HRM Conference November 14 & 15, 2006

1 MyFRS Financial Guidance Line: MyFRS MyFRS.com 1 What We Will Talk About Today FRS Retirement Plan Update —Legislative changes The Financial Guidance Program —Resources available to you —Resources available to ALL your employees (PP and IP) The New Hire Process —Resources —Plan administration Roles and Responsibilities —Helping your employees help themselves

2 MyFRS Financial Guidance Line: MyFRS MyFRS.com 2 FRS: The Florida Retirement System FRS is 4 th largest U.S. public pension plan — 900 public sector employers — 689,000 working members — Over 250,000 retired Pension Plan (PP) members 90% of FRS members are covered by the defined benefit “FRS Pension Plan” — $118.2 billion held in trust for Pension Plan benefits as of July 31,2006 In 2002, FRS Investment Plan (IP) was introduced to provide members a choice

3 MyFRS Financial Guidance Line: MyFRS MyFRS.com 3 FRS Investment Plan – Offering Choice Currently, over 66,000 active Investment Plan members $2.6 billion in participant accounts $32,533 average account balance Money entering Investment Plan accounts: —$16.5 million in ‘new money’ through FRS employer contributions on a monthly basis —$60 million through ‘2 nd Election’ on a monthly basis —$37 million from DROP participants (since 7/1/05) 2,000 active IP elections on a monthly basis —1,500 new hire enrollment elections —500 2 nd Elections (97% of all elections are into IP) Active election default rate continues to decrease

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5 MyFRS Financial Guidance Line: MyFRS MyFRS.com 5 Employee Use of MyFRS Resources Financial Guidance Line Since March 2002 Since March 2003 Annualized Growth Total Calls (over 3,000 calls per mo.)482,636376,07325% Choice Calls292,99141% Planning Calls106,45170% Employer Calls3,74511% MyFRS.com Sessions Since June 2002 Since March 2003 Annualized Growth Total Visits4,466,7163,465,80911% Online Choice Service, 2 nd Election Service, & Advisor Service 702,429589,36019% Workshops Since February 2002 Since March 2003 Annualized Growth Attendance84,46427,02510%

6 MyFRS Financial Guidance Line: MyFRS MyFRS.com 6 Your Support in Promoting Use of All Education Resources Financial education and counseling resources are available —They will be around for the long-run, as long as employees use them Help your employees help themselves —Program resources can help you manage your workload —Program resources are world class and they work Independent, objective and available at no cost to employees —Resources are rated very highly by those employees who use them

7 MyFRS Financial Guidance Line: MyFRS MyFRS.com 7 HB 5025 Legislative Changes Uniform FRS Employer Contribution Rates Effective July 1, 2006 Retirement BenefitAdministrationHISTotal Regular Class8.69%0.05%1.11%9.85% Special Risk Class19.76%0.05%1.11%20.92% Special Risk Admin Class11.39%0.05%1.11%12.55% Elected Officers (Judges)18.40%0.05%1.11%19.56% Elected Officers (Legislative/Cabinet/Public Defender/State Attorney) 13.32%0.05%1.11%14.48% Elected Officers (County)15.37%0.05%1.11%16.53% Senior Management Service Class 11.96%0.05%1.11%13.12% DROP Class9.80%0%1.11%10.91% Please note that the contribution rates applicable to Investment Plan members have not changed (i.e., Regular - 9.0%, Special Risk %, Special Risk Administrative Support %, Legislators %, Governor, Lt. Governor, Cabinet Officers %, State Attorney, Public Defenders %, Justices, Judges %, County Elected Officers %, Senior Management Service %)

8 MyFRS Financial Guidance Line: MyFRS MyFRS.com 8 Generally Housekeeping Invalid Distributions Adjusted Present Value Calculation Purchase of Military Leave SB 1670 Legislative Changes – Effective July 1, 2006

9 MyFRS Financial Guidance Line: MyFRS MyFRS.com 9 SB 1670 Legislative Changes – Effective July 1, 2006 Invalid Distributions —Members who receive an invalid distribution (e.g., reemployed when a distribution is made, violate reemployment after retirement provisions, or received a distribution and original Investment Plan election declared invalid) will be given 90 days to repay the distribution. —If not repaid, may be declared an Investment Plan retiree.

