TRS RETIREMENT REPORT www.TRSGA.com A BI-ANNUAL NEWSLETTER FOR RETIREES Fall 2014 Fiscal Year 2014 in Review Jeffrey L. Ezell, Executive Director As the calendar year draws to an end and we reflect back on 2014, providing excellent customer service throughout TRS continued to be our focus. To engage and keep our newer members informed, we implemented a fully-revised New Member presentation, which includes a section on general concepts of personal financial literacy. We individually counseled over 7,000 members and retirees at the TRS office and around the State. Through our 311 outreach events, including meetings, benefit fairs, and workshops, we reached over 28,000 members and retirees. We also enhanced the disability retiree review process to include disability retirees who have returned to work, ensuring these retirees are in compliance with Georgia law. To keep our pension administration systems and your data secure, we continually test our systems both internally and externally to ensure their integrity and safety. Over the course of the year our system has blocked multiple hacker probes and hacker attacks on the network infrastructure. We are happy to report that no security risks have been identified. We added Positive Pay, a fraud detection tool, to TRS operating and expense accounts to further combat fraudulent checks. Each year we also strive to stay up-to-date with our technology. FY 2014 was no exception. We developed a content management system for our website and implemented improvements in employer reporting to streamline and improve performance when processing employer files, resulting in significant improvements to processing time. We also saw many services rendered by our members on the web Continues on PG 2 2014 Comprehensive Annual Financial Report Our 2014 annual report will be ready to view at the end of December on our website under Publications. Member Statements Available Now Please login to your online account and review your member statement, which contains your account balance, demographic information, and various benefit estimate projections are available for you to view and/or print. Please review your statement. If you find anything incorrect or you have any questions please contact TRS immediately. P2 Fiscal Year 2014 in Review, cont. P2 Working After Retirement P3 Retirement: When to Start Social Security P4 EFT Benefit Payment Schedule P5 How the State Legislature Works P5 GREA Update INSIDE TRS Retirement Report 1 A NUMBERS RECAP Fiscal Year 2014 in Review, cont. during FY 2014. We had 5,637 applications for retirement submitted online, 40,533 member statements downloaded, and 34,882 benefit estimates created, just to name a few. Looking to the future, the 2015 Georgia General Assembly will convene on January 12, 2015. Retirement legislation that has a fiscal impact can only be introduced during the 1st year of a two-year session and can only be acted on during the 2nd year. The earliest effective date of any fiscal retirement bill introduced during the 2015 session would be July 1, 2016. We encourage you to visit our website frequently during the legislative session for accurate, up-to-date information as it relates to retirement legislation. A detailed description of the unique process retirement legislation must follow is also available on our website. Thank your for your continued support and partnership with TRS. We are always working towards providing you with the best customer service available. From myself and the staff at TRS, we would like to wish you a happy holiday season! z 108,100 Retirees & Beneficiaries $3.8 Billion Paid to Retirees & Beneficiaries $66.5 Billion in TRS Assets 90% Of Our Retirees Reside in Georgia Working After Retirement Once you are a retired member of TRS you may be re-employed in a TRS covered position on either a full- or part-time basis, under certain terms and conditions, and continue to receive your TRS pension. In order to ensure a TRS retiree working in a TRS covered position is in compliance with Georgia Law, TRS must approve the employment prior to the retiree starting the job. It is your responsibility to inform the employer that you are a TRS retiree, and it is the employer's responsibility to report your employment to TRS. If you do return to work, you MUST have a break-in-service of at least one month. All employment in a TRS covered position, whether directly or indirectly (i.e. independent contractor, private temporary company, etc.) with a TRS employer, is subject to salary and service limitations as outlined in Georgia law and TRS policy. NO PRE-EXISTING AGREEMENT Georgia law requires employers to certify to the TRS Board of Trustees the date on which the employee's employment is or will be severed and that no agreement exists to allow the employee to return to service. This includes service as an independent contractor. Any return to employment or rendering of any paid service, including service for an independent contractor, for any employer during the calendar month of the effective date of retirement shall render severance invalid and void the application for retirement. To learn more please visit or website or read our member's guide. 2 Fall 2014 Retirement: When to Start Social Security Your Social Security can be worth more in your golden years' income than your 401(k) or individual retirement account. The trick: know at what age to best file for benefits. Consider a married couple who both begin Social Security with a first-year combined benefit of just $23,304, based on the Social Security program fact sheet. As of December 31, 2013, the average retired recipient gets $1,294 a month and a spouse $648 a month. A retirement plan needs a value today of $543,147 to provide the same income as Social Security for the next 20 years. This assumes that each retiree in our couple lives an additional 20 years, during which each receives a cost of living increase of 2.5% per year and pays no federal income tax on Social Security income but does pay 10% federal income tax on all other ordinary income. Also assume that each spouse's 401(k) or IRA earns 4%, with distributions taxed at 10%. Many preparing for retirement do not understand the value of benefits and how those benefits work, nor do the eventual retirees' financial advisors. Here are four ideas to help maximize your Social Security retirement income. 1. Use the proper start-date for benefits. Assume that you have sufficient income without starting your benefits at age 62 your earliest date of eligibility, when you get reduced benefits and that your life expectancy is average or better. Then, delaying your start date can be a good investment. If you were born between 1943 and 1954, you can increase your monthly payments as much as 76% based on when you start your benefits, at 62 or 70, and does not include any cost-of-livingadjustment. 