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KPERS Papers Newsletter

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KPERS Papers Newsletter ...

KPERS Papers Newsletter

    Active Member Issue October 2008 Volume 2

Inside This Issue

    If You Leave Your Job Before Next Summer

    Faster Vesting for Everyone in KPERS Beginning July 1, 2009

    Board of Trustees Seeks Candidates for Upcoming Election

    Giving Credit Where Credit Is Due

    Coming Attraction: New Online Account Access

    Retirement System Portfolio Down, but Benefits Remain Safe

    What You Should Know About Military Service and Your Benefits

    Committee Looking for Ways to Provide a COLA for You

Five Tips for a Great Office Visit

    Retiring is a big step. For some people it’s helpful to sit down with someone for pre-retirement help. Although our

    InfoLine call center staff can handle your questions over the phone, you may want to visit our office in person.

    Here are a few tips to help you prepare for a successful visit.

    1. Call to make an appointment so we can be ready for you when you arrive.

    2. Have your designated agent submit a Retirement Benefit Estimate Request form (KPERS-15E) beforehand.

    That way we can calculate a benefit estimate for your visit with your most current pay information. Otherwise,

    we’ll need to fill out the form during your appointment and mail you an estimate later.

    3. Think about the date you want to retire. Your retirement date is always the first day of a month. We can help

    you choose the date that benefits you most.

    4. If you have questions, write them down ahead of time so you don’t forget to ask.

    5. If you’re considering survivor options for someone, bring that person’s date of birth with you.

    Get Help Applying for Retirement

    If you’re ready to apply for retirement, we can help you fill out the forms during your appointment. We also have

    staff to notarize your signature. To complete your application, you’ll need: Proof of birth and all name changes for you and your spouse. Even if you’re not quite ready to complete a

    retirement application, you’ll be a step ahead later. Rollover company information if you’re planning to roll over a partial lump-sum at retirement.

     Banking information for direct deposit of your monthly benefit. Be sure to verify the routing number for

    electronic transfers with your financial institution. Our office, located in downtown Topeka, is open Monday through Friday from 8 a.m. to 5 p.m. Visit

    www.kpers.org for driving directions and parking locations.

If You Leave Your Job Before Next Summer

    The Legislature is switching KPERS to a new benefit structure beginning July 2009. Because you have been

    hired before then, you will keep the current benefits. But you need to know two important details if you leave

    employment.

    Only Actives Vest Early

    #1 Until now, KPERS members have vested with ten years of service. Beginning July 2009, all members will

    vest with five years of service. This includes you. But you need to be an active member. If you leave employment

    and haven’t vested yet, you won’t vest as an inactive.

    Leaving and Not Vested?

    #2 You’re Switching to New Benefits If you’re not vested and leave employment, you haven’t guaranteed your retirement benefit. You’ll move to the

    new benefit structure if you come back to work after June 30, 2009. If you are vested before you leave employment, you’ll stay in the current benefit structure and can retire when

    you are eligible, whether or not you come back to work.

    Need Help With the Details?

    Benefit details can be overwhelming. If you need to leave employment during the next year, don’t hesitate to

    contact the KPERS InfoLine for help sorting out the specifics. You can also find additional information on our

    web site under “Leaving Employment” in the Active Member KPERS section.

     www.kpers.org

     kpers@kpers.org

     1-888-275-5737

Faster Vesting for Everyone in KPERS Beginning July 1, 2009

    If you’re not vested yet, the new KPERS benefit structure beginning next summer is a win-win situation for you.

    You get to keep your current retirement benefits and you’ll vest with five years of service like the new employees will.

    What Vesting Means

    Vesting means guaranteeing your retirement benefit, even if you leave employment. Five-year vesting is seen as

    a plus for most people, especially for younger employees who plan to change jobs more often.

    On July 1, 2009, if you are an active KPERS member and have between five and 10 years of service (4.5 rounds to

    five), you will automatically vest your benefit. You don’t have to do anything and neither does your employer. If

    you have less than five years of service, you’ll vest when you hit the five-year mark.

