Pima Community College

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Pima Community College

• Optional Retirement Plan
• Jack Redavid
• Assistant Vice Chancellor for Human Resources

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PCC Employees Have Two Retirement Plan Options

• ASRS the Arizona State Retirement System
• Optional Retirement Plan (ORP) administered by
  TIAA-CREF
• The plans differ in a number of ways that
  need to be carefully evaluated

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Some Items to Consider

• The manner in which benefits are calculated
• The contribution rates
• The refund provisions prior to retirement
• The vesting schedule under each plan

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Some Background

• In August 2005, the BOG approved a new defined
  contribution retirement plan also known as the
  Optional Retirement Plan (ORP) with a plan
  effective date of January 1, 2006.
• Permits employees who meet the eligibility
  requirements for participation in the Arizona
  State Retirement System (ASRS) the option to
  participate in a defined contribution retirement
  plan instead of in the ASRS.
• Current PCC employees have 90 calendar days to
  opt out of ASRS and to join the ORP
• New PCC employees will have 30 calendar days to
  select a retirement plan from date of hire.

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ASRS- a defined benefit plan

• ASRS- benefits are based on time in the
  retirement plan and your average monthly
  compensation.
• The retirement benefits in ASRS are defined.
• The greater the length of service and the greater
  the average monthly compensation, the greater the
  retirement benefit.

(length of service any service purchased) times
your average monthly compensation monthly
benefit
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Arizona State Retirement System

• When an ASRS participant retires, he or she
  chooses a retirement annuity option and is
  eligible to participate in the ASRS Retiree
  Health Insurance Program.
• ASRS has specific retirement eligibility criteria
  that must be met to qualify for a retirement
  benefit.
• Employees participating in the ASRS also
  participate in the Long Term Disability Plan
  (LTD) while they are employed.

FOR MORE INFO...
http//www.asrs.state.az.us/web/index.do
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Optional Retirement Plan

• The retirement benefits in the ORP are not
  calculated by a formula.
• The amount of the benefit is based on the value
  of the funds in each individuals Optional
  Retirement Plan Account at the time of
  retirement.
• Greater flexibility with regard to retirement
• date, but may be subject to IRS penalties if
  under 59 ½.

FOR MORE INFO...
http//www.tiaa-cref.org
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Who is TIAA-CREF?

• TIAA-CREF is currently one of PCCs providers for
  tax sheltered annuities and provides optional
  retirement plan services for the three state
  universities (UA, ASU, and NAU)
• TIAA-CREF is a Fortune 100 financial services
  organization with a good reputation and a long
  history of stability.

FOR MORE INFO...
http//www.tiaa-cref.org
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What can they do for me?

• TIAA-CREF provides retirement plans for more than
  3.2 million participants at over 15,000 colleges,
  universities, hospitals and healthcare
  organizations, private and public elementary and
  secondary schools, museums, libraries,
  governments, and other nonprofit organizations.

FOR MORE INFO...
contact the TIAA-CREF representative, Leslie
Jackson, [phone], directly for additional
information.
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Contribution Rates Compared
Employee Contribution
PCC Contribution
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Do the math

• Arizona State Retirement System combined employer
  and employee contributions therefore equal 14.8
  of compensation, 13.8 of which is for retirement
  benefits.
• The employer contribution rate to the OPTIONAL
  RETIREMENT PLAN is capped by state statute at
  7.0, therefore the combined employee and
  employer contribution will be 14.4, all of which
  is retirement.

MORE INFO...
At this time, the ASRS rates (both for employees
and PCC) are scheduled to increase to 8.6 for
retirement and 0.5 for LTD in the 2006/07 year
for both employees and employers.
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I want a refund!

• There are provisions in both plans for early
  withdrawal of employee and certain employer plan
  contributions
• In both plans, employees can withdraw all of
  their contributions upon termination of
  employment and
• either roll the funds over into another qualified
  retirement plan or
• take the money as taxable income in the year it
  is received (which may also subject the money to
  an additional 10 federal tax under current law).

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Vesting Schedule

• Only vested employer contributions are refunded
  to an employee on termination of employment

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5
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6
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MORE INFO...
Employees who have participated in a defined
contribution plan with a former employer may be
vested in the ORP prior to year 5.
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Is the decision final?

• The decision to participate in the Optional
  Retirement Plan or to remain in the ASRS is an
  important decision that should only be made after
  careful consideration.
• All employees are encouraged to carefully review
  the two retirement plans and to consult with tax
  and other advisers before selecting the plan that
  best meets their financial goals.
• The decision to participate or not to participate
  is an irrevocable, permanent decision.

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FYI-additional comments

• Both plans also allow employees to leave their
  funds in the plan upon termination of employment
  (before retirement), or
• Allow the funds to be rolled into another
  qualified retirement plan.
• At retirement, both plans allow participants to
  select from a variety of annuity options.

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How to enroll GO!

• PCC employees who are participants in the ASRS on
  January 1, 2006, have 90 days to decide whether
  to
• Stay in the ASRS
• Withdraw from the ASRS and join the new OPTIONAL
  RETIREMENT PLAN, and
• Have their contributions from ASRS transferred
  to the OPTIONAL RETIREMENT PLAN.
• ORP Election Form needs to be completed and
  returned to the to the Employee Service Center at
  the District Office before the end of the workday
  on March 31, 2006.

FOR MORE INFO and FORMS
http//www.pima.edu/employee/benefits/retirement/