what the tdc to trs pension transfer means to you! presented by wvsspa & aft-wv

What the TDC to TRS Pension Transfer Means to You!

Presented by WVSSPA & AFT-WV

Why is the Selection Important?

Because there are major design and structure differences between the TDC (new plan) and the TRS (old plan) and your selection will ultimately determine

how well you live when you retire

Outline of TDC plan

• State contributes 7.5%

• Employee contributes 4.5%

• The amount of funds at retirement is based on contributions and market performance

• Employee assumes all risk

• 4.59% average rate of return last 7 years

Outline of TRS plan

• State contributes 7.5%

• Employee contributes 6%

• Retirement is based on formula

• Years of Service X 2% X AFS

• State assumes all risk

• 7.74% average rate of return last 7 years

Major Design Differences between TDC (new plan) and TRS (old plan)TDC (new plan) TRS (old plan)

• No Benefit Guarantee.

Ultimate benefit based on investment performance in each private account

• Guaranteed Monthly benefit for life

• Survivor’s benefit equal to account balance

• Survivor’s benefit is guaranteed for life

• Accrued Annual and Sick Leave Conversion: None

• Accrued Annual and Sick Leave Conversion:

2 days of retirement credit for every 1 day of unused leave

• Purchase of out-of-state service is not available

• Purchase of out-of-state service is available

Major Design Differences between TDC (new plan) & TRS (old plan)

• TDC (new plan) • TRS (old plan)• vesting:

* 0 – 6 yrs 0 % vested

* 6 – 9 yrs 33 % vested

* 9 – 12 yrs 66 % vested

* 12 yrs + 100 % vested

• vesting:

* 0 – 5 yrs 0 % vested

* 5 yrs + 100% vested

• There is no COLA • COLA’s can be granted by the WV Legislature

• Employee’s contribution rate:

* 4.5%

• Employee’s contribution rate:

* 6%

First Question - Can You Afford to Retire?TDC (new plan) vs. TRS (old plan) Benefits

Average Final Salary Annual retirement calculated at age 55 with 30 years of service (60% of AFS).

Amount needed in new plan to equal retirement benefit in old plan for female at age 55.

$20,000 $12,000 $181,968

$41,000 $24,600 $372,505

$50,000 $30,000 $454,163

•The new plan projections are based on SPIA rates and are not guaranteed.

First Question - Can You Afford to Retire? TDC (new plan) vs. TRS (old plan) Benefits


Amount needed in new plan to equal retirement benefit in old plan for male at age 55.

$20,000 $12,000 $172,632

$41,000 $24,600 $353,365

$50,000 $30,000 $430,823




Amount needed in new plan to equal retirement benefit in old plan for female at age 60.

$20,000 $8,000 $116,788

$30,000 $12,000 $175,182

$40,000 $16,000 $233,577




Amount needed in new plan to equal retirement benefit in old plan for male at age 60.

$20,000 $8,000 $111,111

$30,000 $12,000 $166,667

$40,000 $16,000 $222,222


Selection Process - Two Thresholds

• If at least 65% but less than 74.9% of the TDC (new plan) members elect to transfer to TRS (old plan), then the transferring employee will retain 75% of their service credit after moving to the old plan. – Transferring employees will have the option to

purchase the remaining 25% of their service credit by paying the actuarial value reserve (the short definition is the remaining 25% of service credit you will receive in future benefits calculated to today’s dollars).

Selection Process- Two Thresholds

• If 75% or more of the TDC (new plan) members elect to transfer to TRS (old plan), then the transferring employee will retain 75% of their service credit after moving to the old plan. – Transferring employees will have the option to

purchase the remaining 25% of their service credit by paying the contribution difference (1.5%) plus 4% interest (computation based on salary for every year of service in the new plan).

