Westmoreland County Employee Retirement Fund Presentation prepared by Carmen Pedicone, County Controller

1. Westmoreland County Employee Retirement Fund Presentationprepared by Carmen Pedicone, County Controller To advance slide presentation either Left click mouse Press page down

2. Thinking of Retirement?Sources of Income County Pension Other Pension(s) Savings Deferred Compensation IRA’s Other Annuities Post Retirement Employment Social Security Benefits Lottery

3. WestmorelandCountyEmployeeRetirementFund Lisa Szczerba Chris Hiteshue experienced with WCERF your source for information Extension 3147.Lisa Szczerba Chris Hiteshue experienced with WCERF your source for information Extension 3147.

4. Plan Authority “County Pension Law” Act 96 of 1971 DISCLAIMER This presentation is designed to provide a summarization of information concerning your Retirement Plan, however Act 96 is the governing plan authority. Rules for MEMBERSHIP VESTING SERVICE CREDIT INTEREST COLA CONTRIBUTIONSRules for MEMBERSHIP VESTING SERVICE CREDIT INTEREST COLA CONTRIBUTIONS

5. Retirement Board BOARD OF COMMISSIONERS TREASURER CONTROLLER FOCUSED ON INVESTMENTS MEET QUARTERLY IN COURTHOUSE YOU ARE INVITED! BOARD OF COMMISSIONERS TREASURER CONTROLLER FOCUSED ON INVESTMENTS MEET QUARTERLY IN COURTHOUSE YOU ARE INVITED!

6. Supporting Parties Investment Managers C.S. Mckee LP CIM Investment Management Grosvenor Capital Management Metropolitan West Asset Management Victory Gradison Marvin & Palmer Emerald Advisors Stonebrook Offshore Partners US Asset Management Manning & Napier Investment Consultant Yanni Partners Actuary Hay Group Custodian PNC Advisors Auditor Sarp & Company

7. Membership All appointed county employees-FT Elected officers (optional) Part-time--hired with the expectation of working 1,000 hours of service during the 12-month period after employment and each 12-month period thereafter Who are the members of the plan? All FULL TIME appointed employees. Elected Officers have an option of membership Part-Time EE must work 1,000 to be a member of the plan Who are the members of the plan? All FULL TIME appointed employees. Elected Officers have an option of membership Part-Time EE must work 1,000 to be a member of the plan

8. Member Contributions 9% required for most employees Not subject to federal income taxes in the year of contribution Voluntary contributions Up to an additional 10% Made with after-tax dollars For most employees a mandatory 9% is withheld from each pay. This deduction is taken before Federal Taxes. This means that no Federal tax is due until you take money from the fund either a retirement or refund. You may contribute an additional 10% to the fund out of each pay however these deduction will be subject to federal tax.For most employees a mandatory 9% is withheld from each pay. This deduction is taken before Federal Taxes. This means that no Federal tax is due until you take money from the fund either a retirement or refund. You may contribute an additional 10% to the fund out of each pay however these deduction will be subject to federal tax.

9. Interest Credit The law permits interest credit in the range of 4-5 1/2 percent per annum. Your member contributions are currently credited at the end of each year with interest of 5 1/2 per cent per annum. (The maximum permitted by law.) Your deductions are credit with 5.5 percent interest each year. This is recapped on a retirement statement which is distributed to members during the first quarter of each year. This the maximum interest rate permitted by act 96.Your deductions are credit with 5.5 percent interest each year. This is recapped on a retirement statement which is distributed to members during the first quarter of each year. This the maximum interest rate permitted by act 96.

10. County Contributions County contributes amounts which are actuarially determined to provide adequate resources for the payment of current and future benefits Tax dollars Excess interest reserves Based on the actuary's calculations, The county is required to make contributions to the plan. This may be done with tax dollars or excess interest reserves of the pension fund.Based on the actuary's calculations, The county is required to make contributions to the plan. This may be done with tax dollars or excess interest reserves of the pension fund.

11. Investments Pension board acting as fiduciaries invests your money with the aid of financial experts 3 MANAGERS INVESTING “LONG-HAUL” APPROACH3 MANAGERS INVESTING “LONG-HAUL” APPROACH

12. Normal Retirement You are eligible if you are: 60 years of age or older regardless of your credited service 55 years of age with 20 years credited service WHEN CAN YOU RETIRE? 60 55 plus 20 YEARS CREDITED SVC NORMAL OR SUPERANNUATIONWHEN CAN YOU RETIRE? 60 55 plus 20 YEARS CREDITED SVC NORMAL OR SUPERANNUATION

13. Early Retirement Voluntary 20 years of service and not yet reached age 55 Termination voluntary Involuntary 8 years credited service Termination is not voluntary Elected official after 8 years of service EARLY 20 YEARS (VOLUNTARY) 8 YEARS (INVOLUNTARY) ELECTED AFTER 8 YEARS EARLY 20 YEARS (VOLUNTARY) 8 YEARS (INVOLUNTARY) ELECTED AFTER 8 YEARS

