State HR Conference

State HR Conference

December 15, 2005

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What We Will Talk About Today

FRS Retirement Plan Update— Your support has been key in a challenging environment— 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 — 850 public sector employers— 660,000 working members— 243,000 retired Pension Plan (PP) members

Nearly all members are covered by the defined benefit “FRS Pension Plan”— $109 billion held in trust for Pension Plan benefits as of

June 30,2005

In 2002, FRS Investment Plan (IP) was introduced to provide members a choice

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FRS Investment Plan – Offering Choice

Currently over 60,000 Investment Plan members $1.7 billion in participant accounts Money entering Investment Plan accounts:

— $15 million in ‘new money’ through FRS employer contributions on a monthly basis

— $50 million through ‘2nd Election’ on a monthly basis

1,500 active IP elections on a monthly basis— 1,000 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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New Hire FRS Plan Choices

87%

74%

63%

5%11%

17%

8%

16%21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sep. 2002 – Jun. 2003 Jul. 2003 – Jun. 2004 Jul. 2004 – Jun. 2005

Defaults Active Enrollments- Pension Plan Active Enrollments- Investment Plan*

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Employee Use of MyFRS Resources 12 months ended June 30, 2005

Year-Ended June 2005

Annualized Growth

Financial Guidance Line Counseling Calls 113,906 38%

MyFRS.com Sessions 1,241,047 116%

Retirement Income Forecasts 354,982 63%

New Hire Choice Service 16,999 1%

2nd Election Choice Service 76,292 62%

Personal Online Advisor Service 98,805 59%

Workshop Attendance 8,543 33`%

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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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Generally Housekeeping2nd Election Requirements

Stale-Dated Checks DROP Rollover

IP Retirement Distribution RequirementsIP Reemployment-after-Retirement

Requirements

SB 1446 Legislative Changes – Effective July 1, 2005

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2nd Election Requirements— 2nd Election Enrollment Form must be filed with CitiStreet

prior to termination date

— No requirement to work during next month

Pension Plan DROP Accumulations may be rolled over to Investment Plan

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Stale-dated Checks— Distribution checks not cashed or deposited within 180 days from

date of issue are considered stale-dated— Check is cancelled and the funds are placed in a suspense

account for up to 10 years while CitiStreet searches for the payee— If the payee is not found within 10 years, the funds are forfeited

and used to pay plan expenses

Investment Plan Retirement Distribution Requirements— Must remain off all FRS payrolls for 3 calendar months— If eligible for Pension Plan normal retirement, may receive up to

10% distribution after 1 month; rest after 3 months unless returned to work (some excepted positions such as substitute/teachers, bus drivers, etc.)

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Reemployment-After-Retirement Requirements— Cannot return to FRS-covered employment for 12 months after

retirement, unless in an excepted position

— Cannot return to an excepted position for three calendar months after taking a distribution (seven months from termination)

— If meets normal retirement requirements of Pension Plan may return after one month to a statutorily excepted position (i.e., substitute teacher, adjunct instructor, firefighter, etc)

— Employer may be jointly liable for repayment of funds paid out if retiree is hired in violation of reemployment after retirement provisions, unless employer has a letter certifying retirement status (new employee certification form can be found at MyFRS.com)

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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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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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On-going Program – Employee Workshops

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

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

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

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

Call the FRS Employer Assistance Linefor more information!

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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

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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

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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

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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Employer Roles and Responsibilities – New Hires

Use the specialized resources in your orientations— FRS Retirement Options for New Employees Brochure— New Hire Videos

• Long version (15 min.) now available via MyFRS.com• Short version (7 min.) available via video

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

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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: 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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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

State HR Conference

December 15, 2005

Documents

State HR Conference