TASA Midwinter Conference Teacher Retention/Attendance Incentives - - PowerPoint PPT Presentation
TASA Midwinter Conference Teacher Retention/Attendance Incentives Retirement Education through Region 10 RAMS Educator Retirement Update Download our School District Financial Health Checklist at www.tcgservices.com/tasa2019 ESC
Download our School District Financial Health Checklist at www.tcgservices.com/tasa2019
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partner that serves the learning community through responsive, innovative educational solutions.
Investment Advisory Committee
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We are on a mission to improve the financial health of our communities and empower individuals of all income backgrounds to reach financial wellness.
N E W R A M S S E R V I C E
A fee-only investment advisor, financial planner and retirement plan administrator.
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ESC Region 10 RAMS Incentive/Retirement Programs
401(a) Incentive Plans
457(b) FICA Alternative Plans
457(b) Retirement Savings Plan
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5% Bonus Incentive 5% Plan Contribution
Bonus Incentive $2,000 Plan Contribution $2,000 Plus TRS Ret. + H Care (est.) $167 Plus Medicare $29 Plus Worker’s Comp. (est.) $20 Plus Unemployment (est.) $5
Total Cost of Bonus Incentive
$2,221
Total Cost of Plan Contribution
$2,000
Assumptions: $40,000 Salary; 8.35% TRS Cont.; 1.45% Medicare Cont.; 1.00% Worker’s Comp. Cont.; and 0.25% Unemployment Ins. Cont.
Less Expensive for Educational Employers
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5% Bonus Incentive 5% Plan Contribution
Bonus Incentive $2,000 Plan Contribution $2,000 Less TRS ($167) Less Medicare ($29) Less Federal Taxes ($300)
Total Cost of Bonus Incentive
$1,504
Total Cost of Plan Contribution
$2,000
Less Expensive for Educational Employers
Assumptions: $40,000 Salary; 8.35 TRS Cont.; 1.45% Medicare Cont.; 1.00% Worker’s Comp. Cont.; 0.25% Unemployment Ins. Cont., Fed. Tax @ 15%
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TERRP: Example of Educational Employer Plan Structure
Employer
ESC Region 10 Plan/Trust District Adoption of District Plan
Employee Deferral Employer Level Contributions 403(b)/457(b) Annual Employee Deferral Employer Basic Match = 50% of Employee Deferral (up to maximum % of pay) + Attendance Incentive (better attendance = higher match %) 100% Immediately Vested Vested in 4th year Employee Account (employer’s choice) Fully Vested Inter-local Agreement between District & ESC Region 10 Vested in 4th year
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investment design
income ladder, other investments determined by Investment Advisory Committee
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18.23% 11.19% 15.00% 12.05% 9.52% 8.51% 8.33% 6.06% 5.71% 9.38% 4.52% 7.50%
0.00% 3.50% 7.00% 10.50% 14.00% 17.50% 21.00% 24.50% 28.00% 31.50% 35.00%
One Tw o Three Four Five Six Seven Eight Nine Ten Eleven through Tw enty Tw enty-
Teacher Turnover (Percentage)
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35 15 15 10 6 4 3 2 2 3 9 6 4 8 12 16 20 24 28 32 36 40
One Tw o Three Four Five Six Seven Eight Nine Ten Eleven through Tw enty Tw enty-
Teacher Turnover (Numbers)
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30% 67% 50% 50% 100% 100% 0% 0% 0% 0% 25% 0% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% One Two Three Four Five Six Seven Eight Nine Ten Eleven through Twenty Twenty-
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2 4 6 8 10 12 14 16 18 20
One Two Three Four Five Six Seven Eight Nine Ten Eleven through Twenty Twenty-one Plus
Hard to Retain Staff Turnover
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32.88% 27.78% 22.55% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% Teachers Administrators All Others
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1,034 63 123 120 240 360 480 600 720 840 960 1,080 1,200 Total Teachers Teachers - Perfect Attendance Teachers - Excellent Attendance
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2 4 6 8 10 12 One Two Three Four Five Six Seven Eight Nine Ten Eleven through Twenty Twenty-
Teacher Sick Days Used Per Year
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0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 105 104 041 043 109 108 042 101 103 102 001 107 106 Total Turnover Percentage Comparison to Mean
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$5,830
$12,210 Cost of Substitutes $35,282 Cost of Salaries for Absent Employees
* 9,540 days x $110 per day for substitute / 180 School Days ** 9,540 days x ($57,214 average salary / 180 days) / 180 School Days
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Base Match—$.50 for every $1.00 of participant contribution up to a maximum of 2.00% of base salary for employees not exceeding eight (8) absences during the plan year.
