HRM Conference November 14 & 15, 2006. 1 MyFRS Financial Guidance Line: 1-866-44-MyFRS MyFRS.com 1...

HRM ConferenceNovember 14 & 15, 2006

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MyFRS Financial Guidance Line: 1-866-44-MyFRSMyFRS.com

What We Will Talk About Today

FRS Retirement Plan Update— Legislative changes

The Financial Guidance Program— Resources available to you

— Resources available to ALL your employees (PP and IP)

The New Hire Process— Resources

— Plan administration

Roles and Responsibilities— Helping your employees help themselves

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FRS: The Florida Retirement System

FRS is 4th largest U.S. public pension plan — 900 public sector employers— 689,000 working members— Over 250,000 retired Pension Plan (PP) members

90% of FRS members are covered by the defined benefit “FRS Pension Plan”— $118.2 billion held in trust for Pension Plan benefits as of

July 31,2006 In 2002, FRS Investment Plan (IP) was

introduced to provide members a choice

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FRS Investment Plan – Offering Choice

Currently, over 66,000 active Investment Plan members $2.6 billion in participant accounts $32,533 average account balance Money entering Investment Plan accounts:

— $16.5 million in ‘new money’ through FRS employer contributions on a monthly basis

— $60 million through ‘2nd Election’ on a monthly basis

— $37 million from DROP participants (since 7/1/05) 2,000 active IP elections on a monthly basis

— 1,500 new hire enrollment elections

— 500 2nd Elections (97% of all elections are into IP) Active election default rate continues to decrease

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16

87%

5%8%

74%

11%16%

63%

17%21%

60%

20% 20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sep. 2002 - Jun. 2003 Jul. 2003 - Jun. 2004 Jul. 2004 - Jun. 2005 Jul. 2006 - Jun. 2006

New Hire FRS Plan Choices

Defaults Active Enrollments - Pension Plan Active Enrollments - Investment Plan

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Employee Use of MyFRS Resources

Financial Guidance LineSince March

2002Since March

2003Annualized

Growth

Total Calls (over 3,000 calls per mo.) 482,636 376,073 25%

Choice Calls 292,991 41%

Planning Calls 106,451 70%

Employer Calls 3,745 11%

MyFRS.com Sessions Since June 2002Since March

2003Annualized

Growth

Total Visits 4,466,716 3,465,809 11%

Online Choice Service, 2nd Election Service, & Advisor Service

702,429 589,360 19%

WorkshopsSince February

2002Since March

2003Annualized

Growth

Attendance 84,464 27,025 10%

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Your Support in Promoting Use of

All Education Resources

Financial education and counseling resources are available

— They will be around for the long-run, as long as employees use them

Help your employees help themselves— Program resources can help you manage your workload

— Program resources are world class and they work• Independent, objective and available at no cost to employees

— Resources are rated very highly by those employees who use them

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HB 5025 Legislative ChangesUniform FRS Employer Contribution Rates Effective July 1, 2006

Retirement Benefit Administration HIS Total

Regular Class 8.69% 0.05% 1.11% 9.85%

Special Risk Class 19.76% 0.05% 1.11% 20.92%

Special Risk Admin Class 11.39% 0.05% 1.11% 12.55%

Elected Officers (Judges) 18.40% 0.05% 1.11% 19.56%

Elected Officers(Legislative/Cabinet/PublicDefender/State Attorney)

13.32% 0.05% 1.11% 14.48%

Elected Officers (County) 15.37% 0.05% 1.11% 16.53%

Senior Management Service Class

11.96% 0.05% 1.11% 13.12%

DROP Class 9.80% 0% 1.11% 10.91%

Please note that the contribution rates applicable to Investment Plan members have not changed (i.e., Regular - 9.0%, Special Risk - 20.0%, Special Risk Administrative Support - 11.35%, Legislators - 13.40%, Governor, Lt. Governor, Cabinet Officers - 13.40%, State Attorney, Public Defenders - 13.40%, Justices, Judges - 18.90%, County Elected Officers - 16.20%, Senior Management Service - 10.95%)

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Generally Housekeeping

Invalid Distributions

Adjusted Present Value Calculation

Purchase of Military Leave

SB 1670 Legislative Changes – Effective July 1, 2006

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Invalid Distributions— Members who receive an invalid distribution (e.g.,

reemployed when a distribution is made, violate reemployment after retirement provisions, or received a distribution and original Investment Plan election declared invalid) will be given 90 days to repay the distribution.

— If not repaid, may be declared an Investment Plan retiree.

