1. Collin County Retirement Plan Briefing September 7, 2010

2. How Your Plan Works

3. A percentage of your employee’s paycheck is deposited into his or her TCDRS account. Your employee’s savings grow at an annual, compounded rate of 7% regardless of market ups or downs. You are also saving for your employee’s retirement. Your employer contributions become matching dollars for employees that retire. Your rate is determined annually based on your projected assets and estimated benefits promised. At retirement, you match the employee’s final account balance, including interest, $2.50 for every dollar saved. We calculate a monthly retirement payment based on that account balance and matching. Your retiring employee receives a monthly benefit payment for life. Five Simple Steps

4. 4 Benefits Are Funded Primarily by Investment Earnings 76% Investment Earnings 11% Employee Deposits 13% Employer Deposits TCDRS Asset Growth (1967 through 2009)

5. Investment Results As Of December 31, 2009

6. Collin County Retiree Profile as of Dec. 31, 2009 Average Age at Retirement Average Service at Retirement 1 Average Current Annual Benefit 2 Average Annual Benefit at Retirement Average Replacement Ratio at Retirement 3 6218$22,000$18,00039% Includes service with other TCDRS employers and proportionate service Includes cost-of-living adjustments adopted by Collin County Based on the average annual benefit at retirement and final salary as available 123123 All averages reflect plan provisions in effect at the time of each retirement. The averages are based on data that is currently available.

7. Projection of Collin County Retirees 250% Match Continuing Each year’s number of retirees reflects estimated number of new retirees and deaths. It is estimated that only between 25% and 30% of all Collin County employees will eventually receive a monthly benefit in retirement. 3.5% annual inflation * **

8. Projection of Collin County Retirees 200% Match Beginning in 2011 Each year’s number of retirees reflects estimated number of new retirees and deaths. It is estimated that only between 25% and 30% of all Collin County employees will eventually receive a monthly benefit in retirement. 3.5% annual inflation * **

9. % of Final Salary Replaced by Collin County Retirement Benefit at Age 65 for a New Hire Above based on an employee deposit rate of 7% and annual salary increases using the graded valuation salary scale. Final Salary 18 Yrs of Service Average Collin County Retiree

10. Projection of Collin County Required Rate Under Current and Proposed Plans These are projections and actual results will vary. The projections are based on the same data, methods and assumptions as those used in the December 31, 2009 actuarial valuation, including a long-term investment return assumption of 8% per year. The required rate increases for the first nine years as the investment losses from 2008 are recognized. The required rate drops after 20 years reflecting the UAAL being amortized over a closed 20-year period.

11. Projection of Collin County Funded Ratio Under Current and Proposed Plans The projections are based on the same data, methods and assumptions as those used in the December 31, 2009 actuarial valuation, including a long-term investment return assumption of 8% per year.

12. Projection of Current Collin County Plan Funded Ratio and Unfunded Liability Amortized Over 20-Year Closed Period The difference between the actuarial accrued liability and the actuarial value of assets (the red area) represents the unfunded actuarial accrued liability. The projections are based on the same data, methods and assumptions as those used in the December 31, 2009 actuarial valuation, including a long-term investment return assumption of 8% per year. This projection assumes the current plan with 250% matching. Funded Percentage 2009 Funded 85% LIab 260 Assets 220 Unfunded 40 2017 Funded 83% Liab 453 Assets 376 Unfunded 77 2023 Funded 91% Liab 641 Asset 581 Unfunded 60 2031 Funded 99% LIab 952 Assets 947 Unfunded 5

13. 13 TCDRS Plan Design We have a unique structure that combines the best features of defined benefit plans and defined contribution plans. Defined Benefit Plans  Example: traditional pension plan  Benefit based on employee’s final salary and length of career  Monthly benefit lasts for lifetime  Employer assumes investment risk TCDRS  An employee-savings based plan  Benefit is based on employee’s final account balance, plus employer matching  Employee must retire to earn employer matching  Interest rate fixed at 7%  Monthly benefit lasts for lifetime  Employer assumes investment risk Defined Contribution Plans  Example: 401(k)  Benefit based on employee’s savings and employer matching, if provided  Benefit varies according to market performance  Benefit may not last a lifetime  Employee assumes investment risk

14. Questions?