PERS Education and Retirement Planning Welcome ! PERS One-Year Group Updated: 2/13/2012

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Agenda Individual Account Program Retirement Eligibility Calculation Factors and Methods Review of Estimate of Benefits PERS Retirement Processes Health insurance; COLA Variable after retirement Working in retirement; Taxes Review Retirement Forms

Individual Account Program Effective January 1, 2004 Member contributions to Individual Account Program (IAP) No contributions to PERS member account after this date Retirement forms for IAP and separate retirement forms for PERS Retirement benefit from IAP and separate retirement benefit from PERS

IAP Retirement When retire from PERS, must retire from IAP Retirement date 1 st day of any month Submit retirement forms within the 90 day period prior to your retirement date First payment due Within 120 days of retirement date

IAP Distributions IAP retirement benefit choices Lump sum (mailed direct to member) Installments over year periods, or Anticipated Life Span Option Can receive IAP distributions only after separation from PERS covered employment IAP cannot be used for Trustee to Trustee Transfers

PERS Trustee to Trustee Transfer for Purchases If eligible to purchase service time Can use pre-tax dollars from 457 deferred compensation plan, or a 403(b) tax- sheltered annuity Time limit on purchases Within the 90 days before retirement date Transfer form required PERS:

PERS Data Verification Requests Must be within two years of earliest service retirement age Will cover following data elements Employment/Salary details Service time Regular and variable account balances Final average salary Unused sick leave (beginning July 1, 2012)

PERS Data Verification Requests Form required PERS: First verification free Fee for additional verification Data verification not an estimate Only provides verification for what will ultimately determine the actual benefit

Online Member Services You can: Access your account information Perform activities related to your account Produce your own estimate Link directly to the PERS web site to view FAQs, forms and other information

30 years PERS Total Creditable Service Time OR Age Normal retirement 58 – Tier One 60 – Tier Two 55, or years total service – P&F Early retirement – P&F PERS Retirement Eligibility

The Calculation Factors  Age  Service time  Final Average Salary  Account Balance

Calculation Methods Full Formula Service time x final average salary x.0167 (P&F.0200) Money Match Age factor x account balance x 2 Formula + Annuity (8/21/81) Service time x final average salary x.01 (P&F.0135) + Age factor x account balance

Option 1 Calculation Method Comparison  Money Match $ 2,  Full Formula$ 2,  Formula + Annuity (Contributions prior to 8/21/81 )

The Retirement Estimate: Age and Retirement Data IMA PERSSON 1234 ANNUITY AVE GOLD HILL, OR Date:1/30/2012 PERS ID: Member Date of Birth:8/6/1953 Retirement Date:7/1/2012 Last Day of Service:6/30/2012 Termination Date:6/30/2012 Retirement Age:58 yrs 10 mos

The Retirement Estimate: Page Two Beneficiary and Service Time Beneficiary: OlovYear of Birth: 1953 Creditable Service Time: 26 yrs 0 mos Granted Service (disability only): 0 yrs 0 mos

The Retirement Estimate: Page Two Service Time; Member Cost Service Purchases: Prior Service Time: 0 yrs Waiting Time: 0 yrs 6 mos Sick Leave Hours: 0 Forfeited Time: 0 yrs 0 mos Vacation Hours: 0 Full Cost: 0 yrs 0 mos Contract Salary: $0.00 Miscellaneous: 0 yrs 0 mos Contract Hours: 0 Estimated Member Cost: $1, Total Creditable Service with Purchase(s): 26 yrs 6 mos

Full-Cost Purchases Senate Bill 711 – military service Senate Bill 665 – teaching time Costs Present cost of future benefits Provides service time at high average cost

Member Cost After-tax contributions in member account 1099 R Member cost is not taxed again in retirement

The Retirement Estimate: Page Two Salaries High 3 YearsLast 36 Months YearSalariesYearMonthsSalaries* 2009 $65, $31, $67, $62, $62, $61, $195, $34, $190, *includes projected salaries Average monthly salary: $5,438.22

The Retirement Estimate Page Three: Account Information RegularVariableTotal Current account balance: $139,709.23$25,850.46$165, Projected account balance at retirement:$156,841.63$29,031.28$185,872.91

The Retirement Estimate Page Three: Benefit Options and Amounts Option 1 Calculation Method Comparison: $2,966.64Money Match $2,329.10Full Formula Formula + Annuity

Tax Remedy HB3349 or SB656 The greater of either... HB 3349 Benefit increase Based on service time prior to October 1, 1991 SB 656 Based on service time if hired prior to July 14, 1995 Maximum 4% increase

Retirement Benefit Options First twelve options pay member lifetime monthly benefit unless the Option 1 benefit is $200 month or less. If Option 1 benefit is $200 month or less No monthly benefit Lump sum payment equal to actuarial value of benefit

The Retirement Estimate: Page Three Benefit Options and Amounts No PurchaseWith Purchase Option 1$3,048.14$3, Refund Annuity$3,013.13$3, Option 15 C$2,956.85$2, Option 2$2,767.71$2, Option 2A$2,737.24$2, Option 3$2,901.84$2, Option 3A$2,883.54$2,890.63

