1. Atlantic Connection Conference Shared Risk Plans, July 9, 2014

2. Response to Unfunded Pension Funds  Between 2009 and now - over 45 states have instituted pension plan modifications.  Categories of the modifications –COLA reductions and implementation contingencies –Increasing employee contributions –Higher age and service requirements –Replacing DB plan with another type of plan Defined contribution plan Hybrid plan Cash balance plan

3. 3 Types of Risks to be Shared

4. Types of Sharing Plans

5. Continuum of Retirement Plan Shared Risk DB Plan, Employer Contributions Only DB Plan, EE and ER Contributions Cash balance plan, hybrid DB-DC plan, plans in which benefits or employee costs vary on the basis of such factors as investment performance and the financial or actuarial condition of the plan More Employer Risk Shared Risk More Employee Risk DC Plan, EE and ER Contributions DC Plan, Employee Contributions Only Excerpted from NASRA Issue Brief, June 2014

6. Hybrid Retirement Plans DB+DC Plan – Indiana, Ohio, Oregon, and Washington - the employer finances the DB component, and the DC component is funded by mandatory employee contributions (ranging from 3 percent to 15 percent of salary). Cash balance plans - combines elements of traditional pensions with individual accounts into a single plan. Assets are pooled, invested by professionals, and guarantee annual returns to plan participants.