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Town Hall Meeting. WRS Vision, Mission and Values. Vision: Partnering to Build F inancial S ecurity for Members and Their F amilies Mission: Provide expert administration and responsible investment of Wyoming’s public retirement and supplemental savings programs Values: - PowerPoint PPT Presentation
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Town Hall Meeting
Town Hall Meeting
WRS Vision, Mission and Values
Vision: Partnering to Build Financial Security for Members and Their FamiliesMission: Provide expert administration and responsible investment of Wyoming’s public retirement and supplemental savings programsValues: Integrity, Accountability, Commitment, Excellence
August 14, 2012
Town Hall Meeting
What is a pension?A traditional pension plan (defined benefit plan)
is a group retirement plan that offers a predictable monthly defined benefit in retirement
It provides workers with a steady, predictable income stream in retirement that cannot be outlived
The average pension benefit for the WRS Public Employee Plan was $16,382 per year in 2011, for public safety and judicial plans the average was higher
August 14, 2012
Town Hall Meeting
Pensions reduce economic hardships among elderly
August 14, 2012
“The analysis indicates pensions exert an independent, positive impact on older Americans’ economic well-being – an effect we call the ‘pension factor.’” Dr. Frank Porell, gerontologist and co-author of The Pension Factor 2012
Town Hall Meeting
Dialogue & FeedbackWhy do pensions matter? Pensions offer the best retirement security for
employees Pensions are a valuable recruitment and retention
tool for employers Pensions are economically efficient and prevent
future public assistance expenditures Pension payments have a ripple effect which
stimulates and stabilizes the local and national economy – $1 becomes $1.20 in Wyoming according to NIRS
Resource: Why Do Pensions Matter? National Institute on Retirement Security
August 14, 2012
Town Hall Meeting
WRS Retirement Benefits by County (dollar amounts in millions)
August 14, 2012
Source: WRS Database 2011
Town Hall Meeting
Study shows economic value of pension payments
August 14, 2012
72%
12%
16%
Investment Earnings
Employer Contributions
Employee Contributions72% of WRS pension pay-ments are funded by in-vestment earn-ings
Source: Pensionomics 2012 Measuring the Economic Impact of DB Pension Expenditures, NIRS, March 2012
Wyoming Pension Payments by Source from 1993-2009
Management of pension plans involves balancing four factors
=Administrative Costs + Member
Benefits
Investment Gains/Losses Contributions
+
We’ve had to make some adjustments to Contributions and benefits to keep this balance
Town Hall Meeting
Nationwide trend toward adjusting pension provisions43 states, including Wyoming, made changes to their pension plans between 2009 and 2011
Increasing contributionsHigher Age and Service Requirements for Normal Retirement
Reductions in COLA provisions
Source: National Conference of State Legislatures
August 14, 2012
Town Hall Meeting
1/1/2012 Valuation ResultsWRS Public Employee Pension Plan
Valuation Result
2012 Valuation
2011 Valuation
Unfunded Liability
$1.28 billion $1.05 billion
Funded Ratio 81.9% 84.6%30 Year Required Contribution
15.04% 14.60%
Surplus/(Shortfall) from current 14.12%
(0.92%) (0.48%)
August 14, 2012
The plan is healthy. The board is carefully watching trends to see if further adjustments are needed.
Town Hall Meeting
2012 Funding Ratio Snapshot – 81.9% Can be expected to decline slightly next year due to 5-year smoothing
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
103.2%
92.2% 91.7%96.0% 95.1% 94.4% 94.0%
78.6%
87.5%84.6%
81.9%
0.7570.801
0.756
Without smoothing/averaging
Experts say a funded ratio of 80% or more is gener-ally considered “healthy” if contributions are ade-quate.
With smoothing/averaging
Town Hall Meeting
Previously awarded COLAs are still being paid to retirees
It is unlikely WRS will be able to fund COLAs without additional funding
Change in state law setting a higher requirement to award COLAs from internal assets
Legislature will make future COLA decisions
Retirees need help offsetting inflation
August 14, 2012
Town Hall Meeting
Purchasing Power ErosionGreatest for those retired longest
63.9% 65.0% 66.7% 68.7%71.0% 71.9% 73.8% 74.3% 73.9% 74.0% 74.1% 74.8% 76.2% 78.0%
80.5%83.7%
86.9%92.2%
94.6%97.2%
48.8% 50.2% 52.0% 54.1%56.6% 58.3%
61.1% 62.9% 64.3% 66.3% 68.4%70.8%
73.4%76.0%
79.3%83.3%
86.9%92.2%
94.6%97.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year of Retirement
Percentage of Purchasing Power by Year of Retirementas of January 1, 2011
Without COLA With COLA
August 14, 2012
A member who retired in 1991 would be able to purchase only 48.8% of goods and services in 2011. WRS has partially offset inflation with prior COLA awards increasing the 1991 retiree’s purchasing power to 63.9%
Town Hall Meeting
For current retirees – target COLAs to make them more affordable and get external appropriation for them. WRS has provided the legislature a tool to use for estimating costs.
For current employees – establish a COLA plan and give employees an incentive to self-fund COLAs. Employers would have a choice to opt into the plan.
COLA Alternatives Needed
August 14, 2012
Town Hall Meeting
Questions?
Contact WRS if you have follow-up questions or input.
August 14, 2012
