TRS retirement report www.trsga.com A bi-annual Newsletter for RetIREES Summer 2012 TRS Statistics u As of June 30, 2012, the System's assets were $53.5 billion. $54.1 billion as of June 30, 2011. u Investment returns: Fiscal YTD (2012) 06/30/12: 2.2% Fiscal YTD (2011) 06/30/11: 21.3% u Asset Allocation as of June 30, 2012: Equities: 70% ($37.3 bil) Internal (In-house index funds): 80% ($29.9 bil) External: 20% ($7.4 bil) Fixed: 28% ($15.3 bil) Other: 2% ($0.9 bil) u Average Benefit on July 1, 2012 for New Service Retirees with 25+ years of service was: $3,499 per month $41,988 per year u Average Benefit on July 1, 2012 for All Service Retirees with 25+ years of service was: $3,048 per month $36,576 per year z INSIDE THIS ISSUE: Protecting Your Pension from Jeffrey L. Ezell, Executive Director Since the dawn of time, man has tried to game the system in one way or another. Luckily today, we have an abundance of resources to help prevent fraud and identify those abusing the system. We take the protection of the Teachers Retirement System (TRS) very seriously because fraud compromises the integrity of our System which hurts our members. At the forefront of fraud prevention and abuse detection is the TRS Board of Trustees. The Board has been entrusted to ensure that the System is actuarially sound and financially stable. It empowers the TRS executive team and staff to put policies and safeguards in place to prevent fraudulent activities from taking place. We cannot prevent all fraud from occurring, as in the latest case in the news regarding a man being indicted for stealing his deceased father's TRS benefit payments, but we will use the full extent of the law to go after those who engage in illegal activity. Although we have always focused on preventing fraud at TRS, over the last few years we have incorporated many new internal and external procedures, technologies, and resources in an effort to enhance our ability to protect the System. Some of the things we are doing include: Strong Internal Controls: Our Retirement Services division has procedures in place to identify overpayments and a rigorous collection process that adheres to the Fair Debt Collections Protection Act. When overpayment recovery is unsuccessful, litigation and criminal prosecution can and does occur. Account Audits: We perform audits on a regular basis and maintain all overpaid accounts in a collection database. We run skip-tracing reports to locate and verify debtor information. We also have access to a variety of internet resources to locate assets and verify information. The Berwyn Mortality report is run monthly and provides a record of any TRS retiree that may be deceased, but still receiving benefits. P2 Working After Retirement P4 Legislative Update P8 continued P3 Pensionomics 2012 P2 Working After Retirement Governor Deal signed a bill that changed the repeal date to June 30, 2013 relating to TRS retirees returning to full-time employment while still receiving benefit payments. This law was scheduled to automatically be repealed on June 30, 2016 and allows retirees who retired under a normal service retirement to return to work and continue receiving full retirement benefits provided the retiree has 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. Local school systems may employ a retiree as a full-time classroom teacher, principal, superintendent, media specialist or counselor. Georgia law specifically defines 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. Extracurricular employment in addition to classroom teaching (i.e. coaching, athletic director, band director) is not eligible. Principals cannot return to work in the same positions in the same schools from which they retired and superintendents cannot return to work in the same position in the same school system from which they retired. 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 does not accrue any additional employment benefits or receive any further creditable service as a result of re-employment. IMPORTANT NOTE: If you are negotiating a return to work employment contract under the provisions outlined above, please note that this type of employment will no longer be allowable after June 30, 2013, regardless of what your contract states. Retirees who are currently under an employment contract which extends beyond June 30, 2013, will be required to terminate or suspend their TRS retirement benefit. Please remember that you must inform a TRS employer that you are a retired TRS member prior to accepting a position. Employers are required to submit to TRS all potential TRS retiree employment. For more information, please