10 MyFRS Financial Guidance Line: MyFRS MyFRS.com 10 SB 1670 Legislative Changes – Effective July 1, 2006 Adjusted Present Value Calculation — For members who transfer from the Pension Plan to the Investment Plan, changes the interest rate used for true-ups from a fixed 8% to the assumed rate of return used in the most recent FRS actuarial valuation Purchase of Military Leave — Allows the purchase of a military leave of absence under the Investment Plan — Investment Plan members currently purchase military leaves under Chapter 121, Part I

11 MyFRS Financial Guidance Line: MyFRS MyFRS.com 11 On-going Program

12 MyFRS Financial Guidance Line: MyFRS MyFRS.com 12 On-going Program – Employer Resources MyFRS.com Web Site New Hire Roadmap Employer Services Tab Quarterly Electronic ( ) and Hardcopy Newsletter Regular updates on FRS program Special newsletters/attachments On-line Employer Catalog Order communications The FRS Employer Assistance Line FRS-2121 ( ) Open M – F, except holidays, 9 a.m. to 8 p.m. Eastern time (8 a.m. to 7 p.m. Central time)

13 MyFRS Financial Guidance Line: MyFRS MyFRS.com 13 Plan Administration – Resources The FRS Employer Assistance Line Connects to: Ernst & Young Division of Retirement —Payroll administration —Pension Plan questions/calculations CitiStreet —Investment Plan administration —MyFRS Financial Guidance Program education materials fulfillment FRS Employer Assistance Line available toll free at FRS-2121 ( )

14 MyFRS Financial Guidance Line: MyFRS MyFRS.com 14 On-going Program – Employee Resources ALL employees can get their questions answered on financial planning, both FRS Plans, 2 nd Election, DROP and Retirement. Employee workshops: Using the FRS to Plan for Your Retirement, Investment Planning for Everyone, Estate Planning: Protecting Your Family, Pension Plan Education (DOR) MyFRS.com with FAQ’s, brochures, forms, user notification feature, investment facts, Advisor Service, Choice Service and 2 nd Election Service Toll-free MyFRS Financial Guidance Line, staffed by Ernst & Young financial planners, DOR counselors, and CitiStreet representatives Brochures and Videos via MyFRS.com, Financial Guidance Line and Employers

15 MyFRS Financial Guidance Line: MyFRS MyFRS.com 15 MyFRS Financial Guidance Line – Choice and Financial Planning One-on-one counseling provided by experienced Ernst & Young financial planners Impartial and balanced guidance on all financial planning topics Do not sell products or services Confidential Help with the Advisor Service and Choice Service Toll-free number MyFRS Available 9 a.m. to 8 p.m. Eastern time (8 a.m. to 7 p.m. Central time), M – F, except holidays

16 MyFRS Financial Guidance Line: MyFRS MyFRS.com 16 Quick Overview of Advisor Service – It’s not just for Investment Plan members Pension PlanInvestment/Hybrid Plan 1.Employee Data is already pre-loaded… All FRS benefit data (age, salary, service and membership class) All FRS benefit data and FRS investment funds 2.Employee adds data/goals (online or though the Financial Guidance Line)… Family’s non-FRS assets (e.g. 457, 403b, etc.) home value and other retirement plans 3.Advisor Service forecasts… Total retirement income: FRS (Pension including DROP or Investment Plan), Social Security and non-FRS assets 4.Advisor Services estimates… The likelihood of meeting an employee’s retirement income goal 5.Advisor Service investment guidance on… One non-FRS tax-deferred account FRS Investment Plan account 6.At employee’s cost of $15/year Get investment guidance across all tax-deferred and taxable investment accounts