The Retirement Estimate: Page Three Lump Sum Benefit Options and Amounts No PurchaseWith Purchase Lump Sum Option 1$1,466.58$1, Lump Sum Option 2$1,331.65$1, Lump Sum Option 2A$1,316.99$1, Lump Sum Option 3$1,396.18$1, Lump Sum Option 3A$1,387.38$1, Total Lump Sum$381,921.38$382,898.19

Retirement Option Choices Option 1 Maximum monthly benefit No beneficiary Refund Annuity and 15 Year Certain Member may choose multiple beneficiaries and change them at any time Beneficiary benefits are limited Refund Annuity: Nine – Eleven years 15 Year Certain

Retirement Option Choices Joint Survivorship Options One beneficiary 60 days to change the beneficiary Options 2 and 2A Full survivorship options With 2 and 2A, and a non-spousal beneficiary, see the PERS website for possible benefit adjustments. Options 3 and 3A Half survivorship options

Lump Sum Options Projected account balance One through five annual installments Interest credited on unpaid balance Options 1, 2, 2A, 3 and 3A provide lifetime monthly benefit

Total Lump Sum Distribution of your PERS account with employer match No monthly benefit paid One through five annual installments Interest credited on unpaid balance

The Retirement Estimate: Page Four Assumptions used in Projection Account Balance: Regular Projected at 8% Variable Projected at 8% Job Classification: Retirement Job Class 01 Salary Projections: Salary Projected to increase 0% annually

 Time Limit on Purchase(s)  During the 90 days before retirement  Not on or after retirement date  Mail purchases to: PERS PO Box 2127 Portland, OR Purchase Documents Waiting Time and Forfeited Time

Health Insurance and Retirement Enrollment opportunities for PERS Sponsored Health insurance At retirement At Medicare enrollment Any time, with at least 24 months of continuous employer group coverage Other options Employer sponsored plans (ORS ) COBRA Portability and individual plans Spouse’s employer plan

PERS Sponsored Health Insurance: Additional points Eligibility Retirees Spouses and dependents Of current or deceased retirees Of deceased member eligible to retire Subsidies may be available RHIA: At Medicare eligibility RHIPA: State of Oregon employees Requirements for subsidy eligibility Total PERS-covered service time PERS group health insurance program

Retirement: Date; Forms; and Your Employer Retirement date 1 st of any month Based on age or service time Submit the retirement forms Within the 90 day period prior to your retirement date Resign all PERS-covered positions Employer provides information to PERS

Retirement Forms  Call PERS Customer Service for a retirement package or download the forms from PERS website  PERS mails you notice soon after receipt of your retirement forms

First Monthly Check Issued Within 92 days of retirement date Estimated payment or actual payment Retroactive

Notice of Entitlement Option changes possible within 60 days of first benefit check or receipt of NOE, whichever is later Dispute Notice 240 days from the later of: Date first actual payment is made Date Notice of Entitlement is provided to the member

Cost of Living Adjustment (COLA) An annual adjustment payable August 1 st Up to 2% of the July gross benefit 2% is the maximum increase July 1 st retirement Last date to retire in any year, and receive the COLA for that year

Variable Dollars At Retirement Number of units Variable Annuity Unit Value Set annually (11/1 - 10/31) Variable Annuity Income Part of benefit Based on unit value Variable Annuity

Initial Benefit $1, $2,000 Account Balance - $100,000 $50,000-R$50,000-V Variable Annuity $500 Fixed Annuity Variable Annuity Example $100,000 Fixed Pension $1,000

VARIABLE ANNUITY EXAMPLE Year 2: 11/1-10/31 - Variable = 18% Variable Per Cent = 18% -= 10% Variable Per Cent = 18% - 8% = 10% Var. Change = $500 x = Var. Change = $500 x (10%) = $50 Benefit = $ $500 + $= $2050 Benefit = $ $500 + $550 = $2050

VARIABLE ANNUITY EXAMPLE Year 3: 11/1-10/31 - Variable = 0% Variable Per Cent = 0% -= - 8% Variable Per Cent = 0% - 8% = - 8% Var. Change = $550 x = Var. Change = $550 x (-8%) = - $44 Benefit = $ $500 + = $2006 Benefit = $ $ = $2006

Working after PERS Retirement For a Private-sector employer No employment limit For Oregon PERS-participating Employers 1039 hours/calendar year limit Exceptions exist Only for normal retirement (age or service time) Review exceptions on PERS and Social Security benefit: Higher of 1039 hrs/calendar year or Social Security limit.

Tax Considerations Monthly benefit Subject to state and federal taxes Oregon residents Subject to Oregon and federal tax Non-Oregon residents Federal tax only; no Oregon tax No withholding for any other state

Member Resources Websites and link for PERS website PERS: PERS Insurance: IAP account: Toll-free telephone number PERS or PERS Insurance or PERS and financial education

More Resources Attend additional PERS presentations PERS: Individual meeting Retirement Application Assistance Session Within 90 days of retirement PERS: or

Thank you for attending this presentation!

 Background  Purchase (8 Units)  Read Pre-Retirement Guide  Employee cost = $4,000  Employer match = $4,000  Benefits  $160 per month from age  Less if over more than 60 months  No COLA increases  Separate unit application forms Police and Fire Units

 Benefit  25% of Refund Annuity benefit OR  25% of Option 1 benefit (Lump Sum)  Beneficiary  Surviving spouse OR  Dependent children under 18 Surviving Spouse Benefit - P&F