visit the Retiree/ Working After Retirement section on our website, www.trsga.com. z P3 Protecting Your Pension continued from page 1 Recovering Overpaid Benefits: Since 2010, we have collected over $2.7 million from members and beneficiaries receiving benefits unlawfully. Recovering these funds helps to maintain the integrity of the System. As a TRS retiree, it is important that you and your family understand the importance of complying with Georgia law and TRS policy, as well as providing accurate and current information to TRS. For instance, you and/or your family are responsible for: Immediately reporting the death of a retiree to TRS. Even if you are listed as a beneficiary and are entitled to receive a monthly benefit, you still must call TRS so we can close the deceased retiree's account and create a new one for you, and possibly other beneficiaries on file. If you are not listed with TRS as a beneficiary and you continue to accept benefit payments once a retiree is deceased, you will be held responsible for the repayment of those benefits, and possibly prosecuted. Notifying TRS if you get divorced or if your beneficiary predeceases you. You may be eligible to change your plan of retirement and/or beneficiary. Complying with Georgia law as it relates to returning to work, which requires you to inform a TRS employer that you are a TRS retiree before you accept a position. Working unlawfully will result in benefit repayment to TRS and other possible consequences. Please understand that we have these laws and measures in place to protect you, your beneficiaries, and your retirement benefit. It is very important that you and your family/beneficiaries comply with Georgia law and TRS policy to maintain the integrity of the System. We encourage you to visit our website or call (404-352-6500 or 800-352-0650) and ask one of our qualified customer service representatives for more information. z FunFacts 1. Months that begin on a Sunday will always have a `Friday the 13th'. 2. There are 293 ways to make change for a dollar. 3. Redheads require up to 20% more anesthesia to be knocked out. 4. Poor eyesight (myopia) is associated with higher IQ. 5. Scientists estimate that laughing 100 times is equivalent to a 10-minute workout on a rowing machine. 6. The average person eats almost 1,500 pounds of food a year. 7. Men who kiss their wives in the morning live 5 years longer than those who don't. 8. Take your height and divide by 8. That's how tall your head is! 9. In Quitman, GA, it is illegal for a chicken to cross the road. 10. It is impossible to hum if your nose is plugged. 11. Basketball great Wilt Chamberlain never fouled out of a game. 12. Half of all identity thieves are either relatives, friends, or neighbors of their victims. 13. You would have to walk for seven hours straight to burn off a Super Sized Coke, fry and Big Mac. 14. No piece of square dry paper can be folded more than 7 times in half! 15. You share your birthday with at least 9 million other people in the world. 16. Aoccdrnig to a rscheearch procejt at Cmabrigde Uinervtisy, it deosnt mttaer waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. Tihs is bcuseae the huamn mnid deos not raed ervey lteter. www.funfactz.com P4 Legislation effective July 1, 2012 The following TRS-related legislation has been passed and was effective July 1, 2012. HB 208 changed the repeal date to June 30, 2013 relating to TRS retirees returning to full-time employment while still receiving benefit payments. This law was scheduled to automatically be repealed on June 30, 2016 and allows retirees who retired under a normal service retirement to return to work and continue receiving full retirement benefits provided the retiree has been retired for a minimum of 12 months. (refer to page 2 for more information) HB 183 as it relates to TRS, requires any public employer to notify the Legislative Retirement System within 30 days of hiring an LRS retiree. Failure to report such employment will result in the hiring employer reimbursing LRS for any benefits wrongfully paid. The retiree must notify the employer of his or her retirement status prior to accepting a position. If the retiree fails to notify the employer and the employer becomes liable to the LRS, the retiree shall hold the employer harmless for all liability. HB 297 prohibits a public retirement system from having an insurable interest in their membership. Public retirement systems would not have the authority to obligate funds to purchase life insurance on its membership unless the benefits to be paid are paid directly to the individual's estate or beneficiary. HB 386 as it