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Member Education Seminar. Indiana State Teachers’ Retirement Fund Please silence your cell phones. Overview. Membership & Service Credit Retirement Overview Investments TRF Web Site. Membership Eligibility. Licensed Teachers & Administrators

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member education seminar

Member Education Seminar

Indiana State Teachers’ Retirement Fund

Please silence your cell phones.

overview
Overview
  • Membership & Service Credit
  • Retirement Overview
  • Investments
  • TRF Web Site
membership eligibility
MembershipEligibility
  • Licensed Teachers & Administrators
    • Regular employment in Indiana public school system
  • Licensed Substitute Teachers
    • Requires minimum Associate’s degree
    • Requires completion of 1 year of service
what counts as service
What Counts as Service?
  • 120 or more days = 1.0 year
  • 60 to 119 days = 0.5 year
  • 10 years of qualified service = vested (eligible to receive pension benefit)
what counts as service1
What Counts as Service?
  • Regular Indiana teaching service
  • Substitute teaching in Indiana
  • Public Employees’ Retirement Fund (PERF) service
  • School board approved leaves of absence from an Indiana school
board approved leaves of absence
Board Approved Leaves of Absence
  • These may include:
    • Advanced Study
    • Work Experience
    • Teacher Exchange
    • Pregnancy/Adoption
    • Sickness or Classroom Disability
what counts as service2
What Counts as Service?
  • Private school service in Indiana
  • Out-of-state service credit
  • Military service credit
  • Additional purchased years of service credit
purchase of additional years of service credit
Purchase of Additional Years of Service Credit

Example of cost to purchase one additional year of service credit

AgeAnnual SalaryYrs ServiceEstimated Cost

35 $ 40,000 10 $ 526

40 45,000 15 1,394

45 50,000 20 2,234

50 55,000 25 12,646

If service credit is purchased and never used, the member is refunded the purchase amount plus interest.

how do i qualify for retirement service eligibility
How Do I Qualify for Retirement: Service Eligibility
  • Two Requirements: Service Eligible and Age Eligible
  • Service Eligible: Vesting
    • TRF members with 10 years of qualifying service
how do i qualify for retirement age eligibility
How Do I Qualify for Retirement: Age Eligibility
  • Age 65 with at least 10 years of service
  • Age 60 with at least 15 years of service
  • Ages 55-59: age and service years total at least 85 (Rule of 85)
can i retire any earlier
Can I Retire Any Earlier?
  • Early (reduced) retirement available between ages 50 to 59
  • Must have at least 15 years of service
  • Pension percentage based on age
  • Member receives reduced pension benefit for life
classroom disability benefit
Classroom Disability Benefit
  • Eligibility
    • At least five years of service
    • Active employment in a TRF-covered position
  • Conditions
    • Medically confirmed
    • Six-month continual absence from classroom
    • No teaching service earned
    • Reviewed annually
  • Benefit
    • $125/month + $5 for every year of service over five years
death before retirement
Death Before Retirement
  • Survivor Pension Benefit Eligibility
      • At least 15 years of service in a covered position
      • Marital status
      • Dependent children
  • Annuity Savings Account (ASA)
      • Keep designated beneficiaries current
slide14

Your Teachers’ Retirement Fund (TRF) retirement benefit consists of two separate components:Monthly Pension Benefit+ Annuity Savings Account Your TRF Retirement Benefit

trf retirement benefit
TRF Retirement Benefit
  • Pension Benefit
        • Administered by State of Indiana through Teachers’ Retirement Fund
        • Lifetime monthly benefit
  • Annuity Savings Account (ASA)
        • Composed of mandatory & voluntary contributions + investment gains/losses
        • Can be lifetime monthly benefit
trf retirement benefit1
TRF Retirement Benefit

Part One: Monthly Pension Benefit

monthly pension benefit
Monthly Pension Benefit
  • Benefit Formula:
      • Average salary x 1.1% x years of service (A-1 Option)
  • Example:
      • Age 55
      • 30 years of service
      • Salary average (5 highest years): $60,000
      • Annual pension income based on formula:

