trs vs. orp what hr liaisons should know

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TRS vs. ORPWhat HR Liaisons Should Know

June 27, 2013

Human ResourcesJune 27, 2013 | Page 2

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

Overview

Human ResourcesJune 27, 2013 | Page 3

TRS eligibility is working 50% for 4.5 months during the fiscal year (FY) Excludes 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

TRS Basics

Human ResourcesJune 27, 2013 | Page 4

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factors A withdrawn account ONLY receives employee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.

TRS Basics Continued

Human ResourcesJune 27, 2013 | Page 5

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

ORP Basics

Human ResourcesJune 27, 2013 | Page 6

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

ORP Notification Process

Human ResourcesJune 27, 2013 | Page 7

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

ORP Election/Enrollment Process

Human ResourcesJune 27, 2013 | Page 8

Refer employees to Benefit Services Process EPA documents timely

Impacts enrollment window Impacts payroll deductions

Work with Benefits Services for special situations or early notifications

Enter accurate appointment term especially during summer

HR Liaison – Your Role

Human ResourcesJune 27, 2013 | Page 9

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

TRS Legislation

Human ResourcesJune 27, 2013 | Page 10

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

TRS Legislation Passed

Human ResourcesJune 27, 2013 | Page 11

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

TRS Legislation – Key Changes

Human ResourcesJune 27, 2013 | Page 12

TRS Legislation – Key Changes

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.

FY14 FY15 FY16 FY17

Human ResourcesJune 27, 2013 | Page 13

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

HR Liaisons play an important role in the process; please help HR by forwarding information found in HR Liaison Network News

Final Thoughts

Human ResourcesJune 27, 2013 | Page 14

Judy KurtzRetirement Specialist979-862-4028jkurtz@tamu.edu

Sarah TobolaEmployee Benefits Manager979-862-4956S-tobola@tamu.edu

Resources: http://employees.tamu.edu/employees/benefits/

How may we help you?

(979) 845-4141 HR-FEEDBACK@TAMU.EDU HTTP://EMPLOYEES.TAMU.EDU

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