Excellent Attendance (2 or fewer days)—$.25 for every $1.00 of participant contribution up to a maximum of 1.00% of base salary Perfect Attendance (0 absences)—$.50 for every $1.00 of participant contribution up to a maximum of 2.00% of base salary Vesting—Graded over 5 years of service Statistics show that plan has been very effective in reducing absenteeism
*Maximum total matching contribution by the educational employer for any participant is $6,000 per plan year.
a maximum of .5% of base salary
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Perfect Attendance Match (0) Match 100.00% % of Pay Cap 4.00% Excellent Attendance Match (2) Match 75.00% % of Pay Cap 3.00% Base Match (7 or fewer) Match 50.00% % of Pay Cap 2.00%
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Perfect Attendance; $20,000 Annual Salary; Match of 100% of Employee Deferrals to 403(b)/457 up to 4% of Pay; $66.67 Per Month Deferral to 403(b)/457 of Employee’s choice; 5.37% Average Annual 5-Year Return of TERRP Trust 3/31/2013 (year plan started) used for all calculations
$0.00 $2,500.00 $5,000.00 $7,500.00 $10,000.00
1 2 3 4 5 $800.00 $1,642.96 $2,531.19 $3,467.11 $4,453.30 $821.52 $1,687.16 $2,599.28 $3,560.38 $4,573.10
Matching & Employee Deferral Account Growth - 5 Years
Deferral Account Match Account
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$0.00 $2,000.00 $4,000.00 $6,000.00 $8,000.00 $10,000.00 $12,000.00 $14,000.00 $16,000.00 $18,000.00 $20,000.00
1 2 3 4 5
$1,600.00 $3,285.92 $5,062.37 $6,934.22 $8,906.59 $1,642.96 $3,374.15 $5,198.30 $7,120.41 $9,145.73
Matching & Employee Deferral Account Growth - 5 Years
Deferral Account Match Account
Perfect Attendance; $40,000 Annual Salary; Match of 100% of Employee Deferral to 403(b)/457 up to 4% of Pay; $133.33 Per Month Deferral to 403(b)/457 of Employee’s choice; 5.37% Average Annual 5 Year Return of TERRP Trust 3/31/2013 (year plan started) used for all calculations
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least $200 per year to the 403(b) or 457(b) plan
year to the 403(b) or 457(b) Plan
absenteeism
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leave plan or the “grandfathered” accumulated leave contribution
following rate:
contribution to the 457(b)
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waived low cost and/or institutional mutual funds as well as individual bonds and other fixed instruments generally held to maturity
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See end of presentation for sources. Confidential and proprietary—for the exclusive use of authorized recipients
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TRS Retirement vs. Corporate Retirement
Income in retirement is very different for Texas teachers than it is for their spouses and neighbors (and financial advisors)
TRS Social Security Savings TRS Social Security Savings Source: Region 10 Education Service Center
Teacher Neighbor
Example
Years of Service: 30 State Multiplier (2.3%): 69 % Average Income: $60,000 Maximum Benefit: $41,400 Years of Service x State Factor 2.3%
Average 3/5 Highest Years of Income
Maximum Benefit $60,000 $41,400 31
Retire at Age 60
Gross Income
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retire
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Credits
Unreported or Substitute, etc.
service
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AFTER August 31, 2014 — If you are not Vested (5 years) — Minimum age 62 to retire and receive unreduced benefits + Rule of 80 AFTER September 1, 2007 — Minimum age 60 to retire and receive unreduced benefits + Rule of 80 BEFORE September 1, 2007 AND had 5 Years of Service – Rule of 80 only (Years + Age = 80)
Became a TRS member:
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Retirement Age: 60 Service: 30 Years Last Year / High 3 Yr. Salary: $60,000
(Full TRS benefit with 2.3 multiplier with no survivor benefit)
$60,000 $41,400 31
Retire at Age 60
Gross Income
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*Assumptions include a lump sum invested at 5% interest, with annual amount paid at beginning of each year for 30 years. This rate is assumed for illustration purposes only and is not guaranteed.
