1. Benefit Overview l Paul Carlson l Regional Counselor l State of Alaska l Department of Administration l Division of Retirement and Benefits

2. State of Alaska Administered Plans l Defined Benefit Plans Public Employees’ Retirement System (PERS) Mandatory participation l Defined Contribution Plans Alaska Supplemental Annuity Plan (SBS-AP) Mandatory participation l Deferred Compensation Plan (DCP) Voluntary participation

3. PERS Web Site l www.state.ak.us/drb l PERS statutes, handbooks, forms, Newsbreaks, travel schedules, seminar registration l Member Services; enroll in Member Services and open the door to your account information or to obtain benefit estimates.

4. Member Services

5. Overview of the PERS l Lifetime Monthly Pension Benefit l Lifetime Medical Insurance Coverage l Survivor Options for Your Spouse l Disability and Death Benefits l Additional Optional Insurance Plans

6. A Little Advice l Whether you are 5 years or 25 years from retirement, it is never too early or too late to start planning. l Experts say you will need 80-90% of your present income to live comfortably in retirement. Your needs may differ.

7. What type of plan is PERS? l PERS is a Defined Benefit Plan. This means your monthly pension benefit is based on a statutory formula, not on the contributions you have paid.

8. What Can PERS Give You? l PERS provides a constitutionally guaranteed set of benefits to you based on your date of PERS enrollment that cannot be diminished. l To be eligible to receive many of the benefits provided by PERS you must be vested.

9. What is Vesting? l Vesting is the completion of 5 paid up years of membership service in the PERS.

10. How Service is Credited l Full time members earn a day service for each calendar day from their PERS hire date until a break in service. l Part time members earn pro-rated service based on the number of part- time hours worked. l Part-time service accrual cannot exceed what the full time accrual would be for the same period.

11. What does Vesting do for You? l It enables you to be eligible for a guaranteed monthly lifetime pension benefit at the time of retirement with health insurance options. l It enables you to apply for a nonoccupational disability benefit. l It gives you the ability to claim service, potentially increasing your retirement benefit.

12. Disability Benefits l Occupational disability—if you suffer a total and presumably permanent disability caused by your job. l Nonoccupational disability—if you suffer a total and presumably permanent disability caused by an injury or illness not related to your job.

13. Non Occupational Death Benefits l Non vested members or beneficiaries that are non spouse: Lump sum benefit (Account balance, plus $1,000, plus $100 for each year of service) l Spouses of vested members: Lump sum benefit or; Lifetime 50% survivor benefit with access to medical insurance.

14. Occupational Death Benefits l Surviving spouse or dependent children are eligible for monthly benefits and access to medical insurance. l All other beneficiaries are entitled to the lump sum payment.

15. When am I Eligible to Retire? l You can be eligible for either a service based retirement or an age based retirement, whichever you reach first.

16. PERS-Four Tiered System l Tier I, II, and III members can retire at any age with 20 years of paid up “Peace Officer/Firefighter” membership service or 30 years paid up membership service for “All Other” employees.

17. PERS-Four Tiered System l Tier I: First enrolled in PERS prior to July 1, 1986, early retirement age 50, normal retirement age 55. l Tier II: First enrolled in PERS on or after July 1, 1986 through June 30, 1996, early retirement age 55, normal retirement age 60. l Tier III: First enrolled in PERS on or after July 1, 1996 through June 30, 2006, early retirement age 55, normal retirement age 60. l Tier IV: First enrolled in PERS on or after July 1, 2006 (Defined Contribution Retirement Plan).

18. Early Retirement l Age 50 Tier I l Age 55 Tier II & III l Reduction of 1/2% per month for each month under normal retirement age l Lifetime Reduction

19. How will your benefit be calculated? l Your benefit is calculated using a formula that includes your average monthly salary (AMS), a benefit multiplier and your total years of credited service.

20. Average Monthly Salary (AMS) l All Others Tier I and II: Based on the average of three highest consecutive years of salary. l All Others Tier III: Based on the average of the five highest consecutive years of salary. l Peace Officer/Firefighter All Tiers: Based on the average of three highest consecutive years of salary. l Must work 115 days of credited service in the last year to include as one of the highest consecutive years.

21. Average Monthly Salary Example l Payroll YearSalaryMonths l 2001$36,000 12 l 2002$33,000 11 l 2003$18,000 6 l Totals$87,000 29 $87,000.00 divided by 29 = $3,000.00 (AMS)

22. Benefit Formula (All Others) l 2% x first 10 years and all years prior to 1986 x AMS l 2.25% x second 10 years x AMS l 2.5% x all years over 20 x AMS l All Others Benefit Formula Example: l Member has $3,000 average monthly salary and 21 years of service l 2% x 10 years x $3,000 = $600 l 2.25% x 10 years x $3,000 =675 l 2.5% x 1 year x 3,000 = $75 l Total base retirement benefit = $1,350.00 per month. l If you take early retirement or choose a joint and survivor option this normal benefit amount is reduced.

23. Benefit Formula (Peace Officer/Firefighter) l 2% x first 10 years x AMS l 2.5% x all years over 10 x AMS l Peace Officer/Firefighter Benefit Formula Example: l Member has $3,000 average monthly salary and 25 years of service l 2% x $3,000 x 10 years = $600 l 2.5% x $3000 x 15 years = $1,125 l Total base retirement benefit = $1,725 per month l If you take early retirement or choose a joint and survivor option this normal benefit amount is reduced.

24. Medical Insurance l Tier I: System paid major medical coverage for retiree and eligible dependents at retirement. l Tier II: System paid major medical coverage at age 60 or at any age if you retire with 25 years of peace officer/firefighter membership service or 30 years of all other membership service, if you take an age- based early retirement before age 60 and desire coverage you must purchase and pay full premium until age 60. l Tier III: Must have 10 years of service to receive Tier II medical benefits, otherwise must pay full medical premium as long as coverage is desired.

