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Montana SAVA

Retirement Program DESIGNER®for the State of Montana Teachers' Retirement System

June 25, 2010

1ADMIN\MONTANA SAVA\2010\TASK 3\PRES_TRS DESIGNER.PPT

Montana SAVADesigner® for Teachers' Retirement System

• Three basic plan designs have been programmed into the software:– Current Plan– Revised DB Plan – Money Purchase Plan

• Several options on the following plan features are available to modify during the June 25 meeting:– Vesting schedule (Revised DB and MPP)– Final average salary period (Revised DB)– PRO (Revised DB)– Pay crediting rates (MPP)– Interest crediting rates (MPP)

• Options for the vesting schedule:– Immediate vesting– 5 year cliff– 10 year cliff– 3-7 year graded– 5-10 year graded– 5-15 year graded

• Options for the final average salary period are 3, 5, 7 and 10 years

• Options for the PRO:– No PRO– Increased multiplier applied to all service after reaching 30 years– Increased multiplier applied to service in excess of 30 years

• In addition to vesting, the member pay credits, employer pay credits and interest credits can be modified for the Money Purchase Plan

• For the purpose of the exhibits included here, the following options have been applied:– Revised DB Plan:

• 3 year final average salary period• No PRO• 5 year cliff vesting

– MPP:• 7.15% member contributions• 7.15% employer pay credits• 7.00% interest credits• 5 year cliff vesting

• These options are a starting point to demonstrate the exhibits that will be prepared during the June 25th meeting and are not recommendations

• The following exhibits compare benefits under the current plan to those under the Revised DB plan first and then the MPP plan

• The percentage listed in each cell shows the percentage increase or decrease in the benefit based on the age and service indicated for that cell

• Below the percentage increase or decrease is the number of members with that age/service combination and the average salary of those members

• The comparisons are shown based on an age at retirement of 50, 55, 60 and 65 in successive exhibits