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19 MyFRS Financial Guidance Line: MyFRS MyFRS.com 19 On-going Program – Employee Workshops Using the FRS to Plan for Your Retirement —60-90 minute discussion of 5 keys to retirement planning (including the role of your FRS Retirement Plans) Investment Planning for Everyone —90 minute discussion on the basics of investing (no matter which FRS Retirement Plan you participate in) Estate Planning: Protecting Your Family —90 minute discussion on wills, living wills and health care surrogate powers, life insurance planning, gifting and estate taxes New Employee Retirement Plan Choice Workshop Division of Retirement Workshops on Pension Plan and DROP Call the FRS Employer Assistance Line for more information!

20 MyFRS Financial Guidance Line: MyFRS MyFRS.com 20 On-going Program – New Employee Workshops – 60 min. Cash and Debt Management: Smart Spending —Cash and debt management workshop designed to help member’s evaluate current spending habits and create a spending plan Estate Planning: Caring for Your Loved Ones —Estate planning workshop will help provide an understanding of estate planning basics as well as debunk some of the myths surrounding this topic. Insurance Planning: Protecting Your Loved Ones —Insurance planning workshop will examine various insurance products as a way to protect assets and income in the event of: death, medical problems, aging, disability, property loss/damage or being sued. Education Planning: Funding the Future —Workshop will help members estimate the costs of education and identify ways to pay for schooling. Tax advantaged savings vehicles, including information on Florida-sponsored plans, will be explored. These new workshops are available to active members because the FRS believes successful retirement planning includes planning for all aspects of one’s financial life.

21 MyFRS Financial Guidance Line: MyFRS MyFRS.com 21 New Hires – Retirement Plan Choice Resources MyFRS.com resources — New Hire Roadmap — FAQ’s, brochures, forms, detailed plan comparisons — Online Choice Service — Enrollment MyFRS Financial Guidance Line available to answer all choice questions (Choice Service) New Hire videos or workshops Two reminder letters during 5th month Redesign of New Hire materials – copy to employers in August 2006 ER Newsletter

22 MyFRS Financial Guidance Line: MyFRS MyFRS.com 22 New Hires – Retirement Plan Enrollment Process On their date of hire, new hires are automatically enrolled in the FRS Pension Plan If a new hire wants to transfer to the FRS Investment Plan, he/she must file an election before the end of the fifth month following his/her month of hire by submitting a Retirement Enrollment Form 80% of IP enrollments are via the new EZ Enrollment Form and remain in the ‘default’ fund The FRS Select Moderate Balanced Fund is the default fund in the FRS Investment Plan

23 MyFRS Financial Guidance Line: MyFRS MyFRS.com 23 New Hires – Retirement Plan Enrollment Process Enrollment Forms are available in the new hire kit, with reminder letters or online at MyFRS.com If the new hire is a Regular or Special Risk Class employee, he/she can make the choice by paper, online or by calling the MyFRS Financial Guidance Line and having them file the choice Sooner new hire makes Investment Plan decision, sooner he gets full Investment Plan contribution (e.g., 9% vs. 8.69% for Regular Class) As an active employee, a new hire has the ability to reverse his/her choice one time before he/she retires from or leaves FRS-covered employment

24 MyFRS Financial Guidance Line: MyFRS MyFRS.com 24 New Education Materials – New Orientation Brochure “Your Money Your Choice, Welcome to the Florida Retirement System” brochure replaces “FRS Retirement Options for New Employees” brochure. Include in your new employee orientation packages. Provides high-level overview of the retirement plan choice they need to make, timeline, resources available, and informs them that kit is on the way. Available online through MyFRS.com under the “Employer” page, or by calling the Employer Assistance Line and connecting to CitiStreet.