Your Benefits Are Guaranteed

    With news of benefit restructuring for future employees

    often comes uncertainty. Except for the bonus of earlier

    vesting, benefits for active KPERS members will stay the

    same. You can rest easy knowing that your benefits are

    guaranteed by the State of Kansas. The “85-point rule,”

    early retirement options and all other eligibility require-

    ments won’t change for you.

Board of Trustees Seeks Candidates for Upcoming Election

    KPERS board members serve an important role overseeing Retirement System operations and safeguarding

    the System’s assets. Interested active and retired members can run for an elected board position and get in-

    volved.

    In April 2009, members will elect two board members. The school position is elected by a majority vote of the

    school membership. The non-school position is elected by a majority vote of the non-school membership. The

    new board members will serve July 1, 2009 to June 30, 2013.

    Board Responsibilities

     Review and accept actuarial assumptions.

     Recommend employer contribution rates.

     Determine the appropriate investment asset allocation mix.

     Establish investment policies and guidelines.

     Hire the executive director and monitor performance.

     Hire investment managers and monitor performance.

     Hire and monitor the performance of various other service providers,

    including actuaries, consultants, advisors and custodians.

    The board usually meets seven times a year in Topeka. Board members also serve on committees, which require

    additional meetings.

    What’s Your Next Step? For more information about board responsibilities and the election, visit www.kpers.org or contact the Retire-

    ment System. To get on the ballot next spring, you need to complete a petition form and have 100 eligible

    members sign your petition. Download the form at www.kpers.org or call the Retirement System at

    1-888-275-5737, or 785-296-6166 in Topeka. Completed petitions are due by November 30, 2008.

Election Countdown

    Now November 2008 Candidates collect signatures November 30, 2008 Candidate petition deadline March April 2009 Voting period

    April 30, 2009 Voting deadline

    May 20, 2009 Winners announced July 1, 2009 New trustees take office

Even if you don’t run for election, it is important that you vote.

    Watch for ballot information in the next issue of KPERS Papers.

Balancing Higher Education and Your Retirement Savings

    Nationwide, the average annual cost for a four-year public university is about $12,000 and rising. Balancing the

    cost of your children’s higher education with your other long-term goals, like retirement, is challenging. It’s

    natural for parents to put their children first. But shortchanging your own savings can have big consequences

    down the road. Remember, there is no financial aid for retirement if you don’t save enough.

    What You Can Do

    Investigate your options for college funding before sacrificing your own retirement savings.

     Scholarships

     Education loans

     Financial aid and grants

    If you have time to plan ahead, one way to save is the Kansas Learning Quest Education Savings program. This

    529 plan is administered by the State Treasurer and offers education savings accounts to help pay for higher

    education costs. Saving this way also offers Kansas and federal tax benefits. For more information, visit

    www.learningquestsavings.com.

    Like your retirement, the earlier you can start saving, the more time your investments will have to grow. Time is

    one of your most powerful allies when investing for retirement or college.

Giving Credit Where Credit Is Due

    If you dedicated time during your career to public service outside of KPERS, you may be able to purchase KPERS service credit for it. Purchasing service credit increases your benefit and could help you retire sooner. Out-of-State Teaching

    You may be eligible to purchase this type of service if you were a teacher in a:

     Public school system in another state.

     Foreign teaching service in an overseas

    dependents’ school.

     Recognized teacher exchange program.

     Kansas Department of Education program

    for teaching in a foreign country.

    Non-Federal Public Employment

    You may be able to purchase service for time you worked for a governmental employer other than the federal government. This could be service in Kansas or another state, and includes Peace Corps and VISTA service. Special Rules

     Federal employment is not eligible.

     Temporary or student employment is not eligible.

     Employment must have been at least half-time.

    If your membership date is after July 1, 1999, there are some rules for purchasing public service with a

    lump-sum.

    If the service is credited in another retirement plan, you must have five years of KPERS service credit and your

    purchase is limited to five years.

    Please contact your designated agent or the Retirement System to see if your past public service is eligible for purchase.

Coming Attraction: New Online Account Access Your personal account information will soon be only a few clicks away. Later this year, we will begin rolling out

    a new member web portal. You will be able to view your account information and even complete some business

    online.

    What’ll Be on the Portal?

