Follow us on: TRS vs. ORP What HR Liaisons Should Know June 27, 2013

Human Resources June 27, 2013 | Page 2  Basics of Teachers Retirement System (TRS) vs. Optional Retirement Program (ORP)  ORP Notification Process  ORP Election/Enrollment Process  HR Liaison – Your Role  TRS Legislative Update Overview

Human Resources June 27, 2013 | Page 3  TRS eligibility is working 50% for 4.5 months during the fiscal year (FY)  Excludes Student Titles  Automatic enrollment on date of hire/eligibility  Current employee contribution is 6.4%  Vested at 5 years TRS service credit  Service credit earned for 90 working days each FY TRS Basics

Human Resources June 27, 2013 | Page 4  Defined benefit plan  Receive monthly annuity upon reaching retirement criteria  Retirement criteria contingent on various factors  A withdrawn account ONLY receives employee contributions and NOT the employer contributions. TRS Basics Continued

Human Resources June 27, 2013 | Page 5  Requires ORP eligible title  Requires 100% effort for at least 4.5 months  One-time irrevocable decision  Vested at 1 year, 1 day from ORP participation date (not hire or eligibility date)  Requires enrollment forms to elect ORP in lieu of TRS  Defined contribution plan ORP Basics

Human Resources June 27, 2013 | Page 6  Benefits Services receives weekly report of potential ORP eligibility based on employment data in BPP after EPA completes  Benefits Services verifies ORP eligibility  Benefit Services sends ORP packet to eligible employees ORP Notification Process

Human Resources June 27, 2013 | Page 7  Employee choosing to elect ORP must:  select ORP vendor and complete the vendor application forms  complete forms in the ORP packet including the TRS 28 Notice of Election to Participate in Optional Retirement Program  Submit completed forms to Payroll Services  Must be completed within 90-day election window ORP Election/Enrollment Process

Human Resources June 27, 2013 | Page 8  Refer employees to Benefit Services  Process EPA documents timely  Impacts enrollment window  Impacts payroll deductions  Work with Benefits Services for special situations or early notifications  Enter accurate appointment term especially during summer HR Liaison – Your Role

Human Resources June 27, 2013 | Page 9  TRS must address unfunded liability  Ordered to conduct a comprehensive study  Evaluated many options including:  Increase minimum age from 60 to 62  Increase average salaries from 5 to 7  Change benefit calculator from 2.3% to 2.0%  Change member contribution rate TRS Legislation

Human Resources June 27, 2013 | Page 10  SB1458 and HB1884 passed during legislative session  Effective September 1, 2014  Changes impact several key areas  Changes to eligibility criteria effect those who do not have 5 years with TRS as of 9/1/2014  Does not impact the retirement eligibility rules for Texas A&M University System retiree status TRS Legislation Passed

Human Resources June 27, 2013 | Page 11  Decreases the interest rate from 5% to 2%  Increases the minimum age for full, normal age (unreduced annuity) retirement from 60 to 62 for “non-grandfathered”  Adjusts the employee contribution rate in phases:  Remains 6.4% for FY14  6.7% for FY15  7.2% for FY16  7.7% for FY17 TRS Legislation – Key Changes

Human Resources June 27, 2013 | Page 12 TRS Legislation – Key Changes 6.4%6.7%7.2%7.7% $2,560$2,680$2,880$3,080 Amount of annual employee TRS member contribution based on annual salary of $40, FY14 FY15FY16 FY17

Human Resources June 27, 2013 | Page 13  Timely and accurate processing of EPA is critical  Strict timelines apply and timing of the ORP election has consequences for the employee  TRS Legislative changes passed recently  Effective September 1, 2014  Grandfathered with 5 years of TRS service credit  HR Liaisons play an important role in the process; please help HR by forwarding information found in HR Liaison Network News Final Thoughts

Human Resources June 27, 2013 | Page 14 Judy Kurtz Retirement Specialist Sarah Tobola Employee Benefits Manager Resources: How may we help you?

(979)   Follow us on: Our goal is to inspire you to reach your full potential.