relates to TRS, freezes the amount of retirement income from any source which can be excluded from State taxes at $35,000 for retirees age 62 to less than age 65, and $65,000 for retirees age 65 and older. SB 286 outlines the provisions for the transfer of service credit and the method of calculating accrued benefits between members of the TRS and members of the Employees' Retirement System (ERS) who are enrolled in the Georgia State Employees Pension and Savings Plan (GSEPS). z P5 10 Tips for a Healthy Retirement Being the healthiest you can be will make for a happier retirement, and save you money. Quiz: Which is the most important ingredient for achieving a happy retirement? A. A sound financial plan B. Good health C. A bright red convertible Answer: We can eliminate C. While it's certainly nice to have, a bright red convertible is not a must. However, choosing between answers A and B is more difficult. Face it: retirement without good health is not ideal. Together, however, these two ingredients can make your retirement a more joyful and fulfilling stage of life. Moving into retirement free of long-term or serious illness may not be easy. In fact, it may demand as much knowledge and effort as financial planning. As we age, our risks of heart disease and diabetes increase. Planning for retirement should mean more than socking money away in an IRA. It also needs to include eating sensibly, exercising, taking steps to control illness, and engaging in other activities to help you maintain and improve your health. Lifestyle plays a major role in many of the conditions that commonly affect our quality of life as we get older. These include heart disease, cancer and type 2 diabetes. Stay Informed Obtaining up-to-date health information can help you make the right decisions for living a healthy lifestyle. For example, most people believe that heart disease is a "man's issue." But each year, heart disease kills more women than men. Here are three sites that provide important information for women: 1. Aetna Women's Health (www.womenshealth. aetna.com) This site is full of health information specifically for women, including information on heart disease. Also, you can take the Framingham Heart Study Risk Assessment to estimate your risk for heart disease (www.framinghamheartstudy. org/risk/index.html). 2. The Women's Health section on the U.S. Centers for Disease Control and Prevention website (www.cdc.gov/women). 3. The Heart Truth A site about heart disease in women. The site is run by the National Heart, Lung and Blood Institute, part of the National Institutes of Health (www.nhlbi.nih.gov/educational/hearttruth). A Financial Incentive to Stay Healthy Here's one more reason to be mindful of your health as you inch toward retirement. A healthy lifestyle now can help protect your financial well being when you retire. Many companies are trimming coverage for future retirees. Some are eliminating this coverage. If you are in one of these situations and you retire before age 65 (when Medicare coverage begins), you may need to shop for an individual health insurance policy. continued P7 P6 Board News Governor Deal has reappointed Dr. L. C. Evans to another 3-year term and the Board re-elected Dr. Evans as Chair for FY 2013. The Board also elected Mr. Thomas Norwood as Vice-Chair. The Board of Regents has reappointed Dr. Ralph Steuer to serve on the TRS Board. Congratulations to all! Two new members have been appointed to the TRS Board of Trustees. Ms. Deborah K. Simonds is a retired special education teacher and Mr. Greg S. Griffin is the State Auditor. We are excited to have them on the TRS team. Ms. Deborah K. Simonds Ms. Simonds is a retired teacher from Georgia. She was a High School Special Education teacher for 27 years at Berkmar High School in Gwinnett. Ms. Simonds served as the Department Chairperson for Special Education at Berkmar HS for 17 years. Prior to teaching in Georgia, Ms. Simonds taught in her home town of Wichita Falls, Texas for three years and in Baton Rouge, Louisiana, for three years. Ms. Simonds received her Bachelors of Elementary Education and a Master's of Education from Midwestern State University. She continued her education at Georgia State University and received a Master's of Special Education. During her career, Ms. Simonds served as state President for the Georgia Association of Educators. She was appointed by Governors Joe Frank Harris and Zell Miller to the Georgia Professional Standards Commission. Ms. Simonds was also appointed by the National Education Association to serve on The National Council for Accreditation of Teacher Education (NCATE). NCATE