Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
May 14, 2013
Arizona State Retirement System
National Institute of Governmental PurchasingArizona State Capitol Chapter
0
Arizona StateRetirement System
Discussion Topics
ASRS Financial Health
2013 ASRS Legislative Initiatives
DC and Retirement Study Committee
1
Arizona StateRetirement System
ASRS Investment Returns(as of June 30, 2012)
2
1 Year 3 Year 5 Year 10 Year Inception
Market Returns 1.3% 13.2% 1.8% 6.3% 9.8%
July, 2012–Dec. 31, 2012 6.2%
July, 2012 –Jan. 7, 2013 7.7%
July, 2012 –May 10, 2013 16.2%
Arizona StateRetirement System
3
ASRS Investment Returns
-20%
-10%
0%
10%
20%
30%
40%
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
8%
Arizona StateRetirement System
ASRS Investment Asset Allocation
4
Investment Category Policy Target Policy Range
U.S. Fixed Income 26% 16-36%
Core 24%
High Yield 2%
U.S. Equity 40% 30-50%
Large Cap 28%
Mid Cap 6%
Small Cap 6%
International Equity 18% 8-28%
Developed Large Cap 13%
Developed Small Cap 2%
Emerging Markets 3%
Private Equity 7% 5-9%
Real Estate 6% 4-8%
Inflation Linked Assets 3% 0-10%
Commodities 3% 0-5%
TIPS 0% 0-5%
Risk Parity 0% 0-5%
Absolute Return 0% 0-5%
Opportunistic 0% 0-10%
GTAA* (Included in allocation above) 10% 8-12%
Green: Denotes asset classes typically absent from DC investment options.
Arizona StateRetirement System
Distribution of ASRS Pensionsas of June 30, 2012
79,269 = 69.30%
29,162 = 25.48%
5,134= 4.49%
641 = 0.56%
156 = 0.14%
46= 0.04%
11 = 0.01%
7 = 0.006%
4 = 0.004%
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
$0 -$25,000
$25,000 - $50,000
$50,000 - $75,000
$75,000 - $100,000
$100,000 - $125,000
$125,000 - $150,000
$150,000 - $175,000
$175,000 - $200,000
$200,000 and over
5
Average Pension$19,568.00
Average Years of Service
37.3
40.0
35.6
33.4
33.6
33.5
32.1
28.3
15.2
Arizona StateRetirement System
Defined Benefit Plan
ASRS Defined Benefit Plan 1996 – 2012
Fiscal Year End June 30
Market Return
Market Value of Assets
(in millions)
Excess Actuarial
Return
Actuarial Funded Status
Contribution Rate* EE & ER Contri-butions
(in millions)
Benefit Payments (in millions)
# of New Retirees by Year
Avg. Monthly Benefit**
Actual Normal Cost
1996 16.7% $13,917.6 8.7% 113.2% 3.36% 5.44% $299.7 $536.5 3,845 $ 920
1997 20.6% $16,397.9 12.6% 117.1% 3.20% 5.20% $309.4 $580.9 3,578 $ 945
1998 21.3% $19,390.0 13.3% 120.7% 3.05% 5.21% $321.3 $628.6 3,353 $ 982
1999 16.8% $21,836.4 8.8% 116.6% 2.85% 5.24% $348.0 $678.9 4,380 $1,024
2000 10.0% $23,187.6 2.0% 120.4% 2.17% 5.24% $283.8 $788.6 4,822 $1,125
2001 (6.7%) $21,872.9 (14.7%) 115.1% 2.17% 5.48% $367.2 $920.4 4,224 $1,211
2002 (8.2%) $18,594.9 (16.2 %) 106.4% 2.00% 5.36% $321.8 $1,029.1 3,954 $1,371
2003 2.4% $18,116.8 (5.6%) 98.4% 2.00% 5.88% $375.5 $1,162.8 5,955 $1,401
2004 17.5% $20,749.6 9.5% 92.5% 5.20% 5.95% $866.0 $1,326.4 6,430 $1,487
2005 8.5% $21,901.0 0.5% 86.1% 5.20% 6.52% $946.7 $1,510.7 7,005 $1,508
2006 9.8% $23,641.1 1.8% 84.3% 6.90% 6.51% $1,265.2 $1,652.6 7,143 $1,566
2007 17.8% $27,639.0 9.8% 83.2% 8.60% 6.58% $1,631.2 $1,784.0 7,393 $1,584
2008 (7.5%) $25,296.1 (15.6%) 82.8% 9.10% 6.71% $1,805.7 $1,931.1 7,784 $1,596
2009 (18.1%) $20,403.5 (26.1%) 79.3% 8.95% 6.46% $1,667.0 $2,012.0 6,615 $1,613
2010 14.6% $23,142.1 6.6% 76.7% 9.00% 6.49% $1,702.0 $2,270.0 8,845 $1,619
2011 24.6% $28,033.3 16.6% 75.8% 9.60% 6.45% $1,735.2 $2,441.0 8,730 $1,627
2012 1.3% $27,604.5 (6.7%) 75.8% 10.50% 6.76% $1,863.9 $2,577.2 9,227 $1,631