    Current info:

     View beneficiaries.

     View account interest.

     Update contact information.

     View life insurance.

    To change beneficiaries, you’ll still need to send a paper form.

    Info as of your last member

    annual statement:

     View employee contributions.

     View service credit.

     View final average salary.

     Calculate personalized

    benefit estimates.

     Download annual statement.

    Employers send us service and contribution information annually. So the information on your annual statement is

    the most current information we have. For the most part, that’s what shows on your online account. Personalized Benefit Estimates

    The portal’s calculator will be tied to your personal record, making it easier to calculate retirement benefit estimates. You’ll be able to try different scenarios and save your estimates in your account for future reference. When and How

    We will gradually roll out online account access beginning later this year by employer. A slower rollout lets us

    provide better customer service as we all learn to use this new service. When it’s time, your employer will provide login information. After a few quick steps to enroll, you’ll have easy and convenient access to your account in-formation anytime.

Retirement System Portfolio Down, but Benefits Remain Safe If you’ve had your eye on the stock market for the past year, it’s been a roller coaster ride. Factors like soaring

    energy prices along with housing, credit and financial crises have weighed heavily on the economy and financial

    markets.

    Fortunately, market uncertainty does not extend to member benefits. Retirement benefits for retirees and current

    members are safe and guaranteed by the State of Kansas, even during bumpy economic times like the September

    turmoil in the financial markets.

    KPERS plans for difficult periods like this. We ride them out with a carefully diversified portfolio and a steady,

    long-term investment strategy. In this difficult investment environment, the Retirement System portfolio re-

    turned -4.4 percent for the fiscal year ending June 30, 2008, while the S&P 500 index returned a -13.1 percent

    for this same time frame.

     Investment Performance for the Fiscal Year Ending June 30, 2008

Over time, this approach helps keep benefits secure for members. The last four years of positive double-digit

    returns have buoyed KPERS’ three- and five-year average annual returns above the long-term 8 percent target. KPERS must be willing to accept some short-term risk in the portfolio to gain the long-term 8 percent return.

    Along with a long-term investment horizon, asset allocation is also an important tool in helping KPERS weather

    weak markets like we’ve seen recently. KPERS invests in many broad investment sectors:

     Domestic equity Treasury inflation protected

     International equity securities (TIPS) Global equity Alternative investments

     Fixed income Cash Real estate

By investing in these sectors, different types of investments can help offset some of the potential losses in the

    portfolio during times of negative volatility like we are experiencing now.

The thought of needing long-term care. It’s depressing and seems remote. But the truth is, many people will need Plan Ahead for Long-Term Care

    some type of long-term care during their lifetime. The U.S. Department of Health and Human Services says

    about 70 percent of people over age 65 will need some form of long-term care.

    Why Is This Important Now?

    Long-term care is expensive and complicated. Planning now can help you be better prepared down the road.

    There is a common misconception that Medicare pays for long-term care. But it really only pays for short-term care in a nursing facility after a stay in the hospital. Without Medicare as a resource, it’s all the more important that you plan ahead. That way, you can choose the long-term care services and finance options that are right for you, should the need arise.

    Don’t Know a Thing About Long-Term Care? The State of Kansas has teamed up with the federal govern-

    ment to provide a program called “Own Your Future.” It’s an education and outreach effort on long-term care

    and ways to finance it.

    Visit www.longtermcare.gov to download or order a free planning kit. You can also order one by calling toll-free 1-866-PLAN-LTC.

What You Should Know About Military Service

    and Your Benefits

    If you are called to active military duty, it’s important to know the details of your benefits, both before and

    after your service.

    Service Credit

    Military service is not Retirement System-covered employment, but you can

    still get credit for it.

     If you are in your “year of service” when called to active duty, your time

    away counts toward completion of your “year of service” when you return

    to the same employer.

     The Retirement System may be able to grant you service credit for your

    time away at no cost, or you can purchase service credit for military ser-

    vice that is not granted. Granted service credit is limited to five years. You

    can purchase up to six years of service regardless of how many years are

    granted.

    For KP&F members, military service does not count toward your eligibility to

    retire, but does increase the dollar amount of your benefit.