is a coalition of more than 30 national associations. Accountability and improvement in teacher preparation are central to NCATE's mission. Ms. Simonds is looking forward to working with the TRS staff and Board of Trustees to continue to provide exceptional service in the administration of pension benefits and related services to TRS members, retirees and employers. Mr. Greg S. Griffin Greg S. Griffin currently serves as the State Auditor of Georgia. Mr. Griffin was appointed to that position by Governor Nathan Deal on July 1, 2012. Prior to his appointment, Mr. Griffin had held the position of State Accounting Officer for the State of Georgia since 2008. Mr. Griffin has over 30 years of experience in accounting, auditing and financial reporting. Prior to his employment at the State Accounting Office, Mr. Griffin completed a nearly 25-year career with AT&T and its BellSouth Corporation and Cingular Wireless affiliates. He started his career as an auditor with Deloitte Haskins and Sells. Mr. Griffin's professional affiliations include the American Institute of Certified Public Accountants (AICPA), the National State Auditors Association (NSAA), the Georgia Society of CPAs (GSCPA), and the Alabama Society of CPAs (ASCPA). Mr. Griffin graduated with highest honors from Auburn University and is a Certified Public Accountant. He is married to Cynthia Griffin and has two sons, Scott and Brian. z P7 10 Tips for a Healthy Retirement continued from page 5 When you purchase individual coverage, insurance companies can ask about your medical conditions. They can factor your health status into the price they charge. The healthier you are, the lower your costs will likely be. Also, the fewer health problems you have, the less burdened you will be with costs. These include copayments, deductibles and the health care expenses that your health insurance policy doesn't cover. Even once you are on Medicare, you may need to purchase supplemental coverage. This coverage helps to pay for prescription drugs and other services that basic Medicare doesn't cover. The Top 10 Tips What are some things you can do to make sure you retire not only feeling financially secure but also feeling healthy? Check out the 10 tips below: 1. Know your cholesterol numbers. A simple blood test can let you know if you have high cholesterol. National guidelines recommend that everyone over age 20 have a blood test to determine cholesterol levels. It should include results for total cholesterol, LDL, HDL and triglycerides. A healthy total cholesterol level is 200 mg/dL or lower. For LDL cholesterol, it is 100 mg/ dL or lower. For HDL cholesterol, it is 60 mg/dL or higher. For triglycerides, it is 150 mg/dL or lower. changes to your lifestyle. People with diabetes are more likely to develop other health risks, such as high blood pressure and high cholesterol. 4. Maintain a healthy weight. Eat high-fiber foods. These include fruits, vegetables, legumes and whole grains. You also can try oatmeal, which has a type of fiber that lowers cholesterol. Other healthy foods are brown rice, barley, peas, beans, chicken, baked fish, whole grain bread, white-meat turkey, low-fat yogurt, and egg whites or egg alternatives. Avoid fad diets. They set you up to regain weight once you resume your previous eating pattern. Most importantly, they can be dangerous because they deprive you of important nutrients. 2. Stop smoking. Smoking damages the heart. It raises blood pressure and damages blood vessels. It also promotes the buildup of fatty plaque in arteries and lowers levels of "good" cholesterol. This makes the blood more likely to clot and starves the heart of oxygen. Quitting smoking is the best thing you can do to help prevent a heart attack. 3. Know your blood sugar numbers. Monitor your blood sugar and maintain it at a normal level. Have a fasting blood sugar level test performed at least once a year. A normal fasting blood sugar level is less than 100 mg/dL. Higher levels indicate that you may be headed for diabetes. Risk factors for diabetes include obesity and lack of exercise. If your blood sugar level indicates a problem, work with your doctor to make 5. Another number to know. Your body mass index, or BMI, relates your weight to your height. It helps to determine if you are within a healthy weight range. A BMI between 25.0 and 29.9 puts you in the "overweight" category. A BMI of 30.0 or higher puts your in the "obese" category. If you are in one of these categories, you have a greater risk of heart disease, stroke, high blood pressure and diabetes. Visit the Aetna Healthy Body, Healthy Weight website. There, you can calculate your BMI and read information about nutrition for a healthy weight. 