Member news, 2007 Fall

ERS MEMBER NEWS FALL 2007 EDITION

ERS Working Hard For You

It's been another busy year at the Employees' Retirement System of Georgia (ERS). Our annual financial report of the Auditors, as well as the report of the Actuary, has been completed. Our actuarial valuation was performed using generally recognized and accepted actuarial principles and practices consistent with pronouncements of the Actuarial Standards Board. The independent audit, obtained in accordance with auditing standards generally accepted in the United States of America and in accordance with Government Auditing Standards, gave ERS a clean audit opinion on the systems' financial statements and internal controls. You may view these reports on our website at www.ersga.org. ERS is also pleased to report the following accomplishments over the past year:
As you know, for the past couple of years ERS has been working on a new Pension and Retirement Information System (PARIS). As a part of that project, in December of 2006, ERS introduced online account access for retirees. This access allows retirees to make changes to their account, including address, direct deposit, and tax-withholding, as well as viewing 1099-R information. To date, over 2,600 retirees have registered. In September 2007, ERS introduced online account access for active members (see article, Page One). With this access, members can view personal information and an account summary, calculate refund payback costs and generate retirement benefit estimates. As another improvement in customer service, ERS plans to allow deductions to State Employees Credit Union accounts from monthly retirement payments and work is already underway to provide this enhanced service for our retirees.
Also as a part of PARIS, our Employer Services Division has introduced a new employer reporting website. The employer web site was implemented in September, 2007 and 15 pilot employers, selected from all over the state, successfully used the site for their September 2007 reports, files and contributions. The features of the new site include summary report,

submittal, monthly employee detail, detail file upload (FTP),and electronic employer payments (ACH). Employer Services Representatives began providing training to reporting officials on the new web site in October 2007. The training will be conducted in three phases at various technical colleges throughout the state to increase employer turnout and reduce travel costs.
In 2007 the state deferred compensation plans (Peach State Reserves - PSR) were successfully transitioned to a new third-party administrator, CitiStreet. With this transition,
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New Member Online Account Access
We are excited to announce the availability of online account access for members through the new ERS Member Self Service website! The final stage in the development of our new Pension and Retirement Information Information System is providing secure online account access for all members. What does this mean for you? The website can be used to access your retirement account as described below:
View personal information View your account summary Calculate refund payback costs Generate retirement benefit estimates Maintain your home address (inactive members)
Some active members may ask, "Why can't I update my address online if it's wrong?" Good question. Every month your employer submits address information to ERS as a part of their payroll reporting. If you change it online and it's
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ERS General Office ERS Toll Free

404-350-6300

ERS Fax

800-805-4609

Peach State Reserves

www.ersga.org

404-350-6308 866-694-2777

What's a Dollar Worth to You?

Smart investors know that one of the key ingredients to success when investing for the long-term is to save as much as they can for as long as they can. They know how important programs like Peach State Reserves (PSR) are when it comes to investing for their retirement. And, they are willing to give up a few things now to be sure that they put as much money to work now for their retirement.
While the ERS pension plan provides a generous retirement benefit, depending upon how long you work for the state, you may not be eligible for the retirement benefit or only for a small percentage. It's up to you to make sure you've got sufficient income when you're ready to retire. PSR, your state-sponsored voluntary supplemental retirement benefit plan, offers you the opportunity to invest money toward your retirement. With PSR you make before-tax contributions to your account and your investments grow without the burden of taxes over time.
Pre-tax contributions are a big plus
With PSR the cost of your contribution is offset by the tax savings you see in your paycheck! Not only are you paying yourself first, but you pay less in taxes.
See what an increase can do for your account:

The real cost of $1* For every $1 you contribute to PSR, your take home pay goes down by only $0.79.
If you contribute $30 a month and kick in just $5 more to contribute $35, the difference in your pay check is only $3.95. It's not magic...It's PSR.
*Calculations assume an annual salary of $20,000, the 15% federal tax bracket and the Georgia marginal tax.
Contribute as much as you can
With PSR you have the opportunity to contribute as much as 100% of your income, up to a maximum of $15,500 for 2007 and 2008. And, if you are over age 50 then you have certain catch-up provisions available to you so you can contribute even more! Contribute as much as you can for as long as you can to PSR and keep more of your money working for you. It can pay big rewards over time.

Total cost of additional investments after 30 years Additional account value after 30 years

Additional daily contribution Total cost of additional investments after 30 years Additional account value after 30 years

$1 $10,950 $43,000

$3

$5

$10

$32,850 $54,750 $109,500

$129,000 $214,995 $430,000

Note: This hypothetical illustration assumes investments of $1, $3, $5 and $10 per day for 30 years ($365, $1,095, $1,825 and $3,650 annually), earning an 8% annual rate of return. It is not indicative of the performance of any specific investment; actual results may vary.

Enroll Today
The Plan Savings Calculator in the Financial Resource Center of the PSR Web site at https://myGApsr.csplans.com can help you determine how much more you can really afford to contribute. Remember, pay yourself first with as much as you can afford. It will be worth it in the long run. To enroll or make changes to your PSR account, visit the PSR Website or call 1-866-MY-GA-PSR.
If you're a part-time or temporary employee, you may not be eligible for PSR, or your employer may not participate in PSR, so check with your Human Resources office first about eligibility.

