1. An Overview: Teachers’ Retirement System of Louisiana Prepared for the Advisory Group on Civil Service and Employee Benefits August 25, 2009

2. Teachers’ Retirement System of Louisiana (TRSL)2 About TRSL  Qualified defined benefit plan under Section 401(a) of the Internal Revenue Code  Defined contribution plan (Optional Retirement Plan) available to higher education employees  Oversight provided by a 16-member board of trustees –12 elected trustees serve four-year terms –4 ex officio trustees from executive and legislative branches  In 2008, TRSL paid $1.38 billion in benefits.  The average annual TRSL benefit from the TRSL defined benefit plan is $21,372.  As of July 31, 2009, TRSL’s market value of investment assets is $11.2 billion.

3. Teachers’ Retirement System of Louisiana (TRSL)3 TRSL Retirement Plan Types Defined Benefit Plan  Employer and employee make contributions to pension system. –Employer contribution based on actuarial calculations Employers will contribute 15.5 percent for FY 2009-10. Normal cost = 5.76%; UAL = 9.74% –Employee contributions established by state statute Employees contribute 8 percent.  TRSL invests the system trust.  Retired members receive a guaranteed benefit for life.

4. Teachers’ Retirement System of Louisiana (TRSL)4 TRSL Retirement Plan Types (cont.) Defined Contribution Plan  Employer and employee make contributions to the employee’s retirement account. –Employer contribution is the same as contribution for defined benefit plan Employers will contribute 15.5 percent for FY 2009-10. Normal cost = 5.76%; UAL = 9.74% Normal cost is deposited in employee’s retirement account. –Employee contributions established by state statute Employees contribute 8 percent.  Employee makes investment decisions from options offered by providers.  Ultimate benefit is based exclusively on the contributions and investment earnings of the employee account.

5. Teachers’ Retirement System of Louisiana (TRSL)5 TRSL Membership  K-12 teachers and other professionals  Unclassified higher education employees  Unclassified employees of constitutionally created education boards  Certain employees of education-related organizations  Public employees with at least five years of TRSL service who choose to remain in TRSL during employment with an employer covered by another retirement system

6. Teachers’ Retirement System of Louisiana (TRSL)6 TRSL Membership Census Regular Plan (as of August 19, 2009) –K-1281,395 –Higher education 9,618 –Employees in state agencies 592 –Other employers 91 Total91,696 Optional Retirement Plan (as of December 31, 2008) –Higher Education9,491 –K-12324 Total9,815

7. Teachers’ Retirement System of Louisiana (TRSL)7 TRSL Regular Retirement Benefit Formula  Formula components –Years of service –Benefit factor of 2.5% –Final Average Compensation (FAC)  Example: 30 years of service × 2.5% benefit factor × $45,000 FAC = $33,750 (maximum annual benefit) $33,750 ÷ 12 = $2,812.50 (maximum monthly benefit)  Deferred Retirement Option Plan (DROP) allows members to freeze their retirement benefits and have that benefit deposited in an account at TRSL for up to three years.  Initial Lump-Sum Benefit (ILSB) option provides a one-time, lump-sum payment along with a actuarially reduced regular monthly benefit for life.

8. Teachers’ Retirement System of Louisiana (TRSL)8 TRSL Regular Plan Retirement Eligibility For members joining on or after July 1, 1999 With 2.5% benefit factor: –Age 55 with 25 years of service credit; –Any age with 30 years of service credit; or –Age 60 with 5 years of service credit With actuarial reduction: –Any age with 20 years of service credit For members joining before July 1, 1999 With 2.5% benefit factor: –Age 55 with 25 years of service credit; –Any age with 30 years of service credit; or –Age 65 with 20 years of service credit With 2.0% benefit factor: –Age 60 with 5 years of service credit –Any age with 20 years of service credit TRSL members do not participate in Social Security.

9. Teachers’ Retirement System of Louisiana (TRSL)9 Optional Retirement Plan (ORP)  Academic and administrative employees of colleges and universities and employees of higher education boards are eligible participants.  Employees are required to contribute 8 percent of salary.  Employers are required to contribute the Regular Plan rate (15.5 percent for FY 2009-10). The normal cost equivalent is paid to the employee’s ORP account.  TRSL charges 0.1 percent administrative fee.  Election to participate in ORP is irrevocable.  Participants choose from three ORP providers selected by the TRSL Board via solicitation for proposal (SFP).  Total assets as of 12/31/2008 are $881 million.

10. Teachers’ Retirement System of Louisiana (TRSL)10 ORP Plan Demographics VALICINGTIAA-CREFTotal Assets (12/31/2008) $269 million$147 million$465 million$881 million Contributions (2008) $30 million$21 million$38 million$90 million Active Participants3,4222,6163,7779,815 Total Accounts5,9454,2659,37819,588 Average Account$45,250$34,564$49,590$45,001 Average Contribution $8,782$8,359$10,244$9,232

11. Teachers’ Retirement System of Louisiana (TRSL)11 Cost of Benefit  Actuary determines annual funding requirement to meet current and future benefit obligations.  Actuarial contributions are based on normal cost and amortization of the unfunded accrued liability (UAL).  Employer contribution for Regular Plan and ORP is composed of normal cost and cost to fund payment toward the UAL.  Employer contribution to Social Security is 6.2%. TRSL Normal Costs Fiscal Year 2009-102008-092007-082006-072005-062004-052003-042002-032001-022000-01 5.7566%6.9453%6.9336%6.6401%6.5065%6.258%6.710%6.749%6.773%6.858%

12. Teachers’ Retirement System of Louisiana (TRSL)12 TRSL Benefit vs. Social Security Benefit The average TRSL benefit is substantially more than the average benefit from Social Security. Average TRSL benefit Average Social Security benefit Poverty Threshold – Under age 65 Poverty Threshold – Age 65 and over

13. Teachers’ Retirement System of Louisiana (TRSL)13 TRSL Return to Work  TRSL retirees may return to work in a TRSL eligible position, subject to a 12-month waiting period.  Retirees receive both salary and retirement benefits after the 12-month waiting period.  Retiree and employer make contributions to TRSL during any re-employment.  Retiree does not earn any additional service credit, but retiree's contributions, without interest, are refunded following the termination of employment.

14. Teachers’ Retirement System of Louisiana (TRSL)14 Teachers’ Retirement System of Louisiana (TRSL) 8401 United Plaza Blvd., Ste 300, Baton Rouge Phone:225.925.6446 Toll free: 877.275.8775 Website: www.trsl.org E-mail: web.master@trsl.org Questions?