Public Employees

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Public EmployeesRetirement System
Are You on The Right Road?
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Retirement Takes Planning

• Be Ready to Retire.
• Not just eligible
• Plan Your Finances.
• How much is enough?
• Plan Your Future.
• What will you do?
• Do it Yourself.
• Or you can get help.

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Why is he talking about Retirement? Im young.
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Ready to Retire?

• Replace 70 90 of last years income (gross)
• National Average
• Your needs will depend on.
• Lifestyle
• Location
• Expenses

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Income in Retirement

• Pension (PERS)
• Social Security
• Personal Savings
• Earned Income

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Pension Benefits

• Lifetime Benefit
• Based on a Formula
• Automatic Cost of Living Adjustment
• Big Advantage for Retirement Planning

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Basic Benefit Formula
Gross Annual Pension
Years/Months

X
FAS
55

• Service Credit includes all service
• Worked Purchased
• FAS Final Average Salary
• Probably your last 3 years

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Retirement Eligibility (PERS/TPAF)

• Age 60 (service)
• No minimum years of service
• 25 Years of Service (early)
• Reduction under age 55
• 10 Years of Service (deferred)
• Collect at age 60
• Veteran Retirements
• Age/service requirements
• Disability (2 types)

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Disability Retirement (Fact Sheet 15)

• Ordinary Disability (43.6 of FAS)
• 10 years of NJ Service
• Disabled for YOUR job title
• Accidental Disability (72.7 of Salary)
• Traumatic event during the performance of your
  normal job duties (very strict definition)
• Enrolled in pension file within 5 years of
  traumatic event
• Salary on the date of the traumatic event

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Beneficiary Options

• There is no BEST option
• We cannot advise you
• Perhaps a financial advisor could help
• Plan Ahead
• Include your beneficiary in the decision
• These options are IRREVOCABLE
• Once you receive your first pension check
• Fact Sheet 5 Pension Options
• Will anyone need income after your
  death to live on?

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Purchase of Service Credit

• You Can Purchase 8 Types of Service in PERS
  TPAF
• It Almost Always Makes Sense
• 25 Years is 25 Years
• For Retirement Health Benefits (in some cases)
• It is also a GUARANTEED Investment!!
• Recover your investment in less than 4 years
• Even at the end of your career!!
• Fact Sheets 1 2

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Purchase of Service Credit

• It Typically Makes Sense to APPLY for a purchase
  if you feel you might be eligible to purchase
• It is OPTIONAL to actually make the purchase
• You Have Many Options To Pay
• Lump Sum (yes, you can use a pension loan)
• Payroll Deductions (interest rate is 8.75)
• Rollover from Qualified Plan
• Deferred Comp, 403B, IRA, etc.

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Pension Loans

• Borrow after three years of posted service
• Borrow 1/2 of posted contributions
• 2 times per year
• Repayment through payroll deductions
• 5 of base salary minimum
• Interest rate is 4
• Pay off in full at any time
• Carry loans into retirement

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Why Borrow?

• Low interest rate
• Borrowing your own money
• No approval process
• Quick turnaround time

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New Loan Rules

• 50,000 is the maximum loan balance
• All loans must be repaid within 5 years
• Members must make timely payments
• Best Bet
  Take one loan
  and pay it off

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If you leave.

• You can withdraw your contributions to the
  pension system
• 20 Federal Tax or Rollover
• Possible penalties
• No interest paid unless you had three years of
  posted service credit
• If you have over 10 years you are eligible for a
  pension at age 60

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Death Benefits

• Life Insurance
• Your pension contributions
• Interest

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Beneficiary ????

• Keep Track of Your Beneficiary
• We can only pay the
  listed beneficiaries
• Change in Family Status?
• Update your Beneficiaries
• New Form replaces
  any old forms
• Available at HR Online

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Save MoreRetire Sooner
Additional Contributions Tax Sheltered Plan
(ACTS) NJ State Employees
Deferred Compensation Plan
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Supplemental Savings

• Public Employees
• 457 (deferred compensation)
• Education Employees
• 403B (tax-sheltered annuity)
• You have both options!
• Two great programs
• Easy way to save
• Lower your taxable income
• Help secure your retirement

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403B vs. 457

• Plans are very similar
• 403B (ACTS) is more flexible in terms of
  investment choices
• Administered by ABP vendors
• 457 is more flexible in terms of withdrawals
• No penalty for early withdrawal
• Is one better than the other?
• Tough question (depends on your goals)
• You can be in both

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Not Enrolled

• Find out how to sign up
• Even if you are close to retirement
• You can start small and increase as you go
• Make sure you dont bite off too much
• Most programs allow monthly changes
• Check with your benefits office for details

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Contribution Limits

• 1 of Salary is minimum
• For 2005
• 14,000 under age 50
• 18,000 over age 50
• Going up next year
• 457 (Deferred Compensation) also has a catch-up
  provision for those approaching retirement
• See you plan administrator for details

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Getting Started

• 45,000/year
• 1 of your salary is 37.50 per month
  (1.12/day)
• Most people can afford this
• Add a little each year
• Starting is the tough part

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Asset Allocation

• Most plans offer many allocation
  choices
• Choosing the right allocation is
  personal
• Some providers offer guidance
• Risk Tolerance how much can you stand?
• Most people have a moderate tolerance
• Time Horizon how much time do you have?
• The more time you have, the more aggressive you
  can be with you money

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Asset Allocation Examples
Years Until Retirement
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Distribution

• At separation of service (457)
• No restrictions under age 59 ½
• At separation of service age 55 (403B)
• Some restrictions for those under age 59 ½
• Check with your administrator for details
• Lump Sum Payment
• Periodic payments over a number of years
• Eligible for rollover to IRA or other qualified
  plan
• Both are federally taxable
• State tax varies depending on the state

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How can you help yourself?

• Check your annual Social Security Statement
• Look at your earnings history
• Check your annual PERS statement
• Look at your service credit
• Look at your Supplemental Savings Plan statements
• Take some action to plan for your financial future

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Sources for credit reporting

• 3 major Credit Reporting Bureaus
• Equifax www.equifax.com
• 800-685-1111
• Experian www.experian.com
• 888-397-3742
• TransUnion www.transunion.com
• 800-888-4213
• FICO scoring at www.myfico.com
• Get ratings from all 3 sources
• This is NOT free