MainePERS Presentation to MLGHRA Managers on Plan Modernization

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The presentation covers the 2013 legislative changes and modernization of the PLD plan by MainePERS, including updates on member contributions, governance structures, committee roles, and communication strategies to improve engagement. It outlines key plan adjustments, such as retirement age modifications, early retirement factors, and post-retirement COLA eligibility criteria. The PLD Consolidated Plan Governance process is detailed, highlighting the roles of advisory committees, trustees, and legislative bodies in overseeing plan design and funding recommendations.

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Presentation Transcript

MainePERS presented to MLGHRA Managers by Stephanie Fecteau PLD Plan Administrator April 30, 2015

Questions? Suggestions? ? Concerns? ? FIRE AWAY!

Agenda Recap of 2013 Legislative Changes PLD Advisory Committee Governance and Roles Members Contribution Rates Employee rates How they are established Employer rates How they are established MainePERS actuary Communication with employers Communication How can we improve this? Help us help you

Re-cap 2013 PLD Plan Modernization Changes approved by the Legislature For New Members after 6/30/14 Normal retirement age 65 Early retirement reduction factor goes from 2.25% to 6% For All PLD Members 2013 PLD Plan Modernization COLA cap changes from 4% of the CPI-U to 3% of the CPI-U Post-retirement COLA eligibility goes from 6 to 12 months Changes adopted by the MainePERS Board of Trustees Employee contributions increase by .5% per year for three years beginning 7/1/14- when the employer aggregate contribution rate reaches 8% in FY 2015

PLD Consolidated Plan Governance The PLD Advisory Committee Monitors plan funding and recommends annual employer rates to the MainePERS Trustees Recommends plan design changes to the MainePERS Trustees MainePERS Board of Trustees Adopts rates or sends back to Committee for specific concerns Submits plan design changes to the Legislature or sends back to the Committee for specific concerns Maine Legislature Discusses and adopts or does not adopt plan changes

MainePERS PLD Advisory Committee MEMBER: NOMINATED BY: David Barrett Maine Municipal Association Vacant, awaiting appointment Appointed by Governor Steven Butterfield Maine State Employees Association Rick Cailler Professional Firefighters of Maine Rob Walker/Charles Betit Maine Education Association John Eldridge Maine Municipal Association Traci Place Teamsters Union Local #340 Janice Kimball Maine Municipal Association John Schlosser Maine School Management Association Sylvia Hebert AFSCME, Council 93 Dr. Thomas J. Ward Maine School Management Association Sandy Matheson, Ex-officio, MainePERS Executive Director

MainePERS Contributions Employee Contributions Established by the MainePERS Board of Trustees Employe Contribution Rate Increase Schedule for Members of the PLD Consolidated Plan AC BC 1C 2C 3C 4C AN 1N 2N 3N 4N Contribution 7/1/2013 6.50% 3.00% 6.50% 6.50% 8.00% 7.50% 6.50% 6.50% 6.50% 8.00% 7.50% Employee 7/1/2014 7.00% 3.50% 7.00% 7.00% 8.50% 8.00% 7.00% 7.00% 7.00% 8.50% 8.00% 7/1/2015 7.50% 4.00% 7.50% 7.50% 9.00% 8.50% 7.50% 7.50% 7.50% 9.00% 8.50% Rates 7/1/2016 8.00% 4.50% 8.00% 8.00% 9.50% 9.00% 8.00% 8.00% 8.00% 9.50% 9.00%

MainePERS Contributions Employer Contributions Subject to change each year Based on results of the annual actuarial valuation In accordance with a corridor funding method of 90% to 130% For copies of Annual Valuation Reports visit: www.mainepers.org/Employer Subject to market volatility Assumed rate of return = 7.125%

How Defined Benefit Funding Works Member contribution + employer contributions + investment returns - benefit payments = trust fund balance Each year, the actuary determines what it costs to provide the benefits earned in the upcoming year (normal cost) The actuary also calculates how much will be owed to each member for work through the end of the fiscal year and discounts it back to present value using the long-term investment earnings assumption (7.125%) This liability is compared to the actuarial value of assets on hand to determine the over/underfunding of the plan (UAL) Normal cost and any UAL cost are converted to % to be applied to payroll throughout the year (contributions) The employer and employee pay these costs as pre-determined

MainePERS Contributions Employer Contributions

PLD Plan Historic Funding Levels $3.5 $3.5 Billions Billions PVAB PVAB Actuarial Liabilities Actuarial Liabilities Market Value of Assets Market Value of Assets Actuarial Value of Assets Actuarial Value of Assets $3.0 $3.0 90% 90% 87% 87% 87% 87% $2.5 $2.5 90% 90% 109 109% % 93% 93% 108% 108% 98% 98% 107% 107% $2.0 $2.0 109% 109% 109% 109% 110% 110% 117% 117% 104% 104% 101% 101% $1.5 $1.5 99 99% % $1.0 $1.0 $0.5 $0.5 $0.0 $0.0 Fiscal Year Ending Fiscal Year Ending

Comparative Investment Returns Demonstrates Market Volatility 6/30/2009 -18.8% 1.8% 2.3% NA 6/30/10 11.1% 1.8% 2.5% 9.4% 6/30/11 22.4% 4.4% 5.4% 9.6% 6/30/12 0.6% 1.5% 6.3% 9.7% 6/30/13 11.1% 4.3% 6.9% 8.7% 6/30/14 16.7% 12.2% 6.9% 9.5% One Year Five Year Ten Year Thirty Year Based on 7.25% Long-term Earnings Assumption

MainePERS Contributions- from 2014 Valuation

PLD Plan Summary as of June 30, 2014 Cost-of-Living Adjustment (COLA) Employer Contribution Rate 7/1/14 - 6/30/15 Participating Employers Active Plan Members Employee Contribution Rate* Plan Plan Retirees Eligibility Service Retirement Benefit Regular Plans Age 60/65 or 25 years of service 2%of AFC* for each year of service AC 224 5756 7710 Yes 7.00% 7.8% Age 60/65 or 25 years of service 2% of AFC for each year of service AN 49 563 559 No 7.00% 4.1% Age 60/65 or 25 years of service 1% of AFC for each year of service BC 4 0 42 Yes 3.50% 4.7% Special Plans 1/2of AFC plus 2% of AFC for each year of service 20 years of special plan service 1C 18 824 321 Yes 7.00% 13.4% 1N 2 65 8 Same as Plan 1C Same as Plan 1C No 7.00% 7.5% 1/2 of AFC plus 2% of AFC for each year of service 25 years of special plan service 2C 39 803 1357 Yes 7.00% 8.3% 2N 3 46 86 Same as Plan 2C Same as Plan 2C No 7.00% 4.4% 25 years of special plan service 2/3 of AFC plus 2% of AFC for each year of service beyond 25 years 3C 25 158 577 Yes 8.50% 11% 3N 4 78 85 Same as Plan 3C Same as Plan 3C No 8.50% 6.1% Age 55 with 25 years of special plan service 2% of AFC for each year of service 4C 7 38 92 Yes 8.00% 7.2% 4N 1 2 11 Same as Plan 4C Same as Plan 4C No 8.00% 4.0%

Communication What works and what doesn t? Employer Updates E-mail E-blasts Employer Working Group Website Accessing information via ESS Regular mail www.mainepers.org How can we make it better?