1. OPEN – C&HR – INFO 1-2 UM Retirement Plan Annual Valuation Board of Curators January 31, 2013

2. OPEN – C&HR – INFO 1-3 UM’s Two Core Retirement Plans Employee Retirement Investment (new) Plan Retirement, Disability and Death Benefit Plan Defined Benefit Portion Multiplier Formula1.0% of pay2.2% of pay UM Contribution3.20% of salary7.25% of salary Vesting5 years Employee Mandatory Contribution 1% up to $50,000, 2% of amount above $50,000 1% up to $50,000, 2% of amount above $50,000 Defined Contribution Portion UM Automatic Contribution 2% of pay UM Match100% up to an additional 3% of pay Vesting3 years (need not be consecutive) Estimated UM Contribution 7.4 to 7.7% of Pay7.25%

3. OPEN – C&HR – INFO 1-4 Funding Approach  Funding for both defined benefit plans (pre and post October 2012) is held in the same trust −Annual UM contributions are blended −Employees contribute the same amount to the defined benefit portion  Valuation as of October 1, 2012 −No members in new plan for this valuation −However, since the valuation predicts funding for FY14, the contribution includes a projection based on previous hires

4. OPEN – C&HR – INFO 1-5 Defined Benefit Annual Valuation Results

5. OPEN – C&HR – INFO 1-6 Annual Valuation Summary  Determine the annual contribution required to meet funding obligations  FY14 funding contribution is slightly less than originally predicted  Highest annual contribution in history of plan, due to extreme market downturn in 2008 and 2009 Note: Full report available on the UM benefits website a

6. OPEN – C&HR – INFO 1-7 Actuarial Valuation Report Howard Rog, Actuary, Segal Consultants  Annual valuation includes: −Present provisions of the plan −Characteristics of active, inactive and retired members −Actuarial assumptions and methods −Actuarial value of the Plan’s Trust assets  Determination of annual contribution

7. OPEN – C&HR – INFO 1-8 Characteristics of Active Members Element 20112012 Academic and Administrative Number11,14811,101 Average age46.146.3 Average years of service10.711.0 Average annual salary$71,541$73,141 Clerical and Service Number7,2797,098 Average age44.544.8 Average years of service9.910.1 Average annual salary$32,195$32,986

8. OPEN – C&HR – INFO 1-9 Characteristics of Retired Members Academic and Administrative Clerical and Service Number of retirees4,1032,621 Average age at retirement63.562.3  Monthly benefits range from less than $100 to more than $5,000  48 retirees are age 95 or older  551 pensions began in 2012

9. OPEN – C&HR – INFO 1-10 Actuarial Valuation Report Assumptions  Assumptions (reviewed every 5 years):  Investment Return  Actuarial Funding Method  Asset Valuation Method  Salary and Payroll Increases  Retirement Rates  Mortality Rates  Withdrawal Rates  Disability Rates  Presence and Age of Spouse

10. OPEN – C&HR – INFO 1-11 Development of Actuarial Value of Assets Calculation of Unrecognized Return Original Amount Unrecognized Return Year ended September 30, 2012$141,201,927$112,961,541 Year ended September 30, 2011($152,060,512)($91,236,307) Year ended September 30, 2010$31,521,057$12,608,423 Year ended September 30, 2009($183,169,581)($36,633,916) Year ended September 30, 2008($742,138,877)0 Total Unrecognized Return($2,300,259)

11. OPEN – C&HR – INFO 1-12 Changes Impacting Plan Contribution Requirements Dollar Amounts Percent of Payroll Total cost as of October 1, 2011$104,711,58810.15% Changes due to: Change due to increased payroll$1,021,181(0.04%) Demographic changes($188,141)(0.02%) Loss/(gain) from actuarial experience and contributions $20,529,6651.96% Total changes$21,362,7051.90% Total cost as of October 1, 2012$126,074,29312.05%

12. OPEN – C&HR – INFO 1-13 Determination of FY 14 DB Annual Contribution Contribution Requirements% of Pay Normal cost6.75% Total costs11.62% Employee contribution-1.27% Net employer DB contribution10.35% Note: Includes DB funding for both pre and post October 2012 members

13. OPEN – C&HR – INFO 1-14 Projected UM Retirement Plans Contributions % of Payroll Actual 11.62% 11.52% 11.02% 10.63% 10.02%

14. OPEN – C&HR – INFO 1-15 Total Cost Projections for all Retirement Plans (Defined Benefit and Defined Contribution)

15. OPEN – C&HR – INFO 1-16 FY14 Total Retirement Plan Costs Contribution Requirements% of Pay Total Defined Benefit (DB) costs11.62% Employee Contribution to DB-1.27% Net Employer Contribution to DB10.35% Projected Employer Contribution to DC.47% Total Employer Contribution to Plans*10.82% *Estimated FY14 Employer Contribution = $119.2 million

16. OPEN – C&HR – INFO 1-17 Projected Use of Stabilization Fund FY12FY13FY14FY15FY16FY17 Gross Required Contribution8.39%10.16%12.09%12.30%12.08%11.96% Projected Employee Contribution -1.23%-1.26%-1.27%-1.28%-1.29%-1.30% Net Required Employer Contribution 7.16%8.90%10.82%11.02%10.79%10.66% Flat Rate – Retirement %7.25%8.25%9.00%9.75%10.50%11.25% Excess (deficiency) of Flat Rate to Net Required Employer Contribution 0.09%-0.65%-1.82%-1.27%-.29%.59% Stabilization Fund, Ending Balance (millions) $ 67.6$ 61.6$ 42.2$ 28.8$ 26.1$33.3