Financial Planning Seminars
No matter what your age or years of service, ERSGA has an educational seminar that can help you assess your current financial situation and understand how your state benefits can enhance your financial security. Visit the seminars section of our website at www.ersga.org to find a seminar near you.
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ERS Financial Condition

While ERS is a properly funded retirement system in accordance with the law, its financial condition has been declining over the past several years. Reports of the Actuary indicate that the funded ratio of ERS has decreased from 100.5% in 2003 to 94.5% in 2006. The funded ratio of a retirement system is determined as the ratio of its actuarial assets to its actuarial liabilities. Contributing factors include:
1. The number of state employees has been stable over the years, but, as the baby boomer generation ages, the number of state retirees continues to grow. ERS is becoming a mature retirement system, and the ratio of retirees to active employees has nearly doubled over the past ten years. Furthermore, the cost of ERS retiree Cost of Living Adjustments (COLA) approximates $250 million per year, an amount that will soon exceed the total annual funding ERS receives from the state as the employer.
2. The ERS funded ratio has fluctuated over time, but it has decreased to below 100% over the past several years. Unless additional funding comes in the form of increases in investment returns, state contributions, and/or employee contributions, the ERS funded ratio will continue to decline.
3. The state as the employer contributes 10.41% of employee payroll each year into ERS as its share of the cost of retirement benefits. By comparison, ERS state employees contribute a relatively low share of the cost for retirement benefits 1.25% of pay. ERS retirement benefits and Georgia teacher retirement benefits are nearly identical yet Georgia teachers contribute 5% of their pay for retirement benefits. The levels of employee and employer contributions to ERS could be changed by law and by budget, respectively, to attain greater funding. Alternatively, the state legislature could approve a New Hire Plan that is more affordable.
4. Investments are earning the actuarially-assumed 7.5% rate of return, but the statutory restrictions on how ERS assets may be invested limit the amount of excess returns ERS can earn. ERS needs increased exposure to broader investment options to improve its investment returns. State law would need to be changed in order to do this.
5. Future retirement bills that add costs resulting in increased liabilities to ERS will further deteriorate ERS' financial condition. The state must be very

5. cont. careful to analyze future changes to the retirement plans to avoid further erosion of ERS' financial condition.
Promises of future retirement benefits for current employees will be honored. This includes current state employees who will be retiring in the future. No change to that benefit structure for current retirees and current state employees can be made. You will receive your benefit as promised. COLAs for retirees are not guaranteed by law, nevertheless ERS understands the significance of COLAs to retirees and is working to find ways to continue some form of COLA.
ERS understands its fiduciary responsibility to all of its members, retirees and State of Georgia taxpayers to fully understand the financial effects of the COLA on ERS' financial condition and continues to study whether additional funding is required to properly fund the system. Whether such funds come from investments, the state as the employer, or employees, ERS must seek to improve its financial condition. The ERS Executive Director and Board of Trustees are working together with the State Legislature on a list of considerations to help improve the ERS financial condition as well as provide a retiree COLA sufficient to maintain retiree purchasing power going forward. ERS believes that fiscal responsibility will best serve all of the members and retirees in the long run.
Retiring Is Easier Than You Think
Retiring in the next few months? Then plan to attend our Workshop for Retirement Appli-
cation Processing (WRAP). WRAP was designed specifically for anyone within three months of retiring and brings together representatives from ERS, Peach State Reserves and Health Insurance. We'll walk you through completing the retirement
application, explain your retirement benefits and answer your questions. You'll also be able to have your completed application re-
viewed by one of our staff members. WRAP is held three times each month in our Atlanta office. Visit the Seminars section of our website at www.ersga.org for the current schedule.
We do not provide benefit estimates at WRAP sessions, so request an estimate from our Member Services Division at least 6 weeks prior to attending a WRAP.
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ERS Working Hard For You - cont. from front page

members of PSR now have access to investment advice through Financial Engines and one-on-one consultations with plan representatives statewide. PSR members can also download their account information to Quicken and Microsoft Money. ERS also provides statewide retirement and financial planning seminars, which include information on financial planning and encompass both PSR and the ERS pension plan. Theses seminars can help state employees better understand how to create a solid foundation for their financial future. (See Page Two.)

We look forward to finding more ways of improving our service to employees and retirees of the state of Georgia, while continuing to perform our fiduciary responsibilities in managing your retirement plans now and in the future.

Preparing for retirement is an extremely important life goal, and one that many people find confusing and intimidating. We are working to improve this by making helpful information more available, including personal account access, education and training, assistance and advice.

Two Northside 75, Suite 300 Atlanta, GA 30318

Presort Standard US Postage
PAID Permit #7926 ATLANTA, GA

New Member Online Account Access - cont. from front page
still wrong with your employer, guess what? The wrong addess will overwrite what you corrected in the system. For this reason, it's critical that you correct your address through your employer. (They need to have the right information anyway.) For those of you no longer employed with the state, simply use the website to correct the information.
Member Self Service is a quick and efficient way for you to review your account, generate an updated refund cost, and calculate benefit information. To access the Self Service feature, go to www.ersga.org and click on Member Information/Active Members/Member Self Service Website. You'll need to establish a user account, with password, after which you can log in to your account and access your account information. Try it today!
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