6. Ease into exercise. When starting an exercise program, be kind to your body. Don't start the first day continued P10 P8 Pensionomics 2012 The National Institute on Retirement Security has created a fact sheet for each state that details the economic impact state and local defined benefit pensions have in each state. Following are the key findings for the State of Georgia. GEORGIA Pensionomics 2012: Measuring the Economic Impact of DB Pension Expenditures Key Findings Benefits paid by state and local pension plans support a significant amount of economic activity in the state of Georgia. Pension benefits received by retirees are spent in the local community. This spending ripples through the economy, as one person's spending becomes another person's income, creating a multiplier effect. In 2009, expenditures stemming from state and local pensions supported... 51,504 jobs that paid $2.3 billion in wages and salaries $7.1 billion in total economic output $913.1 million in federal, state, and local tax revenues ... in the state of Georgia. Each dollar paid out in pension benefits supported $1.70 in total economic activity in Georgia. Each dollar "invested" by Georgia taxpayers in these plans supported $6.06 in total economic activity in the state. Overview Expenditures made by retirees of state and local government provide a steady economic stimulus to Georgia communities and the state economy. In 2009, 157,013 residents of Georgia received a total of $4.2 billion in pension benefits from state and local pension plans. The average pension benefit received was Employer Contributions 28.14% $2,212 per month or $26,547 per year. These modest benefits provide retired teachers, public safety personnel, and others who Investment Earnings 60.75% Employee Contributions 11.12% served the public during their working careers income to meet basic needs in retirement. Between 1993 and 2009, 28.14% of Georgia's pension fund receipts came from employer contributions, 11.12% from employee contributions, and 60.75% from investment earnings.* Earnings on investments and employee contributions--not taxpayer contributions--have historically made up the bulk of pension fund receipts. Impact on Jobs and Incomes Retiree expenditures stemming from state and local pension plan benefits supported 51,504 jobs in the state. The total income to state residents supported by pension expenditures was $2.3 billion. To put these employment impacts in perspective, in 2009 Georgia's unemployment rate was 9.7%. The fact that DB pension expenditures supported 51,504 jobs is significant, as it represents 1.1 percentage points in Georgia's labor force. Economic Impact State and local pension funds in Georgia and other states paid a total of $4.2 billion in benefits to Georgia residents in 2009. Retirees' expenditures from these benefits supported a total of $7.1 billion in total economic output in the state, and $4.1 billion in value added in the state. $3.0 billion in direct economic impacts were supported by retirees' initial expenditures. An additional $2.2 billion in indirect impact resulted when these businesses purchased additional goods and services. $1.9 billion in induced impacts occurred when employees hired by businesses as a result of the direct and indirect impacts made expenditures. Total Economic Impact $7.1 billion direct impact $3.0 billion indirect impact $2.2 billion induced impact $1.9 billion Totals may not add up exactly due to rounding. For more information on the data and methodology used for these estimates, please refer to Boivie, I. 2012. Pensionomics: Measuring the Economic Impact of DB Pension Expenditures. Washington DC: National Institute on Retirement Security. www.nirsonline.org P9 National Institute on Retirement Security Pensionomics 2012: Measuring the Economic Impact of DB Pension Expenditures Economic Multipliers Taxpayer Contribution Factor* THE UNITED STATES OF AMERICA L1180916G L1180916G ONE $1.00 contributed by taxpayers to Georgia pensions over 30 years THE UNITED STATES OF AMERICA L1180916G L1180916G fIVE THE UNITED STATES OF AMERICA L1180916G L1180916G ONE $6.06 total output THE UNITED STATES OF AMERICA L1180916G L1180916G ONE Pension Benefit Multiplier THE UNITED STATES OF AMERICA L1180916G L1180916G ONE $1.00 pension benefits paid to retirees in Georgia THE UNITED STATES OF AMERICA L1180916G L1180916G ONE THE UNITED STATES OF AMERICA L1180916G L1180916G ONE $1.70 total output GEORGIA Each $1 in taxpayer contributions to Georgia's state and local pension plans supported $6.06 in total output in