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Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and past performance is not a guarantee of future returns. $0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,600.00 $1,800.00 $2,000.00 Age 20-60 Age 30-60 Age 40-60 Age 50-60
Years of Savings Monthly Contribution 40 $150.01 30 $297.39 20 $646.55 10 $1,822.87
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$82,711 $135,531 $60,000 $80,000 $100,000 $120,000 $140,000 2017 2020 2030 2040 2050
Impact of Inflation
TRS
TRS does NOT have Cost of Living Adjustments (COLA) Inflation (2.5%) vs. TRS Income (0%)
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10 20 30 40 50 60 70 80 90
500 1000 1500 2000 2500 Life Expectancy Date (-BC) (+AD)
History of Life Expectancy
25 1325 BC 30 1400 AD 37 1800 AD 47 1900 AD 77 2000 AD Age Year
Source: Murray, Nick. “The Exponent of Life Expectancy “Financial Advisor magazine, Mar. 2007:p43.
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that created different kinds of retirement plans
Investments from taxes
investments
from taxes. No matter which plan you use, you will eventually pay some taxes. However, the impact of taxes is usually much less with a tax-deferred plan
403(b), 457, 401(k), IRA, etc.—What Are These??
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$0.00 $10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00 $70,000.00 $80,000.00 $90,000.00
1 2 3 4 5 6
Annual Fee Balance 1% $82,549.26 2% $73,599.44 3% $65,824.55 4% $59,057.63 5% $53,156.51 6% $48,000.00
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Balance based on 6% earning net of fees with $200 monthly contributions for 20 years at the beginning of the month. Actual rate of return is not guaranteed, for illustrations purposes only.
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Spiking — TITLE 34, PART 3, CHAPTER 25, SUBCHAPTER B, RULE §25.31
compensation in last 3* years prior to retirement
greater of 10% or $10,000
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Illustration—TRS Spiking: 10% Rule - 5 Year Average
Years to Retirement Actual Compensation Increase % Allowable Compensation Allowable Increase % 7 $100,000.00 Baseline = greater of these two 6 $110,000.00 Baseline $110,000.00 5 $130,000.00 18.18% $121,000.00 10.00% 4 $133,900.00 3.00% $133,100.00 10.00% 3 $137,917.00 3.00% $137,917.00 3.62% 2 $142,054.51 3.00% $142,054.51 3.00% 1 $146,316.15 3.00% $146,316.15 3.00% TRS Avg $138,037.53 $136,077.53
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Spiking — Conversion (TRS Member Grandfathered Under 3-Year Average)
Example Year Salary Car Allowance TRS Comp 3 Yr Avg 2010-11 $124,922 $12,000 $124,922 2011-12 $127,965 $12,000 $127,965 2012-13 $127,965 $12,000 $127,965 $126,951 2013-14 $127,965 $12,000 $127,965 $127,965 <<<Conversion 4 years prior to retirement 2014-15 $155,257 $0 $155,257 $137,062 2015-16 $155,257 $0 $155,257 $146,160 2016-17 $155,257 $0 $155,257 $155,257
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TRS within 5 years
5 years previously have until 9/1/2016 to correct unreported service
member has retired and received the first annuity check
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to be creditable, the settlement agreement must be submitted to TRS by the district for review before being executed
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can retire
increases
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Why is NOT Saving for Retirement a Problem?
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these emotional issues to work
financial stress is their most common cause of stress*
with their financial situation stressful*
financial problems have affected their productivity at work*
in Savings**
https://www.cnbc.com/video/2018/03/16/t his-expert-says-millennials-are-not- working-enough-to-save-for- retirement.html
*American Psychology Association, Stress in America: Are Teens Adopting Adults’ Stress Habits? (2014). **Source: 2016 GoBanking Rates Survey. Remember all investing involves risk.