Current Service

30-48%

48$59,150

25-48%

29$55,213

-48%473

$56,922

20-48%

27$50,329

-48%426

$55,699

-26%377

$55,365

15-48%

25$45,460

-48%472

$50,382

-26%445

$50,648

$46,604

10-48%

38$36,589

-48%561

$42,521

-26%572

$42,665

$40,019

$35,183

58$29,735

-48%873

$33,356

-26%682

$35,182

$33,283

$29,522

$29,408

38$13,188

-48%597

$22,735

-26%717

$24,691

$24,108

$23,232

$20,490

20 25 30 35 40 45 50 55 60

Current Age

Age at Termination: 50

Benefit Comparison Distribution

State of Montana Teachers' Retirement System

From Current PlanTo Revised DB Plan

Comparison Based on Annuities

Cells ShowBenefit ChangeParticipant CountAverage Salary

Current Service

35-30%

50$59,525

30-30%

48$59,150

-30%465

$59,967

25-30%

29$55,213

-30%473

$56,922

-30%428

$56,110

20-30%

27$50,329

-30%426

$55,699

-30%377

$55,365

$53,963

15-30%

25$45,460

-30%472

$50,382

-30%445

$50,648

$46,604

$45,033

10-30%

38$36,589

-30%561

$42,521

-30%572

$42,665

$40,019

$35,183

$36,395

58$29,735

-30%873

$33,356

-30%682

$35,182

$33,283

$29,522

$29,408

$27,771

38$13,188

-30%597

$22,735

-30%717

$24,691

$24,108

$23,232

$20,490

$20,281

20 25 30 35 40 45 50 55 60

Current Age

Current Service

400%99

$62,772

350%50

$59,525

$62,941

300%48

$59,150

$59,967

$61,703

250%29

$55,213

$56,922

$56,110

$58,226

200%27

$50,329

$55,699

$55,365

$53,963

$49,966

150%25

$45,460

$50,382

$50,648

$46,604

$45,033

$40,439

100%38

$36,589

$42,521

$42,665

$40,019

$35,183

$36,395

$35,840

$29,735

$33,356

$35,182

$33,283

$29,522

$29,408

$27,771

$28,192

$13,188

$22,735

$24,691

$24,108

$23,232

$20,490

$20,281

$21,198

20 25 30 35 40 45 50 55 60

Current Age

Current Service

400%99

$62,772

350%50

$59,525

$62,941

300%48

$59,150

$59,967

$61,703

250%29

$55,213

$56,922

$56,110

$58,226

200%27

$50,329

$55,699

$55,365

$53,963

$49,966

150%25

$45,460

$50,382

$50,648

$46,604

$45,033

$40,439

100%38

$36,589

$42,521

$42,665

$40,019

$35,183

$36,395

$35,840

$29,735

$33,356

$35,182

$33,283

$29,522

$29,408

$27,771

$28,192

$13,188

$22,735

$24,691

$24,108

$23,232

$20,490

$20,281

$21,198

$20,805

20 25 30 35 40 45 50 55 60

Current Age

Current Service

30-29%

48$59,150

25-29%

29$55,213

-34%473

$56,922

20-29%

27$50,329

-34%426

$55,699

-13%377

$55,365

15-29%

25$45,460

-34%472

$50,382

-13%445

$50,648

$46,604

10-29%

38$36,589

-34%561

$42,521

-13%572

$42,665

$40,019

$35,183

58$29,735

-34%873

$33,356

-13%682

$35,182

$33,283

$29,522

$29,408

38$13,188

-34%597

$22,735

-13%717

$24,691

$24,108

$23,232

$20,490

20 25 30 35 40 45 50 55 60

Current Age

From Current PlanTo Money Purchase Plan

Current Service

35-18%

50$59,525

30-18%

48$59,150

-24%465

$59,967

25-18%

29$55,213

-24%473

$56,922

-30%428

$56,110

20-18%

27$50,329

-24%426

$55,699

-30%377

$55,365

-7%402

$53,963

15-18%

25$45,460

-24%472

$50,382

-30%445

$50,648

-7%388

$46,604

-13%416

$45,033

10-18%

38$36,589

-24%561

$42,521

-30%572

$42,665

-7%401

$40,019

-13%437

$35,183

-17%406

$36,395

58$29,735

-24%873

$33,356

-30%682

$35,182

-7%495

$33,283

-13%481

$29,522

-17%503

$29,408

-18%439

$27,771

38$13,188

-24%597

$22,735

-30%717

$24,691

-7%520

$24,108

-13%536

$23,232

-17%429

$20,490

-18%607

$20,281

20 25 30 35 40 45 50 55 60

Current Age

Current Service

40-4%99

$62,772

35-4%50

$59,525

-11%515

$62,941

30-4%48

$59,150

-11%465

$59,967

-17%482

$61,703

25-4%29

$55,213

-11%473

$56,922

-17%428

$56,110

-23%467

$58,226

20-4%27

$50,329

-11%426

$55,699

-17%377

$55,365

-23%402

$53,963

-29%492

$49,966

15-4%25

$45,460

-11%472

$50,382

-17%445

$50,648

-23%388

$46,604

-29%416

$45,033

-33%431

$40,439

10-4%38

$36,589

-11%561

$42,521

-17%572

$42,665

-23%401

$40,019

-29%437

$35,183

-33%406

$36,395

-36%366

$35,840

5-4%58

$29,735

-11%873

$33,356

-17%682

$35,182

-23%495

$33,283

-29%481

$29,522

-33%503

$29,408

-36%439

$27,771

-37%412

$28,192

0-4%38

$13,188

-11%597

$22,735

-17%717

$24,691

-23%520

$24,108

-29%536

$23,232

-33%429

$20,490

-36%607

$20,281

-37%333

$21,198

20 25 30 35 40 45 50 55 60

Current Age

Current Service

4016%99

$62,772

3516%50

$59,525

$62,941

3016%48

$59,150

$59,967

$61,703

2516%29

$55,213

$56,922

$56,110

-7%467

$58,226

2016%27

$50,329

$55,699

$55,365

-7%402

$53,963

-14%492

$49,966

1516%25

$45,460

$50,382

$50,648

-7%388

$46,604

-14%416

$45,033

-20%431

$40,439

1016%38

$36,589

$42,521

$42,665

-7%401

$40,019

-14%437

$35,183

-20%406

$36,395

-25%366

$35,840

516%58

$29,735

$33,356

$35,182

-7%495

$33,283

-14%481

$29,522

-20%503

$29,408

-25%439

$27,771

-29%412

$28,192

016%38

$13,188

$22,735

$24,691

-7%520

$24,108

-14%536

$23,232

-20%429

$20,490

-25%607

$20,281

-29%333

$21,198

-30%392

$20,805

20 25 30 35 40 45 50 55 60

Current Age

• The final exhibit estimates the relative cost of the current plan and the revised DB plan

• Cost are based on the current population, assuming the eventual membership under any revised plan will have the same demographic characteristics of the current group

• Costs are compared using the present value of future benefits at entry age which will directly relate to the annual normal cost (the cost of benefits accruing in the current year) under the Entry Age cost method

• The nature of the Money Purchase Plan does not allow its cost to be estimated in the same way - for comparison purposes, the normal cost for the MPP can be estimated as the sum of the member contributions and employer pay credits, adjusted for vesting and for assumed long term investment returns above the interest credits

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