$60,000 x 1.1% x 30 = $19,800 ($1,650/month)

trf retirement benefit2
TRF Retirement Benefit

Part Two: Annuity Savings Account

annuity savings account what is it
Annuity Savings AccountWhat is it?
  • Individual investment savings account
  • Mandatory contributions
      • 3% of Annual Salary
  • Voluntary contributions
      • Pre-tax or post-tax
      • 1% increments
      • Up to additional 10% of salary
  • Investment gains & losses
annuity savings account vesting withdrawal
Annuity Savings AccountVesting & Withdrawal
  • Immediately vested
  • Consequences of withdrawal
      • Pension forfeiture
      • Penalties
      • Vested Members, inactive for 90 days after June 30, 2009, can withdraw their ASA balance without forfeiting their pension
  • Rollover protection
annuity savings account voluntary pre tax contributions
Annuity Savings AccountVoluntary Pre-Tax Contributions
  • Contributions
      • Reduce taxable income
      • Taxed at distribution
  • Election window
      • Two-year time frame between fifth and seventh years
  • Irrevocable decision
      • Remains in effect for length of employment
annuity savings account voluntary post tax contributions
Annuity Savings AccountVoluntary Post-Tax Contributions
  • Contributions
      • All taxes paid prior to contributions
  • Revocable decisions
      • Participation
      • Contribution percentages
      • Employer approval
annuity savings account investment allocations
Annuity Savings AccountInvestment Allocations
  • Allocation changes
      • Made quarterly
      • Made in 10% increments to total 100%
      • Defaults to Guaranteed Fund
  • Beneficiary designation
      • Beneficiaries should be named and kept current
      • Divorce/Marriage
annuity savings account asa allocation
Annuity Savings Account ASA Allocation
  • Risk tolerance
      • Comfort level with ASA value fluctuations
  • Age
      • Younger members may take on more market risk since losses can be made up over time
  • Portfolio diversification
      • Contributions allocated among different types of investments may reduce overall risk
annuity savings account investor profiles
Annuity Savings AccountInvestor Profiles

Conservative

  • Prefer the slow and steady pace of stable investment options and are not comfortable at all with risk
  • Are within a few years of retirement or already retired
annuity savings account investor profiles1
Annuity Savings AccountInvestor Profiles

Moderate

  • Willing to accept some risk for potentially greater returns, but are uncomfortable with large ups and downs in the short-term
  • Comfortable with risk but have less than 10 years until retirement
annuity savings account investor profiles2
Annuity Savings AccountInvestor Profiles

Aggressive

  • Willing to take a higher level of risk for greater growth potential
  • Have more than 10 years until retirement
  • Not tempted to change allocations when experiencing a drop of 10% or more
annuity savings account investment election options
Annuity Savings AccountInvestment Election Options
  • Guaranteed Fund
      • Investment Risk Profile: STABLE
  • Bond Fund
      • Investment Risk Profile: CONSERVATIVE
  • Standard & Poor (S&P) 500 Index Fund
      • Investment Risk Profile: MODERATE
  • International Fund
      • Investment Risk Profile: AGGRESSIVE
  • Small Cap Equity Fund
      • Investment Risk Profile: AGGRESSIVE
retirement planning please remember trf employees are not financial planners
Retirement PlanningPlease remember, TRF employees are not financial planners.
  • Be aware of personal needs
      • Lifestyle change, health care costs, inflation, travel
  • Research options available to you
  • Consider all sources of retirement income
      • Social Security, TRF benefit, personal savings, spouse’s retirement
retirement planning why worry about it now
Retirement Planning: Why Worry About It Now?

The power of compound interest

  • Age 22 $50/month 10 years at age 60… $86,000
  • Age 32 $50/month 28 years until age 60… $63,000
  • Age 42 $50/month 18 years until age 60… $24,000

But what if…

  • Age 22 $100/month 10 years at age 60… $255,000
  • Age 32 $100/month 28 years until age 60… $194,000
  • Age 42 $100/month 18 years until age 60… $79,000

Please note: estimates based on numbers as of January, 2009

retirement planning what should i do now
Retirement Planning: What Should I Do Now?
  • Set realistic goals
  • Develop a budget and stick to it
  • Save early and often
      • The power of compound interest
  • Determine best investment strategy
      • Which investor profile suits you?
retirement planning what should i do now1
Retirement Planning: What Should I Do Now?
  • Check investments periodically
      • TRF Interactive
      • Quarterly statements
      • Outside investments
  • Maintain good records
      • Keep all financial documents and brochures
rollover savings account rsa
Rollover Savings Account (RSA)
  • What is it?
      • May create a separate account before retirement
      • Rollover tax-deferred funds from IRA or other qualified retirement plans
  • Why set it up? And when?
      • TRF could offer a higher rate of return and/or better payment options than your current qualified retirement plan
trf web site trf interactive
TRF Web SiteTRF Interactive
  • Update contact information
  • Manage ASA investment allocations
  • Calculate potential retirement benefit
  • Change beneficiaries
  • View quarterly statements
teachers retirement fund
Teachers’ Retirement Fund

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