www.trsga.com TEBrxhieeecfutive's Welcome to the first edition of the TRS Retirement Report, designed to inform you about TRS and the retirement industry. We always appreciate the chance to communicate with you and encourage you to let us know the areas which we can improve, and those in which we are doing well so we can continue to provide you with services of value in a timely, accurate, and friendly manner. I would also like you to know that everyone at TRS is a member of a hard-working team who is dedicated to meeting your needs in every way possible, using the best practices and best technology available. In fact, customer service is the main focus at TRS. We strive to be "Faster, Friendlier, and Easier" than ever before. I, along with my staff, am truly fortunate to have the opportunity to serve you and bring you the services you need to be successful. You are the reason we exist at TRS. Thank you for your dedication to teaching our children and serving this great state of ours. z TRS retirement report A bi-annual Newsletter for Retired members Volume 1 / July 2008 Your Pension is Safe with TRS by Jeffrey L. Ezell, Executive Director No matter what you have heard or read in the news lately about the financial markets, you can be assured that your TRS pension is safe and sound. The bottom line--your benefits are available when you need them! The market turbulence over the past year has been troubling. Like all investors, private and institutional, we have been affected by the significant downturn in the markets; however, we have survived other downturns in our history. Black Monday in 1987, the bursting of the technology stock bubble in the late 1990's, the Enron and WorldCom fiascoes, and 9/11...TRS will weather this storm as well. It is important to recognize and remember that the time horizon of the TRS investment portfolio is measured in decades, not days, weeks, or months. Much attention is paid to what is happening now, but the goal is to use periods of market fear and exuberance to TRS' long-term advantage. Unlike a retirement savings program, such as a 457 or 401(k) plan, your TRS account does not lose value when stock prices go down. We are a long-term investor, and short-term downturns in the market are anticipated in our investment strategy. The funds used to pay retirement benefits are derived from employer contributions, member contributions, and investment income. These funds are invested in a mix of high quality bonds and stocks. Because TRS invests in a well-diversified portfolio, when P2 P3 one company or asset class under performs, the stability of the other asset classes offsets that negative performance. Simply stated, the companies making headlines today are just a small fraction of our overall portfolio. The TRS Board of Trustees and our investment staff continually monitor our asset allocations and make adjustments as necessary. As in previous years, conservation of capital and conservatism continue to be the principles that guide our investment decisions. TRS has the liquidity needed to pay promised benefits today and the accumulated assets and funding mechanisms to pay them in the long-term as well. TRS, as a large institutional investor, has access to investments that most individual investors do not have, and we use our professional investment expertise to make investments on behalf of our membership at a low cost. We know that the markets go up and down and that at times we'll have losses, but those losses will be offset by gains over the long run in TRS' diversified investment portfolio. Because we know that the market can be volatile, we have taken a number of risk mitigation steps throughout the years and will continue to monitor all of our investments and manage our system in the context of our longterm investment horizon. You can be confident that the professionals at TRS are doing everything possible to protect and grow the funds available to pay for the retirements of current and future retirees. z P4 INSIDE THIS ISSUE: RETIREES: ECONOMIC FORCE SECURITY FIRST TRS NEWS PP32 in the news Direct Deposit What are you waiting for? Why worry about receiving your pension check, when it can be automatically deposited into your bank account through the TRS Electronic Funds Transfer (EFT) Program? It's safe, fast, hassle free, and you don't have to be in town to get your money! Did you know that the chance of having a problem with a mail-delivered check is 20 times greater than with direct deposit?* Checks pass through more hands and can get lost in the mail, stolen and forged. With EFT, you can rest easy that your retirement benefit will be safely deposited into your account. And, with our account management website, you can view your deposits online at www. TRSGA.com. Over 96% of our retired members use EFT. If your checks are not already direct deposited, what are you waiting for? To s i g n u p f o r t h e EFT Program, go to www. TRSGA.com and click on the Account Login button. You must either: 1) sign up for a new account; or 2) sign in to your existing TRS account. Once you have signed in, click on the Maintain EFT Information section to sign up online. If you do not have access to a computer, you can call our office to request an EFT form. So, go ahead, relax and get paid at the same time! z * Source: Direct Deposit and Direct Payment, www.directdeposit.org and www.directpayment.org. TRS Retirees are a Major Economic Force It has been widely reported by experts that seniors in Georgia, and those relocating from other states, have become a major economic force throughout