    Life Insurance

     Basic life insurance continues at no cost to you during active military duty. (KP&F members do not have basic life insurance.)

     Optional life insurance continues for 16 months as long as you continue to pay the premiums. After 16 months, you can continue your coverage through a conversion or portability option. Optional life insurance is reinstated if you return to covered employment within five years, even if you did not choose to convert to an individual policy. Your premiums will be based on your age when you return.

    Disability Benefits

    No disability coverage during military service.

Eliminate Any Gaps in Your Retirement Income

    Most financial advisers say you’ll need at least 80 percent of your working income to comfortably maintain your standard of living in retirement. You probably know what your monthly household income and expenses are now, but it’s a little harder to plan for 10, 20 or even 30 years down the road. The paycheck you depend on now won’t be there when you retire, so you’ll need to look at where your retirement income will come from.

     Social Security

     KPERS

     Personal savings and investments

    These three sources together will help you replace the income you now earn from working. With the right planning, you can have a more secure retirement.

    If you are a state employee or your employer offers the Kansas Public Employees Deferred Compensation Plan, ING can help. ING recently introduced a financial analysis software program to help make your retirement planning easier. The tool combines your estimated KPERS and Social Security benefits along with your current retirement savings to help identify any gaps in your future retirement income. A gap generally occurs from in-sufficient savings. Your personal financial analysis will estimate how much you need to save per pay period to meet your 80 percent income replacement goal.

    To complete your own financial analysis, you’ll need to talk to an ING representative. Informational meetings

    and analysis sessions are going on now at various state agencies. Watch for a meeting at your employer, or contact ING at 785-296-7095 or toll-free 1-800-232-0024 and press option 5 for an individual analysis. If your employer doesn’t participate in the State’s deferred compensation plan, there are other ways to estimate your retirement income needs. Try the American Savings Education Council’s “Ballpark Estimate” worksheet at

    www.choosetosave.org. The worksheet helps you factor in your KPERS and Social Security benefit estimates, and calculates how much you should be saving now.

Committee Looking for Ways to Provide a COLA for You

    The Legislature’s Joint Committee on Pensions, Investments and Benefits is studying post-retirement benefit adjustments during the 2008 Interim Session. Its goal is to find a long-term solution for retiree cost-of-living

    adjustments (COLAs), including one for you.

    COLAs are not part of your promised benefits. When KPERS was established in 1962, it wasn’t set up to fund

    retiree COLAs. This plan design was standard at that time. Legislators recognize now that retirees are living

    longer and inflation erodes the purchasing power of benefits. Each year, the issue of COLAs confronts the Leg-

    islature as proposed benefit increases must compete with other budget priorities for limited funds. The Legislature

    grants COLAs and one-time payments on an ad hoc basis. In the last decade, retirees have received a 3 percent

    COLA in 1998 and three one-time payments.

    The first step toward a comprehensive COLA plan is already in place. Last year, the Legislature passed plan design

    changes for future employees hired on or after July 1, 2009. The new plan design has a pre-funded automatic

    COLA, funded by increased employee contributions.

    The next step is to consider potential costs and funding sources for providing regular COLAs for current retirees,

    as well as other groups who may be moving into retirement.

     Current active members

     Inactive vested members

     Disabled members

    Long-Term Funding Presents Significant Challenges

    For the last several years, the Retirement System’s highest priority has

    been developing a comprehensive plan to address KPERS’ long-term

    funding shortfall. Key steps have already been taken toward improving

    the System’s financial condition, including the new plan design. The

    Joint Committee hopes to identify ways to fund a comprehensive

    COLA plan without hurting the System’s long-term financial health. What Happens Next?

    The COLA study is still in the preliminary stages, and a complete so-A COLA solution must balance A COLA solution must balance

    lution may not be developed the first year. There are many details and current and future retiree current and future retiree

    needs with KPERS long-term needs with KPERS long-term alternatives to consider. If the Joint Committee recommends a proposal, financial soundness. Consider-financial soundness. Consider-legislation may be introduced during the next legislative session. ing additional funding sources ing additional funding sources KPERS will provide updates at www.kpers.org as further information may present possible solutions. may present possible solutions.

    becomes available.

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