0. Understanding Your Duke Benefits

1. Agenda Rule of 75 Duke 403(b) Plans:
What does it mean to me?
Duke 403(b) Plans:
Faculty & Staff and Savings for Retirement
How do these 403(b) plans work?
Employees’ Retirement Plan (ERP)
When can I access my pension plan?

2. Rule of 75
Must meet the ‘Rule of 75’ (age plus years of service add up to 75) in order to retire with full benefits (Being able to continue your health and dental benefits with Duke paying a portion of the premium, if eligible)
Early Retirement refers to having access to your pension plan (ERP) early. It is totally separate from meeting the Rule of 75.

3. Ineligible for Retiree Health/Dental Insurance
Offered COBRA coverage
Must be participating in health and/or dental plan(s) at time of retirement
Extends coverage for 18 months
Total premium plus 2%
Billed monthly

4. When I retire I would like to…

5. Retirement Income Sources
Your Contributions
Duke’s Contributions
Social Security

6. Duke Retirement Plans Faculty and Staff Retirement Plan
Monthly Paid Employees:
403(b) Plan:
Faculty and Staff Retirement Plan
Biweekly Paid Employees:
403(b) Plan:
Savings for Retirement Plan
Defined Benefit Plan:
Employees’ Retirement Plan (ERP)

7. Duke Retirement Plans
Both Biweekly and Monthly employees receive a university sponsored benefit towards their retirement regardless of participation in the 403(b) plan.
Your contributions are voluntary, however Duke still recommends contributing at least 3% of your monthly salary to help you to reach at least 75% of your pre-retirement income when your retire.

8. What is the 403(b)? You contribute by payroll deduction
Your contribution is tax-deferred (not tax-free)
You choose where to invest your contributions
Your contributions + investment performance taxed when withdrawn (10% penalty if < age 59 ½)

9. Faculty & Staff Retirement Plan
The 2012 formula for the
Duke contribution is:
8.9% of the first $55,000 of salary and % of annual salary in excess of $55,000, up to a statutory salary limit of $250,000
Example with $60,000 salary in 2012:
2012 Duke Contribution Percent
Multiplied by Sample 2012 Salary
EQUALS: Annualized Duke Contribution
8.9%
$55,000
$4,895.00
13.2%
$5,000
$660.00
Total in 2012
$60,000
$5,555.00

10. What is Vesting?
Vesting refers to the point at which participants own the university contribution and it cannot be applied to employee contributions.
Once you are vested, you are always vested.

11. Employees hired before Jan. 1, 2012
Employee is 100% vested in both employee voluntary contribution and Duke contribution.
If the employee is subsequently rehired by Duke, they will continue to be 100% vested.

12. Employees hired after Jan. 1, 2012
Employee is 100% vested in their employee voluntary contribution.
Employee will be 100% vested in Duke’s contribution upon:
Completion of three years of service
Attainment of age 65 while employed by Duke
Hired after age 65
Death while employed by Duke
Approval for long term disability under the Duke LTD Plan

13. Which Investment Carrier?
Decisions
How Much?
Which Investment Carrier?
Which Funds?

14. How much are you going to contribute?
Consider the pre-tax status of your contributions (affects take-home pay by approximately 2/3 of contribution amount)
To obtain a more accurate calculation, try the Take-Home Pay Calculator:
Minimum contribution per pay period $12.50 (biweekly) or $25.00 (monthly). Maximum contribution is 80% per pay period.
Maximum IRS Limit $17,000 for 2012, plus annual catch-up amount, if eligible:
Over age of 50 you may contribute an additional $5,500 into your 403(b) account for 2012
If you have more than 15 years of service you may be eligible to contribute an additional $3,000 into your 403(b) account for 2012 (Contact Benefits at to inquire about 15 year special election)

15. Which Investment Carrier Will You Choose?
Fidelity

16. Investment Decisions
To make it easier to navigate your choices, investments will be grouped into three tiers.
Tier 1: Asset Allocation Funds for a ready made portfolio.
Tier 2: Core Funds
Tier 3: Other Funds
Since Duke offers over 300 funds to EE’s we have recently switched to a tiered investment structure to make your fund selection decision easier.
Duke has an Investment Advisory Committee (IAC) comprised of senior level administrators and Financial consultants who will meet once a year to review the investment line up

17. Asset Allocation Fund (Tier 1)
The Asset Allocation Funds offer a way to make a single choice for your retirement needs based on your expected years to retirement.
The Balanced Fund offers a fixed exposure to stocks and bonds
The Target Funds include a diversified mix of stocks, bonds and short-term instruments that change automatically over time
This tier geared toward EE’s who are not as knowledgeable about the market and investment decisions.
Gives EE’s a hands-off approach to investing, make a single election and let it ride to retirement.
Starts with more aggressive investments as you near retirement asset allocation changes to more conservative investments.