the state. This reflects the fact that taxpayer contributions are a minor source of financing for retirement benefits--investment earnings and employee contributions finance the lion's share. Each $1 in state and local pension benefits paid to Georgia residents ultimately supported $1.70 in total output in the state. This "multiplier" incorporates the direct, indirect, and induced impacts of retiree spending, as it ripples through the state economy. *Caution should be used in interpreting these numbers. See the Technical Appendix of the full Pensionomics report for details. Impact on Tax Revenues State and local pension payments made to Georgia residents supported a total of $913.1 million in revenue to federal, state, and local governments. Taxes paid by retirees and beneficiaries directly out of pension payments totaled $69.6 million. Taxes attributable to direct, indirect and induced impacts accounted for $843.5 million in tax revenue. Federal Tax State/Local Tax Total 544.2 million 368.9 million $913.1 million Economic Impacts by Industry Sector The economic impact of state and local pension benefits was broadly felt across various industry sectors in Georgia. The ten industry sectors with the largest employment impacts are presented in the table below. Industry Employment Impact (# Jobs) Labor Income Impact Value Added Impact Output Impact Food Services and Drinking Places 4,319 $95,730,487 $136,577,523 $264,633,213 Real Estate Establishments 3,049 $45,234,991 $337,910,281 $466,394,939 Private Hospitals 2,825 $178,810,409 $190,866,950 $402,907,890 Physicians, Dentists, and other Health Practitioners 2,439 $186,358,459 $198,769,388 $333,173,008 Private Household Operations 2,272 $11,137,478 $11,137,478 $11,548,973 Nursing and Residential Care Facilities 1,597 $51,288,734 $55,364,504 $98,201,726 Retail Stores - Food and Beverage 1,097 $32,828,495 $53,159,220 $60,745,745 Retail Stores - General Merchandise 1,073 $31,607,931 $51,417,607 $58,435,237 Wholesale Trade Businesses 935 $77,242,167 $133,324,540 $181,644,256 Employment Services 878 $24,533,175 $29,214,451 $36,169,554 Industry totals include impacts from in-state pension payment only, and do not account for the recaptured "leakage" impacts from other states. P10 10 Tips for a Healthy Retirement continued from page 7 with a 30-minute run. Instead, start with 5 minutes of walking. Add 1 minute every day until you reach your 30-minute-per-day goal. Talk to your doctor before you begin an exercise plan. 7. Find a way to relax. Too much stress can make you irritable and depressed. It also can increase your heart rate and raise your blood pressure. Relaxation eases your body's response to stress. Types of relaxation include meditation, deep breathing, muscle relaxation, listening to relaxing music and picturing pleasant scenes. For best results, do one of these activities for 15 to 20 minutes once or twice a day. 8. Express yourself. Stress builds up if you keep your feelings bottled inside. Talk to your friends and family and ask for support. If you don't have a good support system, work to develop one. That way, you'll have someone to talk to when you're upset. Consider joining a support group. Some people keep a journal to record their thoughts and feelings. 9. Be mindful of how you think. Certain styles of thinking can stress you out. Things like perfectionism, allor-nothing thinking and negative thinking. Be mindful of how you think. For example, if you're a perfectionist, try to lower your expectations of yourself and others, and learn to accept things you can't change. If you tend to think negatively, try to focus on the good, not the bad. Practice viewing problems as opportunities. 10. Be aware of your blood pressure. An optimal blood pressure level is 120/80 mmHg or less. To prevent or manage high blood pressure, consider some lifestyle changes. Cut down on salt. Limit your alcohol and caffeine intake. Quit smoking. Watch your cholesterol levels. Be physically active every day. Lose weight if you need to. Reduce stress. z Article courtesy of Planforyourhealth.com Word Search HMNHOB B I E SO I C S D Z N E R D L I HC DN AR G E S D N E I R F SQ Q I AU S F R H E I B C LGT GY O I R I E QDN YZ ENYYT HS AN TOUVTD AI LHI KE EE I G C E I WDNB YU F C YD R G A S R I ENY GN I R N B E E T T UH R I E PN YV E E MT I MCR SGY J A L P DN E S OE ED RET I R EE LE N E NN S C FBD PQ VE O F T N M T Y Q J WC FW AN G I I QV S OU OEV I H RUOT N R A T I F E N E B R T UWK Annuity Benefit Cruise Defined Benefit Education Friends Golden Years Grandchildren Hobbies Investments Leaders Nest Egg New Beginnings Retiree Retirement Security Travel