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Montana SAVA
Retirement Program DESIGNER®for the State of Montana Teachers' Retirement System
June 25, 2010
1ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
2ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
3ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Montana SAVADesigner® for Teachers' Retirement System
• Three basic plan designs have been programmed into the software:– Current Plan– Revised DB Plan – Money Purchase Plan
• Several options on the following plan features are available to modify during the June 25 meeting:– Vesting schedule (Revised DB and MPP)– Final average salary period (Revised DB)– PRO (Revised DB)– Pay crediting rates (MPP)– Interest crediting rates (MPP)
4ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Montana SAVADesigner® for Teachers' Retirement System
• Options for the vesting schedule:– Immediate vesting– 5 year cliff– 10 year cliff– 3-7 year graded– 5-10 year graded– 5-15 year graded
• Options for the final average salary period are 3, 5, 7 and 10 years
• Options for the PRO:– No PRO– Increased multiplier applied to all service after reaching 30 years– Increased multiplier applied to service in excess of 30 years
• In addition to vesting, the member pay credits, employer pay credits and interest credits can be modified for the Money Purchase Plan
5ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Montana SAVADesigner® for Teachers' Retirement System
• For the purpose of the exhibits included here, the following options have been applied:– Revised DB Plan:
• 3 year final average salary period• No PRO• 5 year cliff vesting
– MPP:• 7.15% member contributions• 7.15% employer pay credits• 7.00% interest credits• 5 year cliff vesting
• These options are a starting point to demonstrate the exhibits that will be prepared during the June 25th meeting and are not recommendations
6ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
7ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
8ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
9ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
10ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
11ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
12ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
13ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Montana SAVADesigner® for Teachers' Retirement System
• The following exhibits compare benefits under the current plan to those under the Revised DB plan first and then the MPP plan
• The percentage listed in each cell shows the percentage increase or decrease in the benefit based on the age and service indicated for that cell
• Below the percentage increase or decrease is the number of members with that age/service combination and the average salary of those members
• The comparisons are shown based on an age at retirement of 50, 55, 60 and 65 in successive exhibits
14ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
15ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
40
35
30-48%
48$59,150
25-48%
29$55,213
-48%473
$56,922
20-48%
27$50,329
-48%426
$55,699
-26%377
$55,365
15-48%
25$45,460
-48%472
$50,382
-26%445
$50,648
0%388
$46,604
10-48%
38$36,589
-48%561
$42,521
-26%572
$42,665
0%401
$40,019
0%437
$35,183
5-48%
58$29,735
-48%873
$33,356
-26%682
$35,182
0%495
$33,283
0%481
$29,522
0%503
$29,408
0-48%
38$13,188
-48%597
$22,735
-26%717
$24,691
0%520
$24,108
0%536
$23,232
0%429
$20,490
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 50
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Revised DB Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
16ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
40
35-30%
50$59,525
30-30%
48$59,150
-30%465
$59,967
25-30%
29$55,213
-30%473
$56,922
-30%428
$56,110
20-30%
27$50,329
-30%426
$55,699
-30%377
$55,365
0%402
$53,963
15-30%
25$45,460
-30%472
$50,382
-30%445
$50,648
0%388
$46,604
0%416
$45,033
10-30%
38$36,589
-30%561
$42,521
-30%572
$42,665
0%401
$40,019
0%437
$35,183
0%406
$36,395
5-30%
58$29,735
-30%873
$33,356
-30%682
$35,182
0%495
$33,283
0%481
$29,522
0%503
$29,408
0%439
$27,771
0-30%
38$13,188
-30%597
$22,735
-30%717
$24,691
0%520
$24,108
0%536
$23,232
0%429
$20,490
0%607
$20,281
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 55
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Revised DB Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
17ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
400%99
$62,772
350%50
$59,525
0%515
$62,941
300%48
$59,150
0%465
$59,967
0%482
$61,703
250%29
$55,213
0%473
$56,922
0%428
$56,110
0%467
$58,226
200%27
$50,329
0%426
$55,699
0%377
$55,365
0%402
$53,963
0%492
$49,966
150%25
$45,460
0%472
$50,382
0%445
$50,648
0%388
$46,604
0%416
$45,033
0%431
$40,439
100%38
$36,589
0%561
$42,521
0%572
$42,665
0%401
$40,019
0%437
$35,183
0%406
$36,395
0%366
$35,840
50%58
$29,735
0%873
$33,356
0%682
$35,182
0%495
$33,283
0%481
$29,522
0%503
$29,408
0%439
$27,771
0%412
$28,192
00%38
$13,188
0%597
$22,735
0%717
$24,691
0%520
$24,108
0%536
$23,232
0%429
$20,490
0%607
$20,281
0%333
$21,198
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 60
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Revised DB Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
18ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
400%99
$62,772
350%50
$59,525
0%515
$62,941
300%48
$59,150
0%465
$59,967
0%482
$61,703
250%29
$55,213
0%473
$56,922
0%428
$56,110
0%467
$58,226
200%27
$50,329
0%426
$55,699
0%377
$55,365
0%402
$53,963
0%492
$49,966
150%25
$45,460
0%472
$50,382
0%445
$50,648
0%388
$46,604
0%416
$45,033
0%431
$40,439
100%38
$36,589
0%561
$42,521
0%572
$42,665
0%401
$40,019
0%437
$35,183
0%406
$36,395
0%366
$35,840
50%58
$29,735
0%873
$33,356
0%682
$35,182
0%495
$33,283
0%481
$29,522
0%503
$29,408
0%439
$27,771
0%412
$28,192
00%38
$13,188
0%597
$22,735
0%717
$24,691
0%520
$24,108
0%536
$23,232
0%429
$20,490
0%607
$20,281
0%333
$21,198
0%392
$20,805
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 65
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Revised DB Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
19ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
40
35
30-29%
48$59,150
25-29%
29$55,213
-34%473
$56,922
20-29%
27$50,329
-34%426
$55,699
-13%377
$55,365
15-29%
25$45,460
-34%472
$50,382
-13%445
$50,648
9%388
$46,604
10-29%
38$36,589
-34%561
$42,521
-13%572
$42,665
9%401
$40,019
4%437
$35,183
5-29%
58$29,735
-34%873
$33,356
-13%682
$35,182
9%495
$33,283
4%481
$29,522
3%503
$29,408
0-29%
38$13,188
-34%597
$22,735
-13%717
$24,691
9%520
$24,108
4%536
$23,232
3%429
$20,490
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 50
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Money Purchase Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
20ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
40
35-18%
50$59,525
30-18%
48$59,150
-24%465
$59,967
25-18%
29$55,213
-24%473
$56,922
-30%428
$56,110
20-18%
27$50,329
-24%426
$55,699
-30%377
$55,365
-7%402
$53,963
15-18%
25$45,460
-24%472
$50,382
-30%445
$50,648
-7%388
$46,604
-13%416
$45,033
10-18%
38$36,589
-24%561
$42,521
-30%572
$42,665
-7%401
$40,019
-13%437
$35,183
-17%406
$36,395
5-18%
58$29,735
-24%873
$33,356
-30%682
$35,182
-7%495
$33,283
-13%481
$29,522
-17%503
$29,408
-18%439
$27,771
0-18%
38$13,188
-24%597
$22,735
-30%717
$24,691
-7%520
$24,108
-13%536
$23,232
-17%429
$20,490
-18%607
$20,281
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 55
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Money Purchase Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
21ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
40-4%99
$62,772
35-4%50
$59,525
-11%515
$62,941
30-4%48
$59,150
-11%465
$59,967
-17%482
$61,703
25-4%29
$55,213
-11%473
$56,922
-17%428
$56,110
-23%467
$58,226
20-4%27
$50,329
-11%426
$55,699
-17%377
$55,365
-23%402
$53,963
-29%492
$49,966
15-4%25
$45,460
-11%472
$50,382
-17%445
$50,648
-23%388
$46,604
-29%416
$45,033
-33%431
$40,439
10-4%38
$36,589
-11%561
$42,521
-17%572
$42,665
-23%401
$40,019
-29%437
$35,183
-33%406
$36,395
-36%366
$35,840
5-4%58
$29,735
-11%873
$33,356
-17%682
$35,182
-23%495
$33,283
-29%481
$29,522
-33%503
$29,408
-36%439
$27,771
-37%412
$28,192
0-4%38
$13,188
-11%597
$22,735
-17%717
$24,691
-23%520
$24,108
-29%536
$23,232
-33%429
$20,490
-36%607
$20,281
-37%333
$21,198
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 60
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Money Purchase Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
22ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Current Service
4016%99
$62,772
3516%50
$59,525
8%515
$62,941
3016%48
$59,150
8%465
$59,967
0%482
$61,703
2516%29
$55,213
8%473
$56,922
0%428
$56,110
-7%467
$58,226
2016%27
$50,329
8%426
$55,699
0%377
$55,365
-7%402
$53,963
-14%492
$49,966
1516%25
$45,460
8%472
$50,382
0%445
$50,648
-7%388
$46,604
-14%416
$45,033
-20%431
$40,439
1016%38
$36,589
8%561
$42,521
0%572
$42,665
-7%401
$40,019
-14%437
$35,183
-20%406
$36,395
-25%366
$35,840
516%58
$29,735
8%873
$33,356
0%682
$35,182
-7%495
$33,283
-14%481
$29,522
-20%503
$29,408
-25%439
$27,771
-29%412
$28,192
016%38
$13,188
8%597
$22,735
0%717
$24,691
-7%520
$24,108
-14%536
$23,232
-20%429
$20,490
-25%607
$20,281
-29%333
$21,198
-30%392
$20,805
20 25 30 35 40 45 50 55 60
Current Age
Age at Termination: 65
Benefit Comparison Distribution
State of Montana Teachers' Retirement System
From Current PlanTo Money Purchase Plan
Comparison Based on Annuities
Cells ShowBenefit ChangeParticipant CountAverage Salary
23ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
Montana SAVADesigner® for Teachers' Retirement System
• The final exhibit estimates the relative cost of the current plan and the revised DB plan
• Cost are based on the current population, assuming the eventual membership under any revised plan will have the same demographic characteristics of the current group
• Costs are compared using the present value of future benefits at entry age which will directly relate to the annual normal cost (the cost of benefits accruing in the current year) under the Entry Age cost method
• The nature of the Money Purchase Plan does not allow its cost to be estimated in the same way - for comparison purposes, the normal cost for the MPP can be estimated as the sum of the member contributions and employer pay credits, adjusted for vesting and for assumed long term investment returns above the interest credits
24ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT
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