14. Disability Retirement Totally and permanently disabled Have 5 years of credited service Not eligible for a normal retirement Board requires independent medical evaluation. Disability retirement will be 25% of your “final salary” If you become totally and permanently disabled you may elect to take a disability retirement equal to 25% of your "final salary" if you have 5 years of credited service...pass an independent medical evaluation and you are not eligible for a normal retirement.If you become totally and permanently disabled you may elect to take a disability retirement equal to 25% of your "final salary" if you have 5 years of credited service...pass an independent medical evaluation and you are not eligible for a normal retirement.

15. “FINAL SALARY” Final salary is the average of the highest three years of compensation earned as a county employee. This calculation is critical in determining the county pension for a retiring member.This calculation is critical in determining the county pension for a retiring member.

16. Death Benefit Death in active service After age 60 or After 10 years credited service A lump sum will be paid to your beneficiaries Lump-sum Life-time pension (if this option is chosen during deceased employees lifetime) Should you pass away while in active service to the County your beneficiaries will be entitled to a death benefit if you are age 60 or have 10 years credited service.Should you pass away while in active service to the County your beneficiaries will be entitled to a death benefit if you are age 60 or have 10 years credited service.

17. Vesting County employees are vested after completing 5 years of county service Gives you the right to receive a pension at normal retirement age If you break service prior to vesting your accumulated deductions will be returned to you. If after vesting, you die before being eligible for a deferred pension, the full amount of your accumulated deductions will be paid to your estate or designated beneficiary. Interest continues to accrue. Members vest after 8 years...guarantees a pension from the county. If you break service prior to vesting...you are not entitled to any pension benefit.Members vest after 8 years...guarantees a pension from the county. If you break service prior to vesting...you are not entitled to any pension benefit.

18. Refunds You may receive a refund of your accumulated deductions only when you leave county service Refunds may be “rolled over” to an IRA. Taken with 10% IRS penalty imposed. No provision for partial disbursement. If you request a refund you may roll it over without tax consequences or take it in cash thus incurring a 10% penalty. This is based in current IRS rules.If you request a refund you may roll it over without tax consequences or take it in cash thus incurring a 10% penalty. This is based in current IRS rules.

19. Calculation of Normal Pension Total retirement is comprised of two parts: Member’s pension County pension

20. Member’s Pension The equivalent actuarial value of your accumulated deductions credited to your member reserve account Our actuary determines the value of the member pension based on the amount of accumulated deductions the age and sex of the member and the age and sex of the beneficiary (where applicable). Our actuary determines the value of the member pension based on the amount of accumulated deductions the age and sex of the member and the age and sex of the beneficiary (where applicable).

21. County Pension Formula Class of Service times Final Salary times Years Credited Service

22. Example-County Share 1/60 Class = .01667 Final salary = $ 20,000 15 years credited service Annual county pension = $ 5001.00 Monthly county pension = $ 416.75 This is purely for demonstration purposes your County pension will differ based on factor that are unique to you.This is purely for demonstration purposes your County pension will differ based on factor that are unique to you.

23. Retirement Options Before making any decisions regarding your selection of a retirement option you are encouraged to seek the counsel of your financial advisor(s). The Controller’s Office staff is prohibited from rendering advice on your selection of a retirement option!

24. Retirement Options “NO OPTION” Full Monthly Pension as long as you live. If total pension received to date of your death is less than accumulated deductions at the time of retirement, the balance will be paid to your designated beneficiary(s). Annual Benefit Statement uses this option May name as many beneficiaries and/or change them as often as you want. NO OPTION Full Monthly Pension If you die before receiving at least your accumulated deductions your beneficiary will receive the balanceNO OPTION Full Monthly Pension If you die before receiving at least your accumulated deductions your beneficiary will receive the balance

25. Retirement Options “OPTION ONE” Lesser amount than “No Option”. Guarantee that if total pension received to the date of your death is less than the present value of your pension (member and County shares) at the time of retirement, the balance will be payable to your designated beneficiary (s). May name as many beneficiaries and/or change them as often as you want. Option One Lesser pension than no option If you die and have not received at least the present value of your total pension your beneficiaries will receive the differenceOption One Lesser pension than no option If you die and have not received at least the present value of your total pension your beneficiaries will receive the difference

26. Retirement Options “OPTION TWO” 100% joint-life pension. Based on your age and the ages of your designated joint-life beneficiary and is payable as long as either lives. If your joint-life beneficiary survives you, the same basic monthly pension paid to you will continue for the balance of their life. If your designated joint-life beneficiary predeceases you, you will continue to receive a monthly pension until your death at which time all monthly payments stop. If total pension received( by you & your joint-life beneficiary) is less than the accumulated deductions lump-sum paid to your contingent beneficiaries. Option 2 100% Joint life If you die name beneficiary would receive your pension until the date of their death. If your designated beneficiary predeceases you you will receive your pension until the date of your death If total paid to you and your beneficiary is less than your accumulated deductions balance is paid to your contingent beneficiary.Option 2 100% Joint life If you die name beneficiary would receive your pension until the date of their death. If your designated beneficiary predeceases you you will receive your pension until the date of your death If total paid to you and your beneficiary is less than your accumulated deductions balance is paid to your contingent beneficiary.

