1. OREA ANNUAL CONVENTION October 3, 2018 Tom Spencer, Executive Director
Teachers’ Retirement System
Policy Presentation

2. Client Overview (June 30, 2018)
Total Clients – 177,888
88,534 Active Clients
63,796 Retired Clients (incl. beneficiaries)
12,243 Inactive Vested Clients
13,315 Inactive Non-vested Clients

3. Client Overview

4. Client Overview (FY 2017) Average Active Client Average Retired Client
$46,878 Salary
46.0 Years of Age
11.1 Years of Service
Average Retired Client
$20,908 Annual Benefit (regular ret’ees)
$20,443 (reg. & disab. ret’ees, benefic. & spouses)

5. Client Overview

6. Financial Overview Actuarial Condition
2017 Funded Ratio
70.4% on actuarial basis (65.7% in FY 2016)
70.1% on a market value basis (62.2% in FY 2016)
Funding Period
17 Years (23 years in FY 2016)
*Board lowered investment return assumption from 8.0% to 7.5% for FY 2016 actuarial report

7. Financial Overview

8. Financial Overview FY-2018 Contributions - $1.07 Billion
Client Contributions - $312.8 M
Employer Contributions - $415.9 M
State Contributions (& grants) - $344.6 M
FY-2018 Expenditures - $1.4 B
Benefit Payments - $1.36 B
Refunds - $42.9 M
Administrative Expenses - $4.2 M
*Ratio of Contrib. to Expenditures – 76.2%
Actuarial Line Share Allocation Total
-25.9

9. Financial Overview

10. Financial Overview Investments
FY-2018 Investment Earnings/Loss
$1.49 Billion (10.00% rate of return)
Income: $417.5 M
Appreciation: - $1.14 B
Investment Expenses - $69.3 M
FY-2008 Investment Return was -7.5%

11. Financial Overview Investments

12. Financial Overview Investments
Positives in Recent TRS Performance (thru 6/30/18
Earned 8.7% for last 10 years (1st percentile)
Earned 9.50% for last 5 years (5th percentile)
Earned 10.00% for last 12 mos. (9th percentile)
Long term returns good from active domestic equity managers and private equity. Very difficult to get returns from fixed income investments as interest rates rise.
Source: Oklahoma State Pension Commission, NEPC Consultant

13. Financial Overview Investments
SUMMARY
System is underfunded but trending higher. Very good returns in last two fiscal years.
Funding period is 17 years down from infinity
Long-term financial performance is still very good
Contributions & Revenue almost equal Actuarially Determined Contributions

14. Legislation 2018
HB 1340 (Rep. McDaniel, et al; Sen. Treat, et al) One-time stipend to members retired as of 10/1/13. Two percent of the gross benefit up to $1,000. Minimum $350 for those with at least 20 years. (Eff. 10/1/18).
HB 2553 (Rep. McDaniel; Sen. Pugh) TRS request bill. Section One - Permits the TRS Board to gradually wind down the TRS 403(b) plan. Transition to local plans. Section Two - TRS staff approves disability retirements after Medical Board approval. The TRS Board hears denials. Section Three – Eliminates a loophole in ESIP that a few higher education members had. (Eff. 8/2/18).
SB 527 (Sen. Stanislawski; Rep. McDaniel) Permits TRS members employed in higher education to purchase up to two years of service credit toward retirement at full actuarial cost, if within two years of retirement. (Eff. 11/1/18)

15. “Retirement in America: Out of Reach for Working Americans
“Retirement in America: Out of Reach for Working Americans?” Nat’l Inst. on Retirement Security
Nearly 60% of the 100 million working Americans have no retirement account assets
Typical worker with retirement account has a balance of $40,000
68.3% of those between ages 55 to 64 have retirement savings less than their annual income
Some states are offering retirement savings plans to their residents. (California, Oregon, Washington & Illinois)
(President Trump issued executive order (8/31/18) for U.S. Labor Department to look at relaxing regulations to permit employers to create multi-employer plans to hold down costs)

16. Tom Spencer Executive Director (405) 521-4745
What other questions am I likely to get that I haven’t addressed in the presentation or the notes?