the State. Most people do not have any concept of how vital retirees are to the economic engine of this State. As more people retire, this population will continue to grow in economic strength over the next decade...becoming an integral part of the State's economy. As the largest public retirement system in the State of Georgia, the 27th largest retirement system in the United States, and the 55th largest retirement system in the world1, TRS pays out over $2.5 billion in pension benefits to over 80,000 retirees per year. As consumers, retired individuals and retired educators will spend their benefits on a wide range of goods and services--from food and health care to cars and homes. These expenditures increase economic demand and encourage employment. Additional increased economic activity is generated from this and results in even more demand and employment. This is known as the `multiplier effect' a single dollar has an economic impact greater than one dollar as it ripples through the economy. Of the 80,066 TRS retirees, 88% reside in Georgia and receive an average monthly benefit of approximately $2,900. In many counties, TRS could be considered one of the largest employers. For example, Fulton County, which has the largest concentration of retired TRS members, has 5,182 retirees who receive approximately $198 million in benefits each year. In Cobb County, 3,523 retirees receive about $117 million and 484 retirees in Forsyth County receive $16 million each year in benefits. Even Echols County, which has the smallest number of retirees, has 5 members who receive $145,000 in benefits annually. The unrecognized power of the retiree can make a substantial impact on Georgia's economy. Fueled by Social Security, pension benefits, and other savings, retirees often start small businesses of their own and create the need for service industry and medical jobs in the community. According to William H. Frey, a demographer with the Brookings Institution, one job is created for every 1.8 retirees2. These jobs attract young workers and more businesses. Additionally, as people retire, they invest their knowledge and capital to start new careers or volunteer their time towards community and development projects. Economists and consultants believe that attracting retirees to a location will create a catalyst for strong economic development. Retirees have become a driving force in the revitalization of Georgia's mountain communities like Fannin, Gilmer, Murray, Rabun, Towns, Union, and White, encouraging road improvements and second-home developments3. Consultants, like Frey, also believe "retirement is like permanent tourism," because seniors tend to retire where they frequently vacation. State and local officials see the inherent value of the retiree and the multiplier effect and are now committing more budget dollars to the building and marketing of retirement communities and benefits. The hope is that as communities become aware of the growing knowledge, value, and entrepreneurship of retirees, the retirees will continue to promote and share in the economic growth of the communities. z 1 National and worldwide ranking according to Pensions and Investments 2 Christine Vestal, Retirees Boosting State's Rural Economies, Stateline.org. 3 Dean George Benson, Growth Train to Slow, Georgia Trend P3 did you know? Security First An increase in thefts of financial information from public organizations is raising red flags about security and causing concern about personal privacy. These crimes are no longer limited to teenagers seeking acknowledgement or hacking for fun. Financial organizations have become a tantalizing target for professional criminals looking to cash in. They're targeting corporate information systems in an attempt to steal personal financial information to resell or for corporate blackmail. To protect against such attacks, maintaining the security of the confidential information in our systems is priority number one at TRS. Without divulging specific details about security efforts, personal confidential information is protected by multiple layers of cyber security. The security protocols we use are tested throughout the year by a private security firm. In addition to cyber security protocols, TRS buys some of the market's most advanced security equipment and the technology division has employees assigned full-time to cyber security. Our systems are monitored twenty-four hours a day both manually and automatically. If any atypical or unusual activity is detected, TRS' connection to the Internet is instantly severed to protect the security of confidential information. Rest assured that TRS works continually, diligently, and invests significant financial capital to protect your information. However, despite the abundance of cyber-crime prevention software, government regulations, and security features on computer operating systems, no organization is 100-percent safe from cyber attacks. If you suspect that your identity or TRS information has been compromised because of TRS practices or policies, please contact one of our customer service representatives immediately! We are here to ensure the integrity of the information TRS maintains on your behalf. z the LEGISLATIVE FRONT Three bills that may be of interest to you. HB 371 This bill will amend the retirement system's investment authority by allowing the system to increase equity investments. Under current law, the system may not invest more than 60% of assets in equities. This bill would provide for incremental increases in the allowable percentage amounts to 