TRS vs. ORP What HR Liaisons Should Know June 27, 2013

TRS vs. ORP
What HR Liaisons Should Know
June 27, 2013
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Overview
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Basics of Teachers Retirement System (TRS)
vs. Optional Retirement Program (ORP)
ORP Notification Process
ORP Election/Enrollment Process
HR Liaison – Your Role
TRS Legislative Update
Human Resources
June 27, 2013 | Page 2
TRS Basics
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TRS eligibility is working 50% for 4.5 months
during the fiscal year (FY)
 Excludes
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Student Titles
Automatic enrollment on date of hire/eligibility
Current employee contribution is 6.4%
Vested at 5 years TRS service credit
Service credit earned for 90 working days
each FY
Human Resources
June 27, 2013 | Page 3
TRS Basics Continued
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Defined benefit plan
Receive monthly annuity upon reaching
retirement criteria
Retirement criteria contingent on various
factors
A withdrawn account ONLY receives employee
contributions and NOT the employer
contributions.
Human Resources
June 27, 2013 | Page 4
ORP Basics
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Requires ORP eligible title
Requires 100% effort for at least 4.5 months
One-time irrevocable decision
Vested at 1 year, 1 day from ORP participation
date (not hire or eligibility date)
Requires enrollment forms to elect ORP in lieu
of TRS
Defined contribution plan
Human Resources
June 27, 2013 | Page 5
ORP Notification Process
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Benefits Services receives weekly report of
potential ORP eligibility based on employment
data in BPP after EPA completes
Benefits Services verifies ORP eligibility
Benefit Services sends ORP packet to eligible
employees
Human Resources
June 27, 2013 | Page 6
ORP Election/Enrollment Process
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Employee choosing to elect ORP must:
 select
ORP vendor and complete the vendor
application forms
 complete forms in the ORP packet including the
TRS 28 Notice of Election to Participate in
Optional Retirement Program
 Submit completed forms to Payroll Services
 Must be completed within 90-day election window
Human Resources
June 27, 2013 | Page 7
HR Liaison – Your Role
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Refer employees to Benefit Services
Process EPA documents timely
 Impacts
enrollment window
 Impacts payroll deductions
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Work with Benefits Services for special
situations or early notifications
Enter accurate appointment term especially
during summer
Human Resources
June 27, 2013 | Page 8
TRS Legislation
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TRS must address unfunded liability
Ordered to conduct a comprehensive study
Evaluated many options including:
 Increase
minimum age from 60 to 62
 Increase average salaries from 5 to 7
 Change benefit calculator from 2.3% to 2.0%
 Change member contribution rate
Human Resources
June 27, 2013 | Page 9
TRS Legislation Passed
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SB1458 and HB1884 passed during legislative
session
Effective September 1, 2014
Changes impact several key areas
Changes to eligibility criteria effect those who
do not have 5 years with TRS as of 9/1/2014
Does not impact the retirement eligibility rules
for Texas A&M University System retiree status
Human Resources
June 27, 2013 | Page 10
TRS Legislation – Key Changes
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Decreases the interest rate from 5% to 2%
Increases the minimum age for full, normal age
(unreduced annuity) retirement from 60 to 62 for
“non-grandfathered”
Adjusts the employee contribution rate in phases:
 Remains
6.4% for FY14
 6.7% for FY15
 7.2% for FY16
 7.7% for FY17
Human Resources
June 27, 2013 | Page 11
TRS Legislation – Key Changes
FY14
FY15
FY16
FY17
6.4%
6.7%
7.2%
7.7%
$2,560
$2,680
$2,880
$3,080
Amount of annual employee TRS member
contribution based on annual salary of $40,000.00.
Human Resources
June 27, 2013 | Page 12
Final Thoughts
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Timely and accurate processing of EPA is critical
Strict timelines apply and timing of the ORP
election has consequences for the employee
TRS Legislative changes passed recently
 Effective
September 1, 2014
 Grandfathered with 5 years of TRS service credit
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HR Liaisons play an important role in the process;
please help HR by forwarding information found in
HR Liaison Network News
Human Resources
June 27, 2013 | Page 13
How may we help you?
Judy Kurtz
Retirement Specialist
979-862-4028
[email protected]
Sarah Tobola
Employee Benefits Manager
979-862-4956
[email protected]
Resources: http://employees.tamu.edu/employees/benefits/
Human Resources
June 27, 2013 | Page 14
Our goal is to inspire
you to reach your
full potential.
(979) 845-4141  [email protected]  HTTP://EMPLOYEES.TAMU.EDU
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