25 MyFRS Financial Guidance Line: MyFRS MyFRS.com 25 New Education Materials – New Employee FRS Enrollment Kit New enrollment kit is called “FRS Retirement Options for New Employees”. Includes Benefit Comparison Statement, two detachable resource wallet cards, mini CD of FRS New Hire Video, Investment Fund Summary, EZ Retirement Plan Enrollment Form, and Privacy & Services Agreement. Mailed to new employee’s at the end of the month in which first reported on your monthly payroll.

26 MyFRS Financial Guidance Line: MyFRS MyFRS.com 26 New Education Materials – New Reminder Letters Newly designed reminder letters. Election deadline is 4:00 p.m. EST of the last business day of the fifth month following month of hire If no election made by last month of choice period, employee will receive two reminder letters. First reminder mailed last business day of the fourth month after the month of hire Final reminder letter mailed on 10th calendar day of the employee’s deadline month.

27 MyFRS Financial Guidance Line: MyFRS MyFRS.com 27 New Education Materials – Coming Soon Rewritten Confirmation Letter - mailed to new employees after they make a retirement plan choice. Redesigned Confirmation Brochure - inserted with the confirmation letter that explains ongoing resources provided to all employees by the FRS. FRS Employer Tool Kit - will provide tools to help you explain the new hire process to employees during their orientation process and the benefits offered under the FRS. Should be available in the Spring of 2007.

28 MyFRS Financial Guidance Line: MyFRS MyFRS.com 28 New Web Authentication Effective August 3, 2006 for MyFRS.com FRS members who log into MyFRS.com must create a new user ID and password instead of using their SSN and PIN. Each member will need to create two security questions and answers for identification purposes in case they forget their new user ID or password. Help available via online user manual or calling MyFRS Financial Guidance Line, Option 1. Original PIN still needed when calling the Financial Guidance Line, taking a distribution, and to re-establish their MyFRS.com account if they forget their new user ID or password.

29 MyFRS Financial Guidance Line: MyFRS MyFRS.com 29 Employer Roles and Responsibilities – New Hires Use the specialized resources in your orientations —“Your Money Your Choice, Welcome to the Florida Retirement System” brochure —New Hire Videos Long version (15 min.) available for viewing on MyFRS.com or by ordering copies Short version (10 min.) available by ordering copies (also included in enrollment kit, “FRS Retirement Options for New Employees”). Know where to point new employees to get their plan choice questions answered —Toll-free MyFRS Financial Guidance Line —MyFRS.com —Workshops Promote the importance of an active and informed choice between plans Promote redesigned New Hire materials – copy to employers in August 2006 ER Newsletter

30 MyFRS Financial Guidance Line: MyFRS MyFRS.com 30 Employer Roles and Responsibilities – Existing Employees Know where to point existing employees to get their questions answered on financial planning, either FRS Plan, 2 nd Election, DROP and Retirement Employee workshops: Using the FRS to Plan for Your Retirement, Investment Planning for Everyone, Estate Planning, Pension Plan Education (DOR) MyFRS.com with FAQ’s, brochures, forms, user notification feature, investment facts, Advisor Service, Choice Service and 2 nd Election Service Toll-free MyFRS Financial Guidance Line, staffed by Ernst & Young financial planners, DOR counselors, and CitiStreet representatives Brochures and Videos via MyFRS.com, Financial Guidance Line and Employers

31 MyFRS Financial Guidance Line: MyFRS MyFRS.com 31 What We Talked About Today FRS Retirement Plan Choice Update —Legislative changes The On-going Financial Guidance Program —Resources available to you —Resources available to ALL your employees (PP and IP) The New Hire Process —Resources —Plan administration Employer Roles and Responsibilities —Helping your employees help themselves

32 MyFRS Financial Guidance Line: MyFRS MyFRS.com 32 Questions and Answers

HRM Conference November 14 & 15, 2006