Member news, 2008 Fall

FALL 2008 EDITION

The State of Georgia Introduces a New Retirement Plan
During the 2008 Georgia Legislative Session, the legislature passed Senate Bill 328, which mandates a new retirement plan for state employees that are hired on or after January 1, 2009. Employees eligible for new membership in ERS hired on or after January 1, 2009 will be enrolled in the new Georgia State Employees' Pension and Savings Plan (GSEPS).

Current employees maintain their membership in either

employer contribution -- the more the employee saves, the

the ERS "New" or "Old" plan. However, current employees higher their retirement savings. The new GSEPS plan offers

will have the option to transfer their membership to

an attractive, competitive and portable pension and savings

GSEPS once the Plan becomes available in January.

plan that meets the needs of today's emerging workforce.

Once transferred, the decision is irrevocable. The decision to opt-in to GSEPS should be given careful consideration of both the advantages and disadvantages of participation and how they pertain to your situation. This article highlights the features of GSEPS and provides information to help you make your decision. For information about retirement plan eligibility should you separate from service and then return to state employment after January 1, 2009, see the GSEPS Questions & Answers on Page 3.
Why a New Retirement Plan?
The State of Georgia employs a diverse and multi-generational

With GSEPS the vesting period for the pension plan is the same (10 years of creditable service, including service already completed under the ERS "Old" or "New" plan), but the Pension Benefit Formula Factor upon which the amount you receive at retirement is based changes from 2% for each year of service to 1%. If you transfer membership from the ERS "Old" or "New" plan by opting-in to GSEPS, your pension plan retirement benefit will be calculated as a pro-rata share of both Formula Factors, based upon actual service under each plan. This means the benefit for the years of service completed prior to Opting-In is frozen at the 2% rate, and all service completed after Opting-In will be calculated at the 1% rate (assuming you accrue enough total years of service to vest for the pension benefit --

workforce. In order to become competitive in the marketplace for talent and become an employer of choice, the state must take

10 years). Also, with GSEPS, Group Term Life Insurance (GTLI), valued at 18 x your monthly salary, is not included.

steps to appeal to varying sets of employee values, attitudes and

Continued on page 2

compensation expectations.

Simply put, we should have competitive benefits that attract the best and the brightest to state government, and employees want "portable" retirement plans that can travel with them throughout their careers. The new Georgia

Comparison of Current Retirement Plan to GSEPS

Feature*
Vesting Period for Pension Vesting Period for 401(k) Employer Match Group Term Life Insurance

Current Plan

GSEPS

10 years Creditable Service

Not Offered

5 years (vesting begins as of date of Opt-In)

Available

Not Available

State Employees' Pension and Savings Plan will accomplish both goals -- it is competitive in today's marketplace, and it is portable.
About GSEPS

Pension Benefit Formula
Pension Benefit Formula Salary Employee Pension Contribution* GTLI Employee Contribution

2% for each year of Creditable Service

1% for each year of Creditable Service

24 highest consecutive calendar months

1.25% of Compensation .25% of Compensation None No GTLI Coverage

GSEPS creates a flexible retirement benefit by combining a traditional pension plan with a 401(k) plan. The pension plan component can help the state to retain employees that choose to make state government their career -- the more years of service, the higher their monthly pension. The 401(k) savings plan can help to attract new employees to state government with a matching

Service Retirement Eligibility Early Retirement Eligibility Disability Retirement Monthly Death Benefit

30 years of service, regardless of age or age 60 with at least 10 years of service

Minimum 25 years of service with a 7% benefit reduction for each year under age 60 or each year under 30 years of service, whichever is less (maximum reduction of 35%)

13 years 4 months of service, 75% projected to age 60

15 years service, no projection

* "Old Plan" retirement plan members have slightly different contribution rates and benefits. Please review the ERS Member Handbook at www.ersga.org for full details on retirement benefits for members currently covered under either the "Old" or "New" retirement plan.

ERS General Office 404-350-6300

ERS Toll Free 800-805-4609

ERS fax 404-350-6308

peach state reserves 401(k) & 457 866-694-2777

www.ersga.org

2 www.ersga.org The State of Georgia Introduces a New Retirement Plan: Continued from page 1

If you think you might transfer membership to GSEPS, you should consider enrolling or increasing your life insurance coverage through the Flexible Benefits Program during Open Enrollment (if eligible) or through another source.
Comparison of Pension Benefits

contributions will not change unless you access your PSR account and change or stop those contributions.
Your contributions to your PSR account are immediately 100% vested; employer contributions are subject to a five-year vesting schedule, vesting 20% for each completed year of service.

Age 29, with 1 year creditable service as of date of Opt-In --
retires at age 58

Age 29, does not Opt-In -- retires
at 58

Note: The 401(k) vesting schedule is different from the pension vesting schedule, and the vesting period will start from the date of Opt-In to GSEPS, NOT your original date of membership with ERS.

Pension Benefit Formula
2% (ERS "New" retirement plan)
1% (GSEPS)

Pro-Rated Benefit % of Formula Salary
2% (1 year x 2%)
29% (29 years x 1%)

Total Formula Salary Pension Benefit*

31% $4000 $1240

*Assumes Election of Maximum Retirement Option

No Pro-Rated Benefit
60% (30 years x 2%)
NA 60% $4000 $2400

401(k) Employer-match contributions
Based on employee with $30,000 annual salary

Contribution Percentage

Yearly contribution dollars

% Election First 1% Next 1% Next 1% Next 1%

% Match 100% 50% 50% 50%

Yours $300 $300 $300 $300

Employer match $300 $150 $150 $150

Other differences between current ERS membership plans and GSEPS include: Length of service eligibility to apply for Disability retirement
or for a monthly death benefit increases from 13 years 4 months of Creditable Service to 15 years of Creditable Service, with no projections.
GSEPS includes Creditable Service without projections, excluding injury in line of duty benefits for certain law enforcement personnel; Current ERS membership plans have limited projections.
GSEPS 401(k) Plan

Next 1%

50%

$300

$150

The maximum percentage of employer match contributions is 3% of an employee's salary.

Pre-Tax Contributions to the 401(k) Mean Greater Savings to You
By contributing to the 401(k), you take advantage of pre-tax savings and tax-deferred earnings. Because your contributions are taken from your pay before taxes are calculated, you pay less in taxes than you would with an after-tax deduction. Once invested, your savings are not taxed until you take a withdrawal, which can increase the accumulation of assets over time.

In addition to the pension plan, GSEPS also includes the

Pre-Tax/After-Tax Savings Comparison

availability of an employer match to the Peach State Reserves 401(k) plan of up to 3% of compensation. 401(k) matching is provided based on the following contribution levels: Dollar for dollar on first 1% contribution
50 on the dollar for contributions 2% through 5%

Annual Income Pre-Tax Salary Deductions Remaining Taxable Income Federal Taxes*

401(k) (Pre-Tax) $30,000 -$1,500 $28,500 -$7,125

Savings After-Tax $30,000 NA $30,000 -$7,500

In order to receive the full 3% match, you must contribute 5% of your compensation. Employees currently enrolled in the Peach State Reserves (PSR) 401(k) plan who wish to transfer their retirement plan membership to GSEPS will need to make a new 401(k) contribution election as a percentage of salary when completing the GSEPS Opt-In Election form (available in December). For current participants in the PSR 457 plan,

State Taxes* Net Income After-Tax Contributions Disposable Income

-$1,710 $19,665
NA $19,665

-$1,800 $20,700 -$1,500 $19,200

* Assumes a flat 25% tax bracket without the standard deduction. Assumes Georgia State tax to be 6.00

457 contributions will NOT be matched. Completion of the

Opt-In form and election of a contribution percentage will

For more information on the 401(k) plan, visit

automatically enroll you in the 401(k) plan, however 457

the plan website at https://myGApsr.ingplans.com

How Can I Learn More About GSEPS?
As you can see, GSEPS offers a level of flexibility in career

or call ING, the 401(k) Plan Administrator, at 1-866-694-2777.

and retirement planning not previously available to state employees. The opportunity to transfer membership to GSEPS

by Opting-In is an opportunity to change how your retirement is being built. You can run your own GSEPS Opt-In Forecast

by accessing your retirement account on the ERS website. In addition, ERS is offering meetings across the state beginning

October 27 and running through December, to explain how GSEPS works. To view the meeting schedule, visit the GSEPS

section of the ERS website at www.ersga.org. No registration for the meeting is necessary.

The decision to transfer retirement plan membership to GSEPS should be given careful consideration, based on several factors, including anticipated length of service with the state, ability to adequately contribute to a 401(k) plan, and comfort level with responsibility for investment management of a significant portion of your retirement savings. Based on your own personal situation, there may be advantages or disadvantages to transferring to GSEPS. You should use the GSEPS Opt-In Forecast tool on the website and you should consult a financial advisor prior to making the decision to transfer membership.

Q&A Georgia State Employees' Pension and Savings Plan (GSEPS)

3

I'm a relatively new state employee. Is it possible for me to become a member of GSEPS?
Yes. Current employees who are ERS "Old" or "New" plan members as of December 31, 2008 may opt-in to GSEPS at any time on or after January 1, 2009. There is no time limit on opting-in, however once done, the decision is irrevocable. Use the GSEPS Opt-In Forecast tool through the GSEPS section of the ERS website at www.ersga.org. In addition, a schedule of GSEPS informational meetings to be held statewide from late October through December is available on the website.
I currently participate in the Peach State Reserves 457 Plan. Will my 457 contributions be matched if I Opt-In to GSEPS?
No. For current participants in the Peach State Reserves 457 plan, your 457 contributions will NOT be matched. Completion of the Opt-In form and election of a contribution percentage will automatically enroll you in the 401(k) plan, however 457 contributions will not change unless you access your PSR account and change or stop those contributions.
I currently participate in the Peach State Reserves 401(k) Plan. If I Opt-In to GSEPS, will my current contributions automatically be matched?
No. Current participants in the Peach State Reserves 401(k) plan will need to make a new contribution election as a percentage of salary, via the Opt-In form.
If I'm currently covered under the ERS retirement plan (either the "Old" plan or the "New" plan), and I leave my job with the state but return to state employment sometime after January 1, 2009, will I be covered under GSEPS?
There are various scenarios that affect your retirement plan eligibility. You will be covered by GSEPS on your return if:
At separation from state service, you accepted a refund of your contributions, or
At separation from state service, you had less than 10 years of service (vested) and your break in service was greater than 4 years.
Note: If you left with vested rights under ERS (10 years of creditable service) and did not take a refund, you would retain your Old or New Plan coverage under ERS regardless of the length of the break in service.

state employees' pension & savings plan
Will Law Enforcement Personnel continue to have special benefits under GSEPS?
Yes. Current employees that opt-in to GSEPS and new employees (hired on or after 1/1/09) who are eligible for Line of Duty Disability and/or Early Service Retirement at age 55 will continue to be eligible for these special benefits. However, the Pension Benefit Formula Factor for service earned under GSEPS changes from 2% for each year of service to 1%. Current employees who do not opt-in to GSEPS will continue to be eligible for these special benefits, and their Pension Benefit Formula Factor will remain at 2%.
Should I transfer my membership to GSEPS, or stay with my current retirement plan?
ERS cannot advise you on what decision to make. This is a significant life decision which can only be made by you and should be thought through carefully. If you are considering transferring membership, you should run comparison forecasts on the ERS website (available October 27th), understand all aspects of both plans and consult with a trusted financial advisor prior to making a final decision.
It sounds like I'll be paying the same amount (1.25%) but will be getting half the benefit (2% vs. 1%). Is that right?
Yes, that's right, as it relates to the pension component of GSEPS. But in addition, GSEPS offers the 401(k) employer matching contribution (up to 3% see page 2). It's a different retirement plan structure, which provides more flexibility. You can't make a straight apples-to-apples comparison of the pension plan under which you are currently covered to GSEPS.
If you're interested, we encourage you to go to the ERS web site and use the GSEPS forecast model (available October 27th). This tool will show you a comparison of your current retirement benefits and GSEPS retirement benefits, based on your salary projections, 401(k) contributions and match, and projected length of service. Keep in mind also, that many employees have access to a 401(k) or 457 plan, which, while not offering an employer match, allows for the same tax-deferred contributions you would make under GSEPS.

ERS General Office 404-350-6300

ERS Toll Free 800-805-4609

ERS fax 404-350-6308

peach state reserves 401(k) & 457 866-694-2777

www.ersga.org

Member Statements & Member Account Access.
In the past, ERS has mailed Member Statements each year that reflect your contributions, interest and Retirement Service Credits as of a particular date, along with general information about retirement eligibility. With the availability of secure on-line Member Account Access, this information and more is available to you at any time, with the most recent data available. Not only can you review your personal information and account summary, you can also generate retirement benefit estimates. Based on this improved service feature and in an effort to reduce costs during this time of budget constraints, the Member Statements will not be mailed this year.
Join the over 14,000 members who are already using this service.
Two Northside 75, Suite 300 Atlanta, Georgia 30318-7701 www.esrga.org

To access your account, go to www.ersga.org and click on the Member Account Access button. If you haven't done so already, you'll need to establish a user account, with password, after which you can log into your account and access your account information.
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PAID Permit #7926 ATLANTA, GA

In the case of any conflict between what is presented in this newsletter and the laws governing this plan, the law will take precedence.
Visit www.socialsecurity.gov/estimator to try this new calculator. For questions, please contact the Social Security Administration at 1-800-772-1213.

New Social Security Benefit Calculator
The Social Security Administration now offers a new online calculator that can provide immediate and personalized benefit estimates.
The estimator uses your actual Social Security earnings record and eliminates the need to manually key in years of earnings information. This can be helpful in trying to decide the right time to retire and for younger workers, can provide valuable information to help plan and save for retirement. In addition, it allows you to compare different retirement options, including different retirement dates or expected future earnings. In conjunction with ERS Member Account Access and the new Social Security Benefit Calculator, you have extensive information available to you to help you in planning for your future, regardless of how old you are or at what stage you are in your career.