Collin County Retirement Plan Briefing

September 7, 2010

How Your Plan Works

A percentage of your employee’s paycheck is deposited into his or her TCDRS account.

Your employee’s savings grow at an annual, compounded rate of 7% regardless of market ups or downs.

You are also saving for your employee’s retirement. Your employer contributions become matching dollars for employees that retire. Your rate is determined annually based on your projected assets and estimated benefits promised.

At retirement, you match the employee’s final account balance, including interest, $2.50 for every dollar saved. We calculate a monthly retirement payment based on that account balance and matching.

Your retiring employee receives a monthly benefit payment for life.

Five Simple Steps

4

Benefits Are Funded Primarily by Investment Earnings

76%InvestmentEarnings

11%EmployeeDeposits

13%EmployerDepositsTCDRS

Asset Growth

(1967 through 2009)

Investment Results As Of December 31, 2009

Collin County Retiree Profile as of Dec. 31, 2009

Average Age at

Retirement

Average Service at

Retirement 1

Average Current Annual

Benefit 2

Average Annual

Benefit at Retirement

Average Replacement

Ratio at Retirement 3

62 18 $22,000 $18,000 39%

Includes service with other TCDRS employers and proportionate service

Includes cost-of-living adjustments adopted by Collin County

Based on the average annual benefit at retirement and final salary as available

1

2

3

All averages reflect plan provisions in effect at the time of each retirement. The averages are based on data that is currently available.

Projection of Collin County Retirees250% Match Continuing

Year Number Average Average BenefitEnded of Retirees * Benefit in 2010 Dollars **

2009 281 $22,267 $22,2672010 337 23,678 22,8772011 385 24,984 23,3232012 432 26,316 23,7352013 479 27,625 24,0732014 523 28,952 24,3762015 567 30,153 24,5292016 612 31,215 24,5352017 656 32,335 24,5562018 700 33,510 24,5882019 742 34,755 24,6382020 782 36,230 24,8152021 820 37,858 25,0542022 857 39,409 25,1982023 890 40,973 25,3122024 920 42,744 25,5132025 949 44,541 25,687

Each year’s number of retirees reflects estimated number of new retirees and deaths. It is estimated that only between 25% and 30% of all Collin County employees will eventually receive a monthly benefit in retirement.3.5% annual inflation

*

**

Projection of Collin County Retirees200% Match Beginning in 2011

Each year’s number of retirees reflects estimated number of new retirees and deaths. It is estimated that only between 25% and 30% of all Collin County employees will eventually receive a monthly benefit in retirement.3.5% annual inflation

Year Number Average Average BenefitEnded of Retirees * Benefit in 2010 Dollars **

2009 281 $22,267 $22,2672010 337 23,678 22,8772011 385 24,964 23,3042012 432 26,255 23,6802013 479 27,505 23,9692014 523 28,758 24,2142015 567 29,871 24,3002016 612 30,834 24,2352017 656 31,846 24,1842018 700 32,902 24,1412019 742 34,013 24,1132020 782 35,340 24,2062021 820 36,808 24,3592022 857 38,189 24,4182023 890 39,571 24,4462024 920 41,140 24,5562025 949 42,721 24,638

*

**

% of Final Salary Replaced by Collin County Retirement Benefit at Age 65 for a New Hire

Above based on an employee deposit rate of 7% and annual salary increases using the graded valuation salary scale. 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

10 Years 15 Years 20 Years 25 Years

250% Employer Matching Rate

200% Employer Matching Rate

150% Employer Matching Rate

Final Salary

18 Yrs of ServiceAverage Collin County Retiree

Projection of Collin County Required RateUnder Current and Proposed Plans

These are projections and actual results will vary. The projections are based on the same data, methods and assumptions as those used in the December 31, 2009 actuarial valuation, including a long-term investment return assumption of 8% per year. The required rate increases for the first nine years as the investment losses from 2008 are recognized. The required rate drops after 20 years reflecting the UAAL being amortized over a closed 20-year period.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Year

Current Plan w ith 250% Employer Match and No Lump-Sum Contribution

Current Plan w ith 250% Employer Match and a $5,000,000 Lump-Sum Contribution in 2010

Employer Match Decrease to 200% and a $5,000,000 Lump-Sum Contribution in 2010

Elected Rate0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Year

Current Plan with 250% Match, a 13.50% Elected Rate and No Lump-Sum Contribution

Current Plan with 250% Match, a 13.50% Elected Rate and a $5,000,000 Lump-Sum Contribution in 2010

Match Decrease to 200% with No Elected Rate and No Lump-Sum Contribution

Match Decrease to 200% with a 13.50% Elected Rate and a $5,000,000 Lump-Sum Contribution in 2010

13.50% Elected Rate

Projection of Collin County Funded RatioUnder Current and Proposed Plans

The projections are based on the same data, methods and assumptions as those used in the December 31, 2009 actuarial valuation, including a long-term investment return assumption of 8% per year. 

0%

20%

40%

60%

80%

100%

120%

140%

2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Year

Current Plan w ith 250% Employer Match and No Lump-Sum Contribution

Current Plan w ith 250% Employer Match and a $5,000,000 Lump-Sum Contribution in 2010

Employer Match Decrease to 200% and a $5,000,000 Lump-Sum Contribution in 20100%

20%

40%

60%

80%

100%

120%

140%

2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Year

Current Plan with 250% Match, a 13.50% Elected Rate and No Lump-Sum Contribution

Current Plan with 250% Match, a 13.50% Elected Rate and a $5,000,000 Lump-Sum Contribution in 2010

Match Decrease to 200% with No Elected Rate and No Lump-Sum Contribution

Match Decrease to 200% with a 13.50% Elected Rate and a $5,000,000 Lump-Sum Contribution in 2010

0

200

400

600

800

1,000

1,200

2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Mill

ion

s

Year

0%

20%

40%

60%

80%

100%

120%

Actuarial Accrued Liability

Actuarial Value of Assets

Funded Ratio

Projection of Current Collin County Plan Funded Ratio and Unfunded Liability Amortized Over 20-Year Closed Period

The difference between the actuarial accrued liability and the actuarial value of assets (the red area) represents the unfunded actuarial accrued liability.

The projections are based on the same data, methods and assumptions as those used in the December 31, 2009 actuarial valuation, including a long-term investment return assumption of 8% per year. This projection assumes the current plan with 250% matching.

Fu

nd

ed

Per

cen

tag

e

2009

Funded 85%

LIab 260

Assets 220

Unfunded 40

2017

Funded 83%

Liab 453

Assets 376

Unfunded 77

2023

Funded 91%

Liab 641

Asset 581

Unfunded 60

2031

Funded 99%

LIab 952

Assets 947

Unfunded 5

1313

TCDRS Plan Design

We have a unique structure that combines the best features of defined benefit plans and defined contribution plans.

Defined Benefit Plans

Example: traditional pension plan

Benefit based on employee’s final salary and length of career

Monthly benefit lasts for lifetime

Employer assumes investment risk

TCDRS

An employee-savings based plan

Benefit is based on employee’s final account balance, plus employer matching

Employee must retire to earn employer matching

Interest rate fixed at 7%

Monthly benefit lasts for lifetime

Employer assumes investment risk

Defined Contribution

Plans

Example: 401(k)

Benefit based on employee’s savings and employer matching, if provided

Benefit varies according to market performance

Benefit may not last a lifetime

Employee assumes investment risk

Questions?