2. Integrate your retirement and lifestyle, and consider taxes. Today, many post-career years include new or different work in early retirement. For example, a married couple, both 60 and with a current employer for more than a decade, feel unfulfilled and can't wait for a chance to change their lifestyle. They can work part-time or learn a new skill or both, while beginning to temporarily draw on their 401(k) or IRA. Both can integrate their retirement and work until they reach full retirement age (or FRA, 67 for anyone born after 1960) or continue this strategy until age 70, when they qualify for the maximum Social Security benefit. During this period, both individuals from our couple take distributions from retirement accounts (distributions are taxable) and replace that income at full retirement age or up with higher Social Security income (not fully taxable). Continues on PG 4 TRS Retirement Report 3 Retirement: When to Start Social Security, cont. 3. Consider longevity planning and survivor protection. Longevity planning estimates how long you can collect benefits; survivor protection looks at how long your spouse can collect. According to mortality tables, if you are a 65 year old man you have a 50% chance of living to 85 and a 25% chance of making 92. If you are a woman the same age, you have the same relative odds of living to 88 and 94. A surviving spouse has a 50% chance of living to 92 and a 25% chance of making 97. A survivor at FRA or older can receive 100% of a deceased worker's benefit if that benefit exceeds his or her own. Couples need to jointly decide start dates and take into account age differences and the benefit of the primary wage earner. 4. Enlist a qualified advisor prior to deciding. Social Security representatives are willing to help but not normally prepared to take time to give you a detailed analysis of your best start date. Find an advisor and ask: Do you know how the following may affect my start date: the Social Security tax-favored advantage; use of separate start dates for spouses; the higher step-up survivor benefit? Do you understand how to integrate my lifestyle with Social Security? Does your retirement-income planning integrate Social Security with 401(k) and IRA income? Do you know why I, the primary wage earner, may want to start benefits based on my spouse's lower earnings record instead of on my own record? Carefully consider your Social Security start date. These are just a few of the numerous factors to take into account. z By Wayne Fourman, AdviceIQ 2015 EFT BENEFIT PAYMENT SCHEDULE MONTH PAYMENT DATE January........................................... 2nd February......................................... 2nd March ............................................ 2nd April................................................ 1st May ................................................ 1st June................................................. 1st July................................................. 1st August ............................................3rd September ...................................... 1st October .......................................... 1st November ..................................... 2nd December ....................................... 1st If you are not on EFT, please sign up now to make sure you get your monthly benefits. You can do this through your online account at www.TRSGA.com. Have a Happy Holiday Season! 4 Fall 2014 How Retirement Legislation Becomes Law The 2015 Georgia General Assembly will convene on January 12, 2015, and is the first year of the twoyear (2015-2016) biennium session. Retirement bills that have a fiscal (monetary) impact can only be introduced during the first year of a two-year session and can only be acted on during the second year. Therefore, the earliest effective date for a fiscal bill introduced during the 2015 session will be July 1, 2016. The Georgia Constitution contains several provisions relating to retirement legislation which require retirement bills to be treated differently from other legislation. In Georgia, each bill having a fiscal impact on a public retirement system such as TRS must be funded in the year it is enacted. TRS members and employers contribute monthly to the retirement fund to pay for the member's retirement benefits. This "pay as you work" system ensures that future benefits are prepaid and do not depend on future appropriations. Thus, any bill that increases the liability of TRS must be funded "up front". This ensures the fiscal stability of the retirement system. All retirement bills are sent to the State Auditor for a certificate stating whether the bill is a fiscal or a non-fiscal bill. The State Auditor's certification must be attached to the bill at the time it is introduced. If no certificate is attached when a bill is introduced, it may not be considered. Non-fiscal bills are treated the same as any other legislation, except that such bills must be introduced in the first twenty days of either legislative session. However, a fiscal bill follows a more complex procedure. The requirement to fund fiscal retirement bills concurrently with their enactments necessitates an actuarial study to determine the cost of the proposed legislation. The House and Senate Retirement Committees meet during the summer to determine which fiscal bills will be studied and which bills will "die in committee". A copy of the actuarial study is attached to the bill and must travel with the bill throughout the remainder of the legislative process. After the actuarial study is completed, the bill may be amended only if the amendment reduces the cost of the bill. Any substitute or amendment must be accompanied by certificate from the State Auditors certifying whether the substitute or amendment changed the cost reflected in the actuarial study and, if so, a new actuarial study is required. During the second year of the biennieum session, the respective committees meet again to consider the bills, this time with knowledge of the cost of each bill. From that point, movement of the legislation through the committees and full legislative bodies is similar to other bills, except for the limitation on substitution or amendment. Finally, after a fiscal retirement bill is enacted, a specific provision must be made in the Appropriations Act for funding the legislation. If no funding provision has been made, the bill is automatically repealed. To learn more about the Georgia General Assembly, please visit their website at www.legis. ga.gov. For updates on TRS legislation, please visit www.TRSGA.com. z UPDATE GREA: Georgia Retired Educators Association The annual "tour" of GREA to participate in their nine area meetings across the state just ended. These meetings are a great way for TRS to stay in touch with its retired members. This year TRS met with over 1,000 GREA retirees during the area meetings. There are about 25,000 total GREA members. GREA is currently constructing an educators museum with offices for their executive staff. The museum and offices will be located in Flowery Branch, Georgia just across the street from the Atlanta Falcon's Training Camp. TRS Retirement Report 5