Service Purchase Examples 65% through 74.9% Threshold

Estimated Actuarial Reserve

• Salary Service Years Estimated Buyback Age

• $50,000 15 $27,328 50

• $40,000 10 $9,846 40

• $40,000 5 $4,923 40

• $30,000 5 $2,494 30

• $20,000 15 $10,931 50

• $20,000 10 $4,923 40

Service Purchase Examples 75% Threshold

1.5% Makeup Contribution for Remaining 25% Service Credit with 4% Interest

• Salary Service Years Estimated Buyback• $50,000 15 $11,843• $40,000 15 $9,475• $30,000 15 $7,106• $20,000 15 $4,737

• $50,000 10 $7,727• $40,000 10 $6,177• $30,000 10 $4,633• $20,000 10 $3,089

Service Purchase Examples 75% Threshold

1.5% Makeup Contribution for Remaining 25% Service Credit with 4% Interest

• Salary Service Years Estimated Buyback• $50,000 5 $3,776• $40,000 5 $3,021• $30,000 5 $2,226• $20,000 5 $1,510

• $50,000 3 $2,246• $40,000 3 $1,797• $30,000 3 $1,347• $20,000 3 $898

Contribution Difference

• 4.5% (new) versus 6.0% (old)

• HB 101 allows “make-up” provision

• With a transfer, participants have the option to “make-up” the contribution difference or have TDC service credit reduced by 25% (choice is yours)

Ways to “make-up” difference

• Roll over $ from any supplemental retirement account (e.g. IRA, 403 (b), 401 (k), 457), not including TDC

• Take a loan from TRS and pay 7.5% interest (based on legislative language)

• Take a loan from a credit union or bank and pay applicable interest

• Transfer unused sick days upon retirement to increase retirement benefit

The 25% Difference

Gender Female Male

Age 40 50

Years of TDC service 15 10

Salary $40,000 $20,000

Approx. buyback (65%) $15,000 $7,288

Approx. buyback (75%+) $9,475 $3,089

Additional TRS service 15 years 10 years

TRS annuity w. buyback $2,500 per month $833 per month

TRS annuity w/out buyback $2,188 per month $730 per month

Difference $3,744 per year $1,236 per year

Years to offset 65% buyback 4 5.9

Years to offset 75% buyback 2.5 2.5

Education/Selection Takes Place April 1 Through May 12

• The education/selection period will take place between April 1st and May 12th.

• Time will be set aside during work hours on May 5th for school employees to make selection.

• If selection is completed through the mail, submission must be postmarked by May 12th.

• Selection documents may be provided to a supervisor on or before May 9th.

• Between May 6th -9th, the supervisor shall make every effort to verbally contact TDC participants to remind them of the deadlines.

Selection Process• Selection outcome will be reported by June 5th,

2008 by the Retirement Board. • Employees will be required to work at least one

hour after July 1, 2008 in order to retire with benefits from TRS.

• Employees will be required to make a contribution to CPRB on or after July 1, 2008 to become eligible to retire on September 1, 2008.

• Employees must notify their employer by July 1st of their intent to retire.

Education Campaign

• Active TDC (new plan) participants will receive the following information: – Projected account balance if he or she retires at age

sixty and age sixty-five; – Account balance needed to purchase a certain

monthly annuity under the TDC; – The monthly annuity that the member would receive

under TRS (old plan) – A summary to include his or her most recent account

balance; – Information booths will be set up at each work site

and attended by trained employees, whenever possible.

Education Campaign (cont.)

– The TRS benefit (old plan) if the member chooses to purchase the full service credit and retire at age sixty;

– The monthly annuity under the TRS (old plan) if the participant chooses not to purchase the full service credit and retires at age sixty and age sixty-five.

– The potential cost to the member of purchasing the Actuarial Reserve or the one and one-half percent contribution plus interest, whichever the case may be.

Education Campaign (cont.)

• Education efforts will be conducted through: – CPRB/Buck Consultants website, – Computer programs, – Written and/or electronic materials, – At the discretion of the board, through a program of

individual counseling which is optional on the part of the member;

– Classes and Seminars will be conducted at the school or worksite and can be held during work time if it does not conflict with instructional activities (e.g., Faculty Senate days).

– CPRB/Consultant will conduct a training session during the work day for a minimum of 60 minutes.

Information Sites and Sources

• www.aftwv.org (1-800-222-9838)

• www.wvretirement.com (1-866-413-3985)

• www.benefitmodeling.com/wv/chooseyourplan

what the tdc to trs pension transfer means to you! presented by wvsspa & aft-wv

Documents