Issue

Current PERS Tier III/ TRS Tier II DB Plan

PERS / TRS Alternative 1 DB/DC Plan

Alternative 2 DC Plan Kelly’s HB191

SB 141

PERS Employee Contribution Rate

6.75% or 7.5 Police/Fire

8% all members

8.5% Police/Fire

11.0% School District

8% all members

8.5% Police/Fire

11.0% School District

8% all members

TRS Employee Contribution Rate

8.65%

10%

10%

8% all members

Retirement Age

60 normal - 55 early

30 years “all others”

20 Police/Fire

20 Teachers

Same

Same

25 Police/Fire members

25 Teachers

Any age

PERS Benefit Formula/Contribution Rate

2% up to 2.5%

DB 1% ;DC 8% (8% includes HRA)

12.5% DC

(12.5% includes HRA)

11.5% DC

TRS Benefit  Formula/Contribution Rate

2% up to 2.5% DB

1% DB; 10% DC

(10% includes HRA)

15% DC

(15% includes HRA)

11.5% DC

Medical

• Do not have to retire directly from system to be service or age eligible for medical coverage.
• Must have 10 years of service. Minimal cost share.

• Must retire directly from system to be eligible.
• Must have 10 years of service.
• Member pays more through “cost share” design elements.

Same as Alternative 1

• Must retire directly from system to be eligible.
• 65 years old w/ 10 years service, or 25years for Peace Officers, and 30years for all others.
• E’ee portion graduated 30% at 10years to 10% after 30 years

Normal Cost Rate – PERS (does not include unfunded liability portion)

13.24% - Current

Normal Cost Rate

8% reduces normal cost

rate by 40%

8% reduces normal

cost rate by 40%

3.5% for DC

3.75% for Health Insurance

1%(up to $500) for Health Reimbursement Account

Normal Cost Rate – TRS (does not include unfunded liability portion)

14.28% - Current Normal Cost Rate

8.75% - this reduces

normal cost rate by 39%

8.75% - this reduces

normal cost rate by

39%

3.5% for DC

3.75% for Health Insurance

1%(up to $500) for Health Reimbursement Account

Future exposure and volatility to loss in investment earnings and increasing medical costs.

Employer bears all the

risk.

Employer continues to

have risk in two areas:

(1) 1% DB component

and (2) medical

inflation component.

Minimal Exposure to employer in one area

only: (1) medical

inflation w/capped %.

Minimal Exposure to employer in one area

only: (1) medical

inflation w/capped %.

Early Retirement

55 years old

55 years old

none

none

Post Retirement Pension Adjustments(PRPAs)

Both ad hoc and automatic

Both ad hoc and automatic

None

none

Disability Pension

Yes

Yes

No

No

Death Benefits

Contributions(until vested) then

?

Contributions only if before retirement, or with survivorship option if retired

Contributions only if before retirement, or with survivorship option if retired

Retirement Planning

Can reasonably predict whole retirement benefit

Can only reasonably predict the 1% retirement benefit

Cannot reasonably predict benefit, subject to stock market fluctuations

Cannot reasonably predict benefit, subject to stock market fluctuations

Breakage

Goes to increase financial health of the whole Fund

Except for DC contributions, goes to increase financial health of the whole Fund

Only HI contributions go to increase financial health of the HI Fund

Only HI contributions go to increase financial health of the HI Fund

Alaska cost-of-living adjustment (COLA)

Yes, 10% if remain in Alaska

No

No

No