2013 16/2%*** $31,045*** 10.90% 6.82% * The actual contribution rate is what each active member contributes during a fiscal year. The normal cost rate is what the contribution rate would be
if there was no surplus or deficit to amortize. ** Over the 16-year period, average monthly benefits have increased 77% and the number of members retiring each year has increased by 240% *** As of May 10, 2013
6
Arizona StateRetirement System
ASRS Contribution Rates
7
Pension LTD ACR2012-13 10.90% 0.24% 8.64%
2013-14 11.30% 0.24% 9.20%
Arizona StateRetirement System
2013 Legislative Initiatives Administration
Federal Conforming Changes – increases the annual limit of retirement benefits; non-portability of normal retirement benefits; termination or partial termination of fund would cause full vesting
Amortization Period Member Identity Security – identifies what data the ASRS will release and what
data won’t be released Health Insurance
ASRS Self-insurance – adding language to allow the ASRS to self-insure Long Term Disability Plan
36-month calculation for average monthly salary 60% benefit level
Plan Design Eliminate PBI for new member
Survivor Benefits Non-retired survivor benefit redesign – simplify the non-retired survivor benefit
calculation by eliminating the PV option and allowing a straight life annuity only
8
Arizona StateRetirement System
Defined Contribution and Retirement Study Committee
The Legislature established this Committee in the 2011 session to address the concerns expressed “globally” about DB plans The Committee is comprised of:
Investment Committee of the Treasurer’s Office 3 Senators 3 Representatives ASRS & PSPRS Representatives
Reports: Interim 12/31/2011; Final 12/31/12
Appropriations $50,000 each from ASRS and PSPRS
9
Arizona StateRetirement System
Defined Contribution and Retirement Study Committee
The Committee shall study: Feasibility and cost of transferring existing members
of a public retirement system or plan to a new defined contribution plan
Recommendations to the Legislature: Any proposed changes should only apply to future
employees or as a choice to existing employees
For non-public safety employees, retirement ages for new employees should match that of Social Security
Contributions should never be less than what is required to move the plans to fully funded status
10
Arizona StateRetirement System
Defined Contribution and Retirement Study Committee
The Committee shall study: All existing supplemental retirement plans of PSPRS
and ASRS and the feasibility of merging these supplemental plans
Recommendations to the Legislature: There doesn’t appear to be any cost savings to either
members or employers by consolidating these plans at the state level
Employers participating in all four retirement systems should be encouraged to use the deferred compensation plans offered by the systems rather than contracting with their own providers
11
Arizona StateRetirement System
Defined Contribution and Retirement Study Committee
The Committee shall study: The definition of compensation and each plan’s
“spiking” capability
Recommendations to the Legislature: Limit pensionable compensation to base salary
excluding earnings from off-duty work and lump sum payouts of vacation and/or sick leave at termination
Consider restricting “other methods of increasing compensation that affect final retirement benefits”
12
Arizona StateRetirement System
9
Questions?
???
??
??
?