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Adjusted Present Value Calculation— For members who transfer from the Pension Plan

to the Investment Plan, changes the interest rate used for true-ups from a fixed 8% to the assumed rate of return used in the most recent FRS actuarial valuation

Purchase of Military Leave— Allows the purchase of a military leave of absence

under the Investment Plan — Investment Plan members currently purchase

military leaves under Chapter 121, Part I

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On-going Program

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On-going Program – Employer Resources

MyFRS.com Web Site New Hire Roadmap Employer Services Tab

Quarterly Electronic (email) and Hardcopy NewsletterRegular updates on FRS programSpecial newsletters/attachments

On-line Employer CatalogOrder communications

The FRS Employer Assistance Line1-866-FRS-2121 (1-866-377-2121) Open M – F, except holidays,

9 a.m. to 8 p.m. Eastern time (8 a.m. to 7 p.m. Central time)

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Plan Administration – Resources

The FRS Employer Assistance Line Connects to: Ernst & Young Division of Retirement

— Payroll administration— Pension Plan questions/calculations

CitiStreet — Investment Plan administration— MyFRS Financial Guidance Program education materials

fulfillment FRS Employer Assistance Line available toll free at

1-866-FRS-2121 (1-866-377-2121)

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On-going Program – Employee Resources

ALL employees can get their questions answered on financial planning, both FRS Plans, 2nd Election, DROP and Retirement.

Employee workshops: Using the FRS to Plan for Your Retirement, Investment Planning

for Everyone, Estate Planning: Protecting Your

Family, Pension Plan Education (DOR)

MyFRS.com with FAQ’s, brochures,

forms, user notification feature, investment

facts, Advisor Service, Choice Service and 2nd Election Service

Toll-free MyFRS Financial Guidance

Line, staffed by Ernst & Young

financial planners, DOR counselors,

and CitiStreet representatives

Brochures and Videos via MyFRS.com,

Financial Guidance Line and Employers

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MyFRS Financial Guidance Line –

Choice and Financial Planning One-on-one counseling provided by experienced

Ernst & Young financial planners Impartial and balanced guidance on all financial

planning topics Do not sell products or services Confidential Help with the Advisor Service and Choice Service Toll-free number 1-866-44-MyFRS Available 9 a.m. to 8 p.m. Eastern time (8 a.m. to

7 p.m. Central time), M – F, except holidays

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Quick Overview of Advisor Service – It’s not just for Investment Plan members

Pension Plan Investment/Hybrid Plan

1. Employee Data is already pre-loaded…

All FRS benefit data (age, salary, service and

membership class)

All FRS benefit data and FRS investment funds

2. Employee adds data/goals (online or though the Financial Guidance Line)…

Family’s non-FRS assets (e.g. 457, 403b, etc.) home value and other retirement plans

3. Advisor Service forecasts…

Total retirement income: FRS (Pension including DROP or Investment Plan), Social Security and non-FRS assets

4. Advisor Services estimates…

The likelihood of meeting an employee’s retirement income goal

5. Advisor Service investment guidance on…

One non-FRS tax-deferred account

FRS Investment Plan account

6. At employee’s cost of $15/year

Get investment guidance across all tax-deferred and taxable investment accounts

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2020


On-going Program – Employee Workshops

Using the FRS to Plan for Your Retirement— 60-90 minute discussion of 5 keys to retirement planning (including the role of your FRS Retirement Plans)

Investment Planning for Everyone— 90 minute discussion on the basics of investing (no matter which FRS Retirement Plan you participate in)

Estate Planning: Protecting Your Family— 90 minute discussion on wills, living wills and health care surrogate powers,

life insurance planning, gifting and estate taxes New Employee Retirement Plan Choice Workshop Division of Retirement Workshops on Pension Plan and DROP

Call the FRS Employer Assistance Line for more information!

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On-going Program – New Employee Workshops – 60 min.

Cash and Debt Management: Smart Spending— Cash and debt management workshop designed to help member’s

evaluate current spending habits and create a spending plan Estate Planning: Caring for Your Loved Ones

— Estate planning workshop will help provide an understanding of estate planning basics as well as debunk some of the myths surrounding this topic.

Insurance Planning: Protecting Your Loved Ones— Insurance planning workshop will examine various insurance products as

a way to protect assets and income in the event of: death, medical problems, aging, disability, property loss/damage or being sued.

Education Planning: Funding the Future— Workshop will help members estimate the costs of education and identify

ways to pay for schooling. Tax advantaged savings vehicles, including information on Florida-sponsored plans, will be explored.

These new workshops are available to active members because the FRS believes successful retirement planning includes planning for all aspects of one’s financial life.