18. Core Funds (Tier 2)
These funds represent the primary asset classes and have been chosen based on their suitability for inclusion in a customized retirement portfolio.
This option may be good if you are more comfortable diversifying your own investments.
Tier 2 is aimed for EE’s who are somewhat knowledgeable about the market and want to have a little more control over their investments.
13 Best in class funds are chosen from each vendor ranging from the aggressive to conservative, to give EE’s wide range of options

19. Other Funds (Tier 3)
Other Funds include all investment options available through Duke’s retirement plan that are not already listed under Tier 1 or Tier 2.
These funds will not be monitored regularly by the IAC, so you will be responsible for monitoring the holdings and performance of these funds to ensure they remain in line with your investment strategy.
Tier 3 is geared toward the experienced investor
This includes the remaining 300 funds available to EE’s

20. Default Investment Option
Where do your contributions go if you do not choose a retirement plan vendor?
Vanguard
Target Retirement Fund closest to your 65th birthday
Where do your contributions go if you select a retirement plan vendor but do not select investment funds/investment options?

21. Things to Consider in Your Decision…
How much will you need in retirement?
Time horizon
Tolerance for risk
Diversification
Asset Allocation

22. If You Leave Duke… Your vested* 403(b) funds can:
Remain in plan until age 70 ½
Be rolled over into your new employer’s 403(a), 403(b), 401(k), governmental 457 plan
Be rolled over into an IRA
Be withdrawn as cash (IRS penalties apply)
*You are always 100% vested in your employee contributions, however your 403(b) employer contributions may be subject to vesting.
Keep them here at Duke
Take with you to new ER
Move to personal RA
Withdraw as cash, amount will be taxed and include an additional 10% penalty for early withdrawal before age 59 1/2

23. Did you transfer from one payroll to another?
Have you ever transferred from one payroll to another at Duke?
You may be entitled to a benefit under the Employees’ Retirement Plan (ERP) for employees paid biweekly.
If you are entitled to a benefit, this frozen benefit is calculated using your years of service and compensation while you were paid biweekly.
This frozen benefit will appear on your annual benefits statement. TO
Biweekly
Monthly

24. What is Employees’ Retirement Plan (ERP)?
The benefit is defined
Duke makes all contributions
You are not required to make any contributions to the plan
You are not required to participate in any retirement plan in order to be eligible for this pension

25. Eligibility You automatically become a plan member, if you:
Have reached age 21, and
Have worked at least 1,000 hours during your first year of employment or in any future fiscal year. (July 1 to June 30)
You are entitled to a benefit from the Plan after 5 years continuous service. This is called vesting.

26. ERP Formula 1.25% of average final compensation TIMES
years of credited service up to 20 years
PLUS
1.66% of average final compensation
years of credited service over 20
This calculation takes into consideration your average earnings (5 highest consecutive years of last 10 fiscal years), your age and years of credited service

27. Example – Employee Retiring at Age 65
ERP Income
Average final compensation - $27,086
30 Years of credited service
1.25% x 20 x $27,086 = $6,772
1.66% x 10 x $27,086 = $4,496
Annual benefit = $11,268
Monthly benefit = $939
Total Monthly Income $2,620
Replacement Ratio 105%

28. Example – Employee Retiring at Age 62
ERP Income
Annual benefit at age = $11,268
Less 3% reduction for each year
between age 62 & 65:
9% x $11, = -$1,014
Annual benefit = $10,254
Monthly benefit = $855
Total Monthly Income $2,162
Replacement Ratio 86%

29. What are my payment options?
Single Life Annuity
Joint and Survivor Annuity (50%, 75% or 100%)
Level Income age 62 or 65
If lump sum value is less than $10,000 you may be eligible for a lump sum payment
Payments under the Employees’ Retirement Plan are considered taxable income
Discrepancy in age between you beneficiary will make a difference in benefit

30. When can I start to receive a benefit?
Normal Retirement
Age 65 - full benefit
Early Retirement
Age 45 or older and 15 years of credited service
reduced based on age at time benefit starts
Deferred Retirement (working at Duke past age 65)
Additional 10% for extra credited service over age 65

31. More on Early Retirement Benefits
Early reduction factors are less for employees age 55 with at least 20 years of credited service
Early reduction examples:
Age 20 Years 20 Years
% %
% %
% %
% %

32. Take action now!!!
“Small amounts regularly saved is how the road to wealth is paved.” – Benjamin Franklin

33. Action Items Organize and plan your finance
Start contributing towards your voluntary employer sponsored 403b retirement plan
Meet with a Financial Advisor
Review allocation every year
Use the investment carrier calculators
Learn about the different investments
Update your beneficiaries
Save, save and save!!!!

34. More Information
Financial Planning Tools on Benefits web site ( - Click on “Retirement Manager”)
Review/Change your contribution rate
Review portions of your personal benefits statement on-line
Set up a one-on-one session with your retirement plan provider
Human Resources Information
Center at

35. 403b Investment Carriers Information
Fidelity
Contact: Chris Mann Local Phone: (800) National Phone: (800) Web Site:
Contact: Hank Conway
Local Phone: (919) National Phone: (800) Web Site:
Contact: Tom Overcash Local Phone: (919) National Phone: (877) Web Site:
National Phone: (800) Web Site: