ERS RETIREE NEWS - FALL 2007 EDITION State Employees Credit Union 2008. In recent years, when the funding status of ERS was Deductions Now Available! higher, the Board had approved both of the COLAs at the same time. Great news for retirees! In partnership with the State Employees Credit Union (SECU), we are now able to offer you the ability to make deductions from your monthly retirement benefit to go directly to the Credit Union. If you already have an account with SECU, just complete the form on the reverse side of this page, cut it out and mail or fax to: State Employees Credit Union FAX (404 651-8632 Attention: Member Services Dept. 400 Whitehall Street SW Atlanta, GA 30303-3720 Deductions can become effective with the January 2008 retirement check. SECU must receive the form no later than the 15th of January in order for the deduction to begin with the January 31st retirement payment. If you don't already have an account with SECU, you'll need to complete their Membership Application. You can contact them directly at 404-656-3748 to request the application or download one from their website at www.secuga.org. Return the Membership Application along with the Retiree Payroll Deduction Authorization form on the reverse side of this page to the Credit Union at the address above. Application and Authorization forms must be received by SECU by the 15th of the month in which you want the deduction to be reflected in the retirement payment at the end of the month. At the October 18, 2007 meeting of the ERS Board of Trustees, the Board approved an additional of 1% retiree COLA effective January 1, 2008, in accordance with board policy thus making the total COLA awarded during the fiscal year 2.0%. The Board also directed the Actuary propose to the Board no later than April 2008 a framework for providing future retiree COLAs that is consistent with maintaining the actuarial soundness of the retirement system. The Board is sensitive to the significance of the COLA to all retirees. However, the Board also 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 the ERS' financial condition. The financial condition of ERS is changing, as further explained below, and the Board is currently studying the need for additional funding of the retirement system. 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: continued on page 3 We're pleased to offer this enhanced service to our retirees. For your convenience, the Retiree Payroll Deduction Authorization form is also available for download in the Forms & Publications section of our website at www.ersga.org. Please do not send the form to the Employees' Retirement System (ERS). All paperwork should be remitted directly to SECU. Cost of Living Adjustments At the annual meeting of the ERS Board of Trustees held in June 2007, the Board approved a 1.5% Cost of Living Adjustment (COLA) for retirees effective July 1, 2007 but delayed a decision on the COLA to be effective January 1, Have You Tried Online Account Access? In December 2006, online account access was introduced for retirees. To date, over 2,600 retirees have registered and are using their access to check their account and make changes to direct deposit, tax withholding and address. Have you registered? Go to www.ersga.org and access Member Information/ Retirees/Retiree Self Service Website. Try it today! 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 STATE EMPLOYEES CREDIT UNION RETIREE PAYROLL DEDUCTION AUTHORIZATION Instructions 1) Complete the information requested below. Type or print clearly in ink. 2) Mail or fax this form to the SECU at the address below: State Employees Credit Union FAX (404) 651-8632 Attention: Member Services Dept. 400 Whitehall Street SW Atlanta GA 30303-3720 3) SECU will process this form and forward the deduction amount to the Employees' Retirement System of Georgia for this to be set up as a deduction from your retirement payment. 4) If this form is not received by SECU by the 15th of the current month, it may not be reflected as a deduction from your retirement payment until the following month. 5) If you are not currently a member of SECU, you must also complete the SECU Membership Application, available at www.secuga.org or you can contact SECU at 404-656-3748 to have an application mailed to you. Please submit this form concurrently with the Membership Application. First Name Middle Initial Last Name Your Social Security Number - - Your Home Mailing Address (Street/P.O. Box) (Apt.No.) City State Zip Code County Phone: Area Code / Phone Number / Extension (if any) Area Code / Phone Number / Extension (if any) Home / Other / I authorize the Employees' Retirement System of Georgia to begin deductions from my retirement check each month to be remitted to the State Employees Credit Union and credited to my accounts as follows: LOANS: ACCOUNTS: (A) CAR LOAN (B) DEPOSIT LOAN (C) LINE OF CREDIT (D) HOME EQUITY (E) OTHER LOAN TOTAL $__________________ $__________________ $__________________ $__________________ $__________________ $__________________ (A) REGULAR SAVINGS (B) CHRISTMAS CLUB (C) IRA (D) OTHER (E) CHECKING ACCOUNTS TOTAL $__________________ $__________________ $__________________ $__________________ $__________________ $__________________ GRAND TOTAL $____________ Authorization & Acknowledgments. I understand this authorization for deductions replaces any previous authorization and will remain in effect until terminated by me in writing. I wish to continue making my loan payments by payroll deduction until such time as I decide to terminate deductions, even in the event of bankruptcy, and if I fail to so terminate, I request that payments continue to be made voluntarily to the loans in accordance with my pre-bankruptcy instructions. Signature Date Credit Union Use Only 2 Cost of Living Adjustments Continued from page 1 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 COLAs 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 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 careful to analyze future changes to the plans to avoid further erosion of ERS' financial condition. ERS continues to study whether additional funding is required to properly fund the system. Whether this comes 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 COLA sufficient to maintain retiree purchasing power going forward. ERS believes that fiscal responsibility will best serve all of the retirees in the long run. Service Retirement Earnings Limitations All retirees, except disability retirees, who are reemployed by an employer participating in ERS are limited to no more that 1,040 hours of work during a calendar year. If you work more than 1,040 hours, your retirement allowance will be suspended for the remainder of the calendar year. ERS Working Hard For You It's been another busy year at 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. You can visit our website at www.ersga.org to register. In September 2007, ERS introduced online account access for active members. 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 (see article, Page One). ERS is excited about these significant improvements to customer access and service for our members. Also as a part of PARIS, our Employer Services Division has introduced a new employer reporting website. The new 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 continued on page 4 3 ERS Working Hard For You - continued from page 3 (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. 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. These seminars can help state employees better understand how to create a solid foundation for their financial future. In 2007 the state deferred compensation plans (Peach State Reserves - PSR) were successfully transitioned to a new third-party administrator, CitiStreet. With this transition, 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 At ERS we are working to make helpful information more available, including personal account access, education and training, assistance and advice. 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. Two Northside 75, Suite 300 Atlanta, GA 30318-7701 Presort Standard US Postage PAID Permit #7926 ATLANTA, GA It's Tee Off Time A Recess. A Devotion. A Passion. A Holiday. A Sport. A Need. A Love. Call it anything you wish - We call it Golf. There are eight Georgia State Park golf courses with special rates for current* or retired Georgia State Government Employees. You can receive $5 off the Regular Greens Fee or 20% off an Annual GreensPass for an individual and/or Family. A GreensPass membership is valid for unlimited greens fees at your home course for one year from date of purchase. For further information, go to http://www.GeorgiaGolf.com or call 1-800-982-3691. *salaried or full-time hourly 4