65% effective July 1, 2009; 70% effective July 1, 2010; and 75% effective July 1, 2011. This bill further amends the system's investment authority by removing the 15% restriction on investments in corporations or in obligations of corporations in a country other than the United States of America. This is a non-fiscal bill. HB 650 This bill would expand the provisions regarding the re-employment of retired teachers to include "speech-language pathologist" as an eligible position. This bill does not change any other aspect of current law regarding retirees returning to work. This is a fiscal bill. SB 259 A This bill would allow the University System of Georgia to employ a TRS retiree who has been retired for at least 12 months as a "full-time instructor." "Full-time instructor" is defined as a registered nurse employed by the University System of Georgia who has the sole responsibility of the academic instruction of students in a school of nursing. The University System of Georgia shall pay all employer and employee contributions to TRS as if the retiree was an active member of TRS. The retiree will not be considered an active TRS member and will not receive any additional service credit. The provisions of this legislation shall not become a part of an employment contract and shall be subject to future legislation. The provisions of this code section shall automatically be repealed on June 30, 2016. This is a fiscal bill. For a complete review of legislation that has been introduced and affects the Teachers Retirement System, please visit www. TRSGA.com and click on the Legislation link at the top of the homepage. z P4 news New Face of TRSGA.com If you have not visited our website in a while, we encourage you to check it out. If you have, then welcome to our friendlier and easier portal to all that is TRS. We have been listening to your suggestions and implemented some enhancements that should improve navigation and information presentation. Accessing your account has never been easier and finding the information you need to be successful never faster. We hope you enjoy the site and encourage you to let us know what you think and how we can continue to improve the services we provide. z Keeping Your Info Updated To ensure we have the correct information on file and that you receive necessary correspondence, we ask that you keep TRS informed of any status changes that may occur while in retirement. Many changes or updates can be done online via your TRS account, while others must be made in writing. Address changes should be made online via your TRS account to ensure all correspondence from TRS, such as your 1099R, reaches you at the correct address. If your bank account information changes, affecting the direct deposit of your monthly retirement check, you may update it online via your account. You may also update your Federal and/or State Tax Withholding information. Name and beneficiary changes, birth date and social security number discrepancies must be proven via certain identification and in writing. Please contact one of our Customer Service Representatives for help. Also, if you have any questions regarding your account information, call our office to speak with one of our Customer Service Representatives. z Working in Retirement During the 2008 session, the Georgia General Assembly passed legislation that helps address the need for qualified educational professionals in Georgia's public schools. This new law will allow certain retired educators to start a new chapter in their lives by returning to the workforce and continuing to receive the retirement benefits they worked so hard to attain. Effective July 1, 2008, TRS retirees who retired under a normal service retirement may return to work and continue receiving full retirement benefits provided that they have been retired for a minimum of 12 months. Normal service retirement is defined as having at least 30 years of service credit or being age 60 with at least 10 years of service credit. All previous return to work provisions regarding full-time teaching in a TRS covered position in retirement have been superseded. Local school systems may employ a retiree as a full-time classroom teacher, principal, superintendent, media specialist or counselor (assistant principals and assistant superintendents are not eligible). The new legislation is very specific in defining a classroom teacher as a certified teacher (pre-K thru grade 12) employed by the public school system with the sole responsibility of academic instruction in a classroom. A principal cannot return to work as a principal in the same school from which he/she retired and a superintendent cannot return to work as a superintendent in the same school system from which he/she retired. Under the provisions of this legislation, extracurricular employment in addition to classroom teaching (i.e. coaching, athletic director, band director) is not eligible. Regional educational service agencies may still employ a retired teacher as an improvement specialist. A school system employing a retiree must pay all employee and employer contributions to TRS as if the retiree was an active member of TRS. The retiree will not be eligible to accrue any additional employment benefits or receive any further creditable service as a result of reemployment. TRS retirees may still return to work in less than halftime (49% or less) positions since these positions are not eligible for TRS membership. For more information, please visit our website or call our office to speak with one of our Customer Service Representatives. z