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Member Education SeminarIndiana State Teachers’ Retirement Fund
Please silence your cell phones.
Overview
• Membership & Service Credit
• Retirement Overview
• Investments
• TRF Web Site
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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
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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)
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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
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Board Approved Leaves of Absence
• These may include:
• Advanced Study
• Work Experience
• Teacher Exchange
• Pregnancy/Adoption
• Sickness or Classroom Disability
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What Counts as Service?
• Private school service in Indiana
• Out-of-state service credit
• Military service credit• Additional purchased years of service credit
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Purchase of Additional Years of Service Credit
Example of cost to purchase one additional year of service credit
Age Annual Salary Yrs Service Estimated 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.
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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
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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)
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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
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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
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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
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Your Teachers’ Retirement Fund (TRF) retirement benefit consists of two
separate components:
Monthly Pension Benefit+ Annuity Savings Account
Your TRF Retirement Benefit
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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
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TRF Retirement Benefit16
Part One: 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)
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TRF Retirement Benefit18
Part Two: Annuity Savings Account
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
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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
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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
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Annuity Savings AccountVoluntary Post-Tax Contributions
• Contributions• All taxes paid prior to contributions
• Revocable decisions• Participation• Contribution percentages• Employer approval
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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
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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
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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
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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
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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
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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
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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
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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
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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?
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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
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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
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TRF Web Sitewww.in.gov/trf
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TRF Web SiteTRF Interactive
• Update contact information• Manage ASA investment allocations• Calculate potential retirement benefit• Change beneficiaries• View quarterly statements
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Teachers’ Retirement Fund
We are here to serve you! Any questions?
Please complete our survey. Your comments help us serve you more effectively.
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