member - Refund of account value Vested member - Refund of account value - Monthly benefit for life (if one beneficiary
designated) - Monthly benefit for 60 consecutive months (5 years)
Death After Retirement Benefits paid based on the plan selected at retirement
Disability BenefitsEligibility One year service credit Active member of TFFR Application filed within 36 months from last date of employment Disability must result in the inability to perform the duties of a teacher Certified eligible by Board of Trustees
Disability Formula FAS (final average salary) x service credit (minimum 20 years) x
2.0% = Disability Single Life Annuity No age reduction Benefit options available
Divorceand Your TFFR Benefits
TFFR benefits are generally considered a marital asset and subject to valuation and division in a divorce.
Division of TFFR benefits can only be accomplished if a court order called a Qualified Domestic Relations Order (QDRO) is filed and approved by the TFFR Board before being signed by the judge.
QDRO model has been established by TFFR and such language should be used in preparing the order.
Former spouse (alternate payee may only receive a lump sum payment from TFFR if you elect a refund upon termination of employment).
Alternate payee can elect to receive a monthly benefit for life based on the accrued benefits at the time of divorce.
Divorce and Your TFFR Benefits (continued)
Monthly benefit to the alternate payee can begin when:- You reach normal retirement (age 65 or Rule of 85 using
only years of credit prior to divorce);- You reach early retirement (age 55);- The alternate payee reaches a certain date (must be after
you reach age 55); and- You retire.
Alternate payee can begin benefits and you can continue working.
The actuarial value of the alternate payee’s current and future benefits will reduce your benefit.
If TFFR is not to be divided, the divorce decree should state that you retain sole ownership of the retirement account.
“I think that the life cycle is all backwards. You should die first, get it out of the way, then live 20 years in an old-age home. You get kicked out when you’re too young. You get a gold watch; you go to work. You work 40 years until you’re young enough to enjoy your retirement.
“You go to college, you party until you’re ready for high school, you become a little kid, you play, you have no responsibilities, you become a little baby, you get back into the womb, you spend your last nine months floating.
“And you finish off as a gleam in someone’s eye.”
-Author Unknown-
LivingReverse