27. Retirement Options “OPTION THREE” 50% joint-life pension. Based on your age and the ages of your designated joint-life beneficiary and is payable as long as either lives. If your joint-life beneficiary survives you, 50% of the same basic monthly pension paid to you will continue for the balance of their life. If your designated joint-life beneficiary predeceases you, you will continue to receive a monthly pension until your death at which time all monthly payments stop. If total pension received(by you & your joint-life beneficiary) is less than the accumulated deductions lump-sum paid to your contingent beneficiaries. Same as option two except pension to member is more with beneficiary receiving 1/2 of the member pension for the balance of their lives.Same as option two except pension to member is more with beneficiary receiving 1/2 of the member pension for the balance of their lives.

28. Retirement Options “OPTION FOUR” May withdraw an amount equal to the accumulated deductions as lump-sum at the time of retirement. Receive county share in form of monthly pension. Pension subject to rules similar to No option thru 3. If you are not age 55 at the time of retirement you may rollover to qualified plan. Lump-sum distribution with 10% IRS penalty imposed. Option Four permits you to split the member and county components of your pension. Under Option 4 you may take your accumulated deductions (subject to IRS rules) and receive the county share in the form of annuity using rules similar to the options we've just coveredOption Four permits you to split the member and county components of your pension. Under Option 4 you may take your accumulated deductions (subject to IRS rules) and receive the county share in the form of annuity using rules similar to the options we've just covered

29. To demonstrate the computation of a real pension we are displaying an actual preliminary quotation prepared by our actuary for an employee doing a "what if I retire on 1/1/98 scenario.To demonstrate the computation of a real pension we are displaying an actual preliminary quotation prepared by our actuary for an employee doing a "what if I retire on 1/1/98 scenario.

31. Pension Payments Pensions are payable at the end of each month.

32. SOCIAL SECURITY CARVEOUT NONE Unlike many private sector plans!

33. BENEFICIARIES(Primary/Contingent) Beneficiaries are designated in order to instruct plan administrators to whom the refund of your accumulated deductions or death benefit will be paid upon your death. Differs from “Joint-Life Beneficiary” May designate one or more. Must have an “insurable interest” in your life. You may name your “estate” as beneficiary. Need periodic review for changes due to: marital status, death, birth May name one or more beneficiaries. Must have an "insurable interest" Estate is OK as beneficiary Review periodically for changes Marital Status Death BirthMay name one or more beneficiaries. Must have an "insurable interest" Estate is OK as beneficiary Review periodically for changes Marital Status Death Birth

34. Cost of Living Adjustments COLA’s must be considered at least once every three years. COLA’s only paid to members. They do not continue to a surviving beneficiary.

35. Military Service Intervening member with six months of service inducted or enlists in military during time of declared war,armed conflict or national emergency is entitled to service credit and the county will make the member contributions at the minimum rate based on the salary at the time of entry into ACTIVE service.

36. Military Service Non-Intervening Member with 3 or more years of service may purchase and receive credit for not more than 5 years of military served prior to employment by the county. Buy back requires member to pay both member and county shares.Buy back requires member to pay both member and county shares.

37. Flexible Spending Accounts Not Part of WCERF Unreimbursed Medical Dependent Care Pre-tax dollars Use it or lose it! Not associated with WCERF Administered by AFLAC insurance through the human resources dept. Underutilized by Count employees.Not associated with WCERF Administered by AFLAC insurance through the human resources dept. Underutilized by Count employees.

38. Section 457 Deferred Compensation Plan Not Part of WCERF Supplement your retirement savings Pre - Tax dollars Invest in Fixed Income or Equity Funds No Minimum Investment Not associated with WCERF under utilized permits you to defer Federal Taxes on more than your 9% retirement deduction (subject to IRS limits) Not associated with WCERF under utilized permits you to defer Federal Taxes on more than your 9% retirement deduction (subject to IRS limits)

39. Sources of Information Summary Plan Description. Annual Statements Quarterly Pension Board Meetings. Controller’s Office Lisa Szczerba (Ext. 3131) Mary Jo Nardizzi (Ext. 3132) County Website www.co.westmoreland.pa.us