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New Hires – Retirement Plan Choice Resources

MyFRS.com resources— New Hire Roadmap

— FAQ’s, brochures, forms, detailed plan comparisons

— Online Choice Service

— Enrollment

MyFRS Financial Guidance Line available to answer all choice questions (Choice Service)

New Hire videos or workshops Two reminder letters during 5th month Redesign of New Hire materials – copy to

employers in August 2006 ER Newsletter

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New Hires – Retirement Plan Enrollment Process

On their date of hire, new hires are automatically enrolled in the FRS Pension Plan

If a new hire wants to transfer to the FRS Investment Plan, he/she must file an election before the end of the fifth month following his/her month of hire by submitting a Retirement Enrollment Form

80% of IP enrollments are via the new EZ Enrollment Form and remain in the ‘default’ fund

The FRS Select Moderate Balanced Fund is the default fund in the FRS Investment Plan

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New Hires – Retirement Plan Enrollment Process

Enrollment Forms are available in the new hire kit, with reminder letters or online at MyFRS.com

If the new hire is a Regular or Special Risk Class employee, he/she can make the choice by paper, online or by calling the MyFRS Financial Guidance Line and having them file the choice

Sooner new hire makes Investment Plan decision, sooner he gets full Investment Plan contribution (e.g., 9% vs. 8.69% for Regular Class)

As an active employee, a new hire has the ability to reverse his/her choice one time before he/she retires from or leaves FRS-covered employment

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New Education Materials – New Orientation Brochure

“Your Money Your Choice, Welcome to the Florida Retirement System” brochure replaces “FRS Retirement Options for New Employees” brochure.

Include in your new employee orientation packages.

Provides high-level overview of the retirement plan choice they need to make, timeline, resources available, and informs them that kit is on the way.

Available online through MyFRS.com under the “Employer” page, or by calling the Employer Assistance Line and connecting to CitiStreet.

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New Education Materials – New Employee FRS Enrollment Kit

New enrollment kit is called “FRS Retirement Options for New Employees”.

Includes Benefit Comparison Statement, two detachable resource wallet cards, mini CD of FRS New Hire Video, Investment Fund Summary, EZ Retirement Plan Enrollment Form, and Privacy & Services Agreement.

Mailed to new employee’s at the end of the month in which first reported on your monthly payroll.

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New Education Materials – New Reminder Letters

Newly designed reminder letters. Election deadline is 4:00 p.m. EST of

the last business day of the fifth month following month of hire

If no election made by last month of choice period, employee will receive two reminder letters.

First reminder mailed last business day of the fourth month after the month of hire

Final reminder letter mailed on 10th calendar day of the employee’s deadline month.

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New Education Materials – Coming Soon

Rewritten Confirmation Letter - mailed to new employees after they make a retirement plan choice.

Redesigned Confirmation Brochure - inserted with the confirmation letter that explains ongoing resources provided to all employees by the FRS.

FRS Employer Tool Kit - will provide tools to help you explain the new hire process to employees during their orientation process and the benefits offered under the FRS. Should be available in the Spring of 2007.

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New Web AuthenticationEffective August 3, 2006 for MyFRS.com

FRS members who log into MyFRS.com must create a new user ID and password instead of using their SSN and PIN.

Each member will need to create two security questions and answers for identification purposes in case they forget their new user ID or password.

Help available via online user manual or calling MyFRS Financial Guidance Line, Option 1.

Original PIN still needed when calling the Financial Guidance Line, taking a distribution, and to re-establish their MyFRS.com account if they forget their new user ID or password.

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Employer Roles and Responsibilities –

New Hires

Use the specialized resources in your orientations— “Your Money Your Choice, Welcome to the Florida Retirement System” brochure— New Hire Videos

• Long version (15 min.) available for viewing on MyFRS.com or by ordering copies

• Short version (10 min.) available by ordering copies (also included in enrollment kit, “FRS Retirement Options for New Employees”).

Know where to point new employees to get their plan choice questions answered

— Toll-free MyFRS Financial Guidance Line— MyFRS.com— Workshops

Promote the importance of an active and informed choice between plans

Promote redesigned New Hire materials – copy to employers in August 2006 ER Newsletter

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Employer Roles and Responsibilities –

Existing Employees

Know where to point existing employees to get their questions answered on financial planning, either FRS Plan,

2nd Election, DROP and Retirement

Employee workshops: Using the FRS to Plan for Your Retirement, Investment Planning

for Everyone, Estate Planning,

Pension Plan Education (DOR)

MyFRS.com with FAQ’s, brochures,

forms, user notification feature, investment

facts, Advisor Service, Choice Service and 2nd Election Service

Toll-free MyFRS Financial Guidance

Line, staffed by Ernst & Young

financial planners, DOR counselors,

and CitiStreet representatives

Brochures and Videos via MyFRS.com,

Financial Guidance Line and Employers

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What We Talked About Today

FRS Retirement Plan Choice Update— Legislative changes

The On-going Financial Guidance Program— Resources available to you

— Resources available to ALL your employees (PP and IP)

The New Hire Process— Resources

— Plan administration

Employer Roles and Responsibilities— Helping your employees help themselves

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Questions and Answers

HRM ConferenceNovember 14 & 15, 2006

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HRM Conference November 14 & 15, 2006. 1 MyFRS Financial Guidance Line: 1-866-44-MyFRS MyFRS.com 1...

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