Retirement Presentation Training Center

1. To insert your company logo on this slide • From the Insert Menu • Select “Picture” • Locate your logo file • Click OK • To resize the logo • Click anywhere inside the logo. The boxes that appear outside the logo are known as “resize handles.” • Use these to resize the object. • If you hold down the shift key before using the resize handles, you will maintain the proportions of the object you wish to resize. Retirement Presentation Training Center City-Parish Employees' Retirement System CPERS CPERS

2. About the Retirement Office • $964 Million in Assets (12/31/12) • 3,500 Active Members • 2,800 Retired Members • Employee Contributions 9.5%, Employer (GF 24.53%, SF 29.44%) • Funded by EE and ER contributions plus investment earnings

3. 7 Member Board of Trustees • Linda Hunt (Finance) – 389-3061 • Chad King (Police) – 389-3877 • Richard Sullivan (Fire) – Headquarters • Casey Cashio (Metro Council) • Mark LeBlanc (Metro Council) • Marsha Hanlon (Finance Dept.)

4. Investments • Professionally Managed Portfolio • Investment Consultant & Managers • Diversified Portfolio - 55% Equities, 30% Fixed Income, 15% Alternatives • 72% Funded Ratio (2011) • 2010 Performance of 15.76% • 2011 Performance of -1.84% • 2012 Performance of 13.60%

5. Pension Plans (2 basic types) • Defined Benefit Plan: Benefit amount based on a preset formula Usually a lifetime benefit Usually contributory by EE and ER • Defined Contribution Plan: Benefit based on contributed balance (457 plan) Finite balance from which to draw Withdrawals must coordinate with available funds

6. The Retirement Process • Schedule appointment at CPERS 1 to 2 years prior to target date to get benefit estimate(s) • As DROP entry/Retirement date approaches: Visit with Deferred Comp and Social Security if applicable Furnish required documents to CPERS Birth Certificate(s) (member, spouse, et al) Marriage License Military documents Divorce/Community Property Settlements • Once benefit is selected, triple checked by staff and approved by Retirement Board

7. The Retirement Formula 2.5% (<25 Years) OR 3.0% (>= 25 years) X Years of Creditable Service X Highest Successive 36 Months Average Salary CPERS Monthly Benefit

8. Types of Creditable Service • Actual City-Parish Service (Headstart, BREC, DA, Fire Protection Districts, etc.) for which contributions are received • Prior Service – must be purchased if refunded • Some CETA Service (II and VI) • Transferred Service • Military Service – (3 years at no charge) • Trade in of Accrued Sick and Vacation Leave

9. Creditable Service Issue • Creditable service is given only for service for which retirement contributions are received (except for military and leave traded in) • Also excluded are LWOP and NP hours • Family Medical Leave and maternity leave without pay are available for purchase as creditable service

10. Transferred Service • Members can complete an actuarial transfer of service from other Louisiana public employee retirement systems • Contributions must be on deposit with the transferring system • Actuarial deficiencies may exist between systems • Retirement percentage factors remain the same after the transfer • Sec. 457 (deferred comp) monies can be used to pay deficiencies

11. Round to Next Quarter Additional benefit (not mandatory)Work one day into the quarter and receive credit for the entire quarter Example:Employee hired August 6, 1988 Today (May 7, 2013) has 24 years, 9 months, 1 day of service Could retire or enter DROP with 25 years (trading in no accrued leave)

12. Accrued Leave = Retirement Creditable Service Conversion formula (1-for-1)No. of hours / 8 = No. of days No. of days / 20.67 = No. of months Use .689 for partial months Example:500 hours of sick leave and 600 hours of vacation Total of 1,100 hours available to trade 1,100 hours / 8 = 137.5 days 137.5 days / 20.67 = 6.65 months .65 months = 19.5 days 1,100 hours = 0 years, 6 months, 19 days

13. Trading Accrued Leave • 1-for-1one day traded = one day retirement credit no separation pay from Retirement Office severance pay may be due from Department • 2-for-1two days traded = one day retirement credit separation pay payable from Retirement Office up to (960 hours) Can be sick, vacation, or a combination 960 hours are not “banked” - balance must be on the books at retirement date severance pay may be due from Department

14. 1 – For - 1 • For those who want to retire ASAP • For those who want to enter and exit DROP ASAP • For those who are content with up to 960 hours of severance pay from their department • In many cases, a 1-for-1 conversion results in a higher benefit amount

15. 2 – For - 1 • For those who trade in no leave • For those who have an abundance of accrued leave • For those who value separation pay (up to 960 hours from CPERS) • For those who find themselves with “too much” service for a full term DROP

