COH Pension SystemsRetirement Benefit Levels

COH Pension SystemsRetirement Benefit Levels

Replacement Ratio:

- Standard measure of retirement benefit level

- Retirement income as % of pre-retirement income

2

3

HMEPSCivilian Employees

Replacement Ratio w/o DROP

Years ofService at Retirement

Employees HiredPrior to 1/1/08 –

Plan A

Employees Hired

After 1/1/08

Current Ultimate*

20 63%+SS 50%+SS 36%+SS

25 85%+SS 66%+SS 45%+SS

30 90%+SS 83%+SS 50%+SS

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EE Contribution % of Salary 5%+6.2% 0%+6.2%

Eligible for Full Benefit Age+Svc=75 Age 62/5 Svc

OT Included in Benefit Calculation

No No

DROP Available Yes No

Automatic COLA Yes No

* All Service After 1/1/05

4

HPOPS and HFRRFPublic Safety Employees

Replacement Ratio w/o DROP

Years ofService at Retirement HPOPS HFRRF

Current Future* Current Future**

20 55% 45% 50% ?

25 65% 55% 65% ?

30 75% 65% 80% ?

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EE Contribution % of Salary 9% 10.25% 9% ?

Eligible for Full Benefit 20 Yrs Svc Age 55/10 Svc 20 Yrs Svc ?

OT Included in Benefit Calculation

No No Yes ?

DROP Available Yes No Yes ?

Automatic COLA Yes Yes Yes ?

* Applies to police officers hired after October 9, 2004** Work in process

5

DROP Is A Game Changer

Specific to Individual – cannot generalize

Variables Include:

Provisions of DROP

Age and service at DROP entry and exit

Basic benefit accrual rates w/o DROP

Salary changes during DROP

EE Contributions during DROP

Interest credits on DROP account

6

Sample of DROP Changing the Game

At DROP Entry:

Age 45

20 years of service

Annual Salary $75,000

Eligible for lifetime annuity of $37,500 (50%) per year

7

Sample of DROP Changing the Game (cont’d)

During DROP:

Active, but no further benefit accruals based on salary and service

Salary increases 3% per year

DROP account credited each year with:

Annuity amount based on salary and service at 20 yrs

EE contributions of 9% of salary

Interest at 5% per yr

Sample of Drop Changing The Game (cont’d)

At Retirement:

Age 55

30 years of service

Annual salary of $100,794

Accumulated value of DROP account - $627,655

COLA adjusted 20 year service annuity - $45,000/yr

8

9

Sample of Drop Changing the Game (cont’d)

with DROP w/o DROP

Pre-Retirement Salary $100,794 $100,794

Annuity Value

‾ From DROP account $ 44,832 $ N/A

‾ Based on salary/service 45,000 80,634

‾ Total $ 89,832 $ 80,634

Replacement Ratio 89% 80%