25. Optional Plans l Dental-Vision-Audio (DVA) l Long Term Care (LTC) l Optional Life (for participating members)

26. How Can I Increase My Benefit? l Higher Salaries l Work Longer l Claim Eligible Service Active military service Temporary service with a PERS employer Worker’s Compensation leave without pay

27. Indebtedness l An indebtedness is established when you claim service or are reinstating previously refunded service. l You may elect to pay your indebtedness with a pre or post tax payroll deduction. l Periodic monthly payments (post tax). l Lump sum payment (post tax). l A pre-tax transfer from a qualified plan. Pre-tax transfers will no longer be accepted for refunded service after July 1, 2010. l Take a lifetime actuarial reduction on your retirement benefit.

28. How much is paid to PERS? l Peace Officer7.5% l Firefighters 7.5% l All Others6.75% l Alternate Option (school district) 9.6%

29. Contribution Account l Only your contributions show in your account. l Your account accrues 4.5% interest. l Any indebtedness payments you have made are part of your contribution account. l Employer Contributions are NOT part of your account.

30. Refunding Contributions l Employee contributions and interest only. l Must be terminated a minimum of 60 days before refund is issued. l A refund forfeits all rights to benefits including retirement and insurance eligibility.

31. Refunding Contributions l 20% federal withholding if paid directly to you. l If you are under age 59 1/2, you may be required to pay an additional 10% early withdrawal tax penalty. l Pre-tax contributions are rollover eligible.

32. Social Security l If you work in a position that does not pay into social security, and have less than 30 years of qualifying Social Security earnings, you may be subject to the Windfall Elimination Provision which will reduce your Social Security benefit. l Benefit estimates received from social security do not include the offset, it must be specifically requested. l Contact SSA for more information. (1-800- 772-1213) / www.ssa.gov

33. SBS-Annuity Plan l Mandatory Defined Contribution plan, account balance is the benefit. l Immediately 100% vested in employee and employer contributions. l 6.13% Employee Contribution per pay period. l 6.13% Employer Contributions per pay period. l Employee controls investment l Participants must be terminated from employment for 60 days before they can access account.

34. SBS-AP Distribution l May leave funds in account after termination. l Must commence minimum distribution by age 70-1/2. l Cash-in account balance. l Rollover to other qualified plans. l Partial lump sum payouts, remaining balance stays invested. l Term certain annuities.

35. SBS-AP Distribution l Single Life Annuity l Life Annuity with period certain payment l 2 joint and survivor options available l Lump sum and Annuity payments are fully taxable and may be subject to penalty l Can now transfer funds from other qualified retirement plans, such as an IRA or 401(k), into the SBS-AP

36. Deferred Compensation Plan l Voluntary Defined Contribution plan, account balance is the benefit. l Immediately 100% vested. l $50.00 per month minimum. l $16,500.00 per year maximum (2009) higher maximum if over age 50. l Employee controls investment. l Payment options include cash withdrawal, periodic or annuity payment or rollover to a qualified plan. l Taxes are due when you receive the money.

37. DCP Payments l Must be terminated from employment 60 days (may be waived). l All payments are fully taxable - no early withdrawal penalty. l Rollover eligible (caution: other provisions then apply, including early distribution penalty). l May leave funds in account after termination (must take account at age 70 1/2).

38. DCP Participation l No specific enrollment period, enroll anytime. l Request an enrollment packet from the division or on-line at www.state.ak.us/drb. l Increase contribution by cashing leave. l Use the catch up provisions

39. Investing Your Contributions l Recognizing that not all participants are investment experts, your retirement system has contracted with Great West Retirement Services as well as their wholly owned subsidiary, Advised Assets Group, LLC, to provide a suite of investment services to participants. l New participants are automatically enrolled in the Alaska Target Trust Fund which Corresponds to the member’s anticipated retirement date.

40. Reality Investing Options l Managed Accounts: Do-It-For-Me Investor. AAG Coordinates with an independent financial advisor to choose an investment strategy from the options offered by the plan based on your finances, goals and life circumstances. l AAG monitors your account and adjusts investments as needed to reach your goals. l Advice: Help-Me-Do-It Investor. If you like to chart your own investment course, but want to draw on expert advice, AAG will provided advice services at your request.

41. Reality Investing Options l Guidance: Do-It-Myself Investor. Free online access to Investment Option Detail sheets, calculators and market information.

42. Reality Investing Costs l Managed Accounts: Annual fees based on balance of accounts; l.50% accounts less than $100,000 l.40% for next $150,000 l.30% for next $150,000 l.20% for balances over $400,000 l Charged quarterly

43. Reality Investing Costs l Advice: $25.00 annual fee, billed $6.25 per quarter. l Guidance: Free l Participants may opt in or out of any of these features during the year.

44. How can the Division of Retirement help me? l Benefit Education l How to maximize your PERS benefit by purchasing service credits. l How benefits work in conjunction with other State, Federal, and other employer benefits. l Health benefit options at retirement. l Payment options for SBS-AP and DCP at termination or retirement. l Information on taxes and penalties for early withdrawal.

45. Helpful Hints l Remember to keep your beneficiary designations current. l If you have been married and divorced during your PERS covered employment, you must submit court certified copies of your divorce decree and property settlement to the division.

46. Conclusion l Thank you for attending. Please complete the seminar evaluation located in each of your folders. l If you need further assistance please contact the Division of Retirement and Benefits at: PO Box 110203 Juneau, AK 99811-0203 1-800-821-2251