16. Benefits of Trading Accrued Leave • Adds to creditable service toward retirement eligibility • May add to highest average compensation for use in computing monthly benefit • With proper planning, can make full use of accrued leave balances

17. Service Allowance Retirement • 10 Years of Eligible Service • Age 55 • 2.5% Factor Per Year • 50% Surviving Spouse Benefit • Additional Surviving Spouse Benefits Available • 3-Year DROP Participation Eligibility • Supplemental Funding of DROP

18. Service Allowance Retirement • 25 Years of Eligible Service • Any Age • 3.0% Factor Per Year • 50% Surviving Spouse Benefit • Additional Surviving Spouse Benefits Available • 5-Year DROP Participation Eligibility • Supplemental Funding of DROP

19. What is DROP? • Contractually agreed upon pre-retirement program that allows the member to accumulate from 2 to 5 years’ benefit amounts in an interest earning account while remaining employed • It carries penalty provisions if the terms are violated by the member • It is available beginning at 10 years of service if age 55 or older – 3-year participation • It is available beginning at 25 years of service at any age, and unavailable after 30 years of service • Years of service + DROP participation <= 32 years

20. DROP Interest Rate • 5-year rolling (geometric) average • Based on CPERS’ investment earnings • Protection of principal (rate no lower than zero) • 2012 rate of 0.5% • 2013 rate of 1.2% • The 5 rates now in the average are: 10/1/07 – 9/30/08 -15.8% 10/1/08 – 9/30/09 1.1% 10/1/09 – 9/30/10 11.9% 10/1/10 – 9/3011 -0.2% 10/1/11 – 9/30/12 17.1%

21. DROP Example • Assume $3,000 per month benefit • Assume 5.0% DROP interest rate • DROP principal = $180,000 ($3K X 60 mos.) • DROP interest = $24,887.33 • Total DROP after 5-year participation = $204,887.33

22. Survivor Benefits Automatic 50% spousal benefit - no cost Option 1 Benefit – Can purchase a refund of contributions (net of benefits paid) Option 2 Benefit - 75% and 100% spousal benefit options available. Benefit reduction based on life expectancies of member and spouse (Pop-Up benefit can be purchased) Option 3 Benefit - Can purchase a survivor’s benefit for a child, grandchild, etc.

23. 55 - The Magic Retirement Age (non public safety) • If you are age 55 or older in the year in which you retire (not enter DROP): no mandatory withdrawals from DROP no restrictions on DROP withdrawals rollovers possible at any time Mandatory DROP withdrawals kick in at age 70.5

24. Mandatory DROP DistributionsIf Retirement Age is < 55 (<50 public safety) Option 1Based on age at retirement and DROP balance Amount is adjusted each year until age 59.5 Option 2 Also based on age at retirement and DROP balance Approximately 3 times the option 1 amount Amount must remain unchanged until age 59.5 Option 3Any amount in-between

25. Supplemental Benefit PaymentSBP Paid if excess investment revenues availableMust be authorized by the Retirement Board Non-recurring lump-sum payment Minimum amount of $600 or less Maximum amount of $1,200 or lessBased on: number of years retired number of years of service participation in DROP receipt of RBA

26. Former Spouse Issues • Can assert a right to your CPERS benefit if: • Legal marriage existed during years of employment covered by CPERS • No community property settlement has been executed protecting member’s benefit rights • Benefit split is done according to the Sims vs. Sims formula: Number of years of community during employment Number of years of creditable service X 50%

27. Social Security Concerns • Members should be aware of the Government Pension Offset – GPO • Members should also be aware of the Windfall Elimination Provision – WEP • CPERS has no control or jurisdiction over these laws • Members should visit Social Security Office after receiving a CPERS benefit estimate

28. Decisions at DROP entry or Retirement without DROP • Date of DROP entry or retirement (payroll ending date) • Amount and type of leave to trade in • 1-for-1 or 2-for-1 option • Survivor options

29. Decisions at Retirement After DROP • Severance and/or separation pay (take receipt, rollover, or supplement DROP) • Supplemental funding of DROP (mandatory vs. elective) • Mandatory or elective DROP distributions (rollover anytime if =>55 and one-time shot if <55 (<50 for public safety)) • Direct deposit • Federal tax and other deductions

30. Other Considerations Plan retirement around: Earliest eligibility Best use of accrued leave Target monthly retirement amount Job promotion Your spouses retirement date Your childrens’ education Age 55 Other employment opportunity

31. Helpful Tips • Use vacation leave instead of sick leave since sick leave has no maximum • Never deplete leave balances when entering DROP • If possible, retire early in year to minimize tax effects of severance/separation pay • Transition into retirement gradually to make the process smooth for you and your employer