tcdrs: doing retirement right · 760. employers. 294,000. members and retirees. 89%. 8.8%. funded....
TRANSCRIPT
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TCDRS: Doing Retirement Right
Amy Campbell, TCDRS Employer Services Manager
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760employers
294,000members and retirees
89%funded8.8%
35-year return
$30Bin assets
More than
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Set Up for Success
Created in 1967 by the Texas Legislature
Managed independently by a nine-member board of trustees
Manage $30 billion in assets as of Dec. 31, 2017
Operating costs average 0.26% of assets
Receive no funding from the State of Texas
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Benefits Texas
$1.4 billion in benefits paid in 2017
– 96% stays in Texas
Supports:
– $2 billion in total economic output
– 14,752 jobs created
– $1.1 billion added to Texas GDP
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TCDRS Does Retirement Right
Savings-based benefits
Responsible plan funding
Flexibility and local control
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TCDRS Does Retirement Right
Savings-based benefits
– Members save over their careers for retirement
– Savings earn 7%, set by statute
– At retirement, benefit is based on savings account balance and employer matching
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Texans Earn Reasonable Benefits
Averages as of Dec. 31, 2017
Age at Retirement Years of TCDRS Service at Retirement
Current Annual Benefit
61 18 $22,764
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TCDRS Does Retirement Right
Responsible plan funding
– Employers pay 100% of required contributions
– Nearly 35% of employers make additional contributions
– 2019 estimated weighted-average required employer contribution rate is 11.57%
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Investment Income Funds Benefits
Estimated
Investment Income
Employer ContributionsEmployee Deposits
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Diversified Portfolio Reduces Risk
As of April 1, 2018
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AnnualizedReturns
2018Return
5Year
10Year
15Year
20Year
25Year
30Year
35 Year
Total Fund -3.0% 4.9% 8.9% 6.2% 6.4% 7.0% 8.0% 8.8%
Benchmark -4.1% 3.9% 8.0% 5.6% 5.5% 6.0% 6.9% 7.6%
13
Investment Returns (Net of All Fees)
Estimated as of Dec. 31, 2018
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TCDRS Returns 1999–2018 (Net of All Fees)
1.3%
9.4%
2.9%1.3%
20.1%
12.7%
7.2%
13.9%
7.9%
-29.0%
26.5%
12.6%
-1.2%
12.6%
16.4%
6.8%
-0.7%
7.5%
14.7%
-3.0%(Est.)
28.0%
23.0%
18.0%
13.0%
8.0%
3.0%
-2.0%
-7.0%
-12.0%
-17.0%
-22.0%
-27.0%
-32.0%
Expected Risk & Return
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TCDRS Does Retirement Right
Flexibility and local control
– Employers choose benefit levels based on their local needs and budgets
– Employers may increase or reduce benefits by adjusting the employee deposit rate or employer matching
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Case Study: Harris County
After rate increase due to 2008 Great Recession:
– Reduced benefits by lowering employee deposit rate from 7% to 6%
– Experienced immediate rate relief
– Employees could choose to put the difference in voluntary 457 if wanted to save for retirement. Otherwise, it increased net pay.
When economy rebounded:
– Increased deposit rate back to 7% with salary increase to offset
– Subsequently adopted an elected rate to improve funding
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Stabilize Rates
Contribute at a higher elected rate or make an additional contribution
– Allows employers to prefund benefit increases
– Provides a cushion against possible future negative plan experience, such as investment losses
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Case Study: Tarrant County
Adopted elected rate significantly greater than required rate
This policy:
– Has improved funding
– Provides budget stability
– Funds retiree COLAs
– Establishes plan level reserves to offset adverse markets
Even with the 2018 investment returns, required rate is projected to remain stable from 2019 to 2020
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Each year, TCDRS actuaries look at each plan to determine the required contribution rate.
Estimate the value of future benefits in today’s dollars
Compare plan assets with estimate of benefits
Determine a rate to appropriately fund benefits while keeping rates stable
How Employer Rates Are Determined
Study workforce and estimate benefits employer will pay
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JAN
. 1
AP
R.
1
JULY
. 1
OC
T.
1
JAN
. 1
Dec. 31:Actuaries take a snapshot of your plan
May 1:Rate information and Plan Customizer available
Dec. 16:Plan changes due
Jan. 1:New rate goes into
effect
May thru December:Employers make plan decisions
January thru April:Actuaries perform plan valuation
When You Review Your Plan
July:TCDRS Annual Conference
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Providing a Secure Retirement Benefit
C A R E E R
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Providing a Secure Retirement Benefit
R E T I R E M E N T
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Other Ways to Earn Service Time
Multiple TCDRS
Accounts
Military or USERRA
Proportionate Retirement Program
=
ERS (State of Texas)JRS (Courts)TRS (Schools)TMRS (Select Cities)COA (City of Austin)
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Survivor Benefit
Earned after 4 years of TCDRS service
Gives beneficiaries the option to receive a lifetime monthly benefit from the account, if the member were to pass away before retirement
Beneficiaries don’t have to wait until that member would have become eligible to retire
Gives loved ones peace of mind
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Vesting
Vested after 5, 8 or 10 years of service
Set by each employer
Means you’ve earned the right to a lifetime benefit when you’re eligible and choose to retire
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Vesting + Eligibility = Lifetime Monthly Benefit
Age 60 and 5,8, or 10 Years
Age plus Years of Service* =75 or 80
Any Age and 20 or 30 Years
* Employee must be vested.
Retirement Eligibility
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Benefit Payment Options
Single Life• Highest monthly
payment
• Payments stop when retiree passes away
• Select multiple beneficiaries, change if needed
Guaranteed Term• Retiree receives
lifetime monthly payment
• If retiree passes away before the end of term, beneficiary receives benefit for remainder of term (term begins on retirement date)
• Select multiple beneficiaries, change if needed
Dual Life• Select 100%, 75%
or 50% of payment to continue for beneficiary’s lifetime
• Variation: 100% to beneficiary with pop-up option
• Only select one beneficiary, no changes
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800-651-3848 [email protected]
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www.TCDRS.org
Questions?