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Typical Payroll Deduction Investment Options
The Capital Preservation Portfolio is for those individuals who do not wish to assume much risk and are adverse to the ups and downs of the equity (stock) market. Target Allocation: 50% Bonds, 50% Stable Value Targeted Age Range 55+ The Conservative Portfolio is for those individuals who are adverse to risk but want a little exposure for growth to offset the effects of inflation. Target Allocation: 25% Equities, 75% Bonds Targeted Age Range 50-55 The Moderately Conservative Portfolio is for those individuals who are conservative but want and are willing to accept some market risk in return for growth with income. Target Allocation: 50% Equities, 50% Bonds Targeted Age Range 40-50 The Growth Portfolio is for those individuals who are interested in growth and are willing to assume the risk of a fluctuating equity market. Target Allocation: 75% Equities, 25% Bonds Targeted Age Range 30-50 100% Stock 50% Stock 50% Stock 25% Fixed 75% Stock 75% Fixed 25% Stock The Aggressive Growth Portfolio is for individuals who are interested in growth and are willing to assume the risk of a fluctuating equity market. They have time to recover from a potential loss if a long-term down-trending market
Target Allocation: 100% Equities Targeted Age Range 20-45 100% Fixed
Remember your allocation should adjust as you get closer to retirement!
Fixed Income Stock/Equities
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coverage
credits; and either
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(HB 21)
Plan details
Deductible for medical and prescription expenses $1,500 individual $3,000 family $3,000 individual $6,000 family Maximum out of pocket for medical and prescription expenses $5,650 individual $11,300 family $11,300 individual $22,600 family Coinsurance for medical and prescription expenses You pay 20% after meeting your deductible You pay 40% after meeting your deductible Teladoc—Board-certified doctors diagnose, treat, and write prescriptions via phone or video, available 24/7 $40 consultation Coverage for certain generic drugs No cost for certain maintenance medications taken to prevent or treat chronic
Monthly premiums for non-Medicare retirees in 2018
Retiree/Surviving Spouse Only: $200* Retiree + Spouse: $689 Retiree/Surviving Spouse + Child(ren): $408** Retiree + Family: $999
Non-medical Retirees (Under Age 65)
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How the 2018 TRS-Care Medicare Advantage plan works
Deductible: $500 Maximum out-of-pocket: $3,500 Coinsurance: You pay 5% or a copay after meeting your deductible Copays: Primary care physician visit: $5 Urgent care: $35 Outpatient hospital stay: $250* Specialist visit: $10* Emergency room: $65 Inpatient hospital stay: $500* Preventive care benefits are still covered at 100%.
*After you meet the deductible. In most cases, you must also purchase and maintain Medicare Part B in order to have benefits through TRS-Care.
Prescription drug plan details
Retail Copays Mail Order or Retail-Plus copays (up to 90-day supply) Generic $5 $15 Preferred brand $25 $70 Non-preferred brand $50 $125
Monthly premiums for Medicare retirees in 2018
Retiree/Surviving Spouse Only: $135* Retiree + Spouse: $529 Retiree/Surviving Spouse + Child(ren): $468** Retiree + Family: $1,020** 66
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D O N ’ T F O R G E T !
TCG Advisors, LP is a registered investment advisor regulated by the U.S. Securities and Exchange Commission (SEC), subject to the Rules and Regulations of the Investment Advisor Act of 1940. Registration does not imply a certain level of skill or training. TCG Advisors, LP is a part of TCG Group Holdings, LLP. TCG Group Holdings, LLP, owns and operates several other entities which provide various services to employers across the U.S. Those affiliates (wholly-owned subsidiaries of TCG Group Holdings, LLP) sometimes provide services to TCG Advisors’ Clients. These affiliates are Total Compensation Group Consulting, LP; TCG Administrators, LP (f/k/a JEM Resource Partners, LP); TCG Benefits (f/k/a The Paragon Group, LP; Paragon National, LP; and Paragon Benefits, LP, collectively). The business activities of these companies are discussed in its ADV Part 2A. TCG Advisors is located in Austin, Texas, and a copy of its Form ADV Part 2 is available upon request. This presentation is not authorized for use as an offer of sale or a solicitation of an offer to purchase investments in any
This presentation is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security, or as an offer to provide advisory or other services in any jurisdiction in which such
Past performance may not be indicative of any future results. No current or prospective client should assume that the future performance of any investment or investment strategy referenced directly or indirectly in this report will perform in the same manner in the future. Different types of investments and investment strategies involve varying degrees of risk— all investing involves risk—and may experience positive or negative growth. Nothing in this presentation should be construed as guaranteeing any investment performance.
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An investment in the plans discussed will involve a significant degree of risk, and there can be no assurance that the investment objectives will be achieved or that an investment therein will be profitable. The hypothetical performance presented herein reflects the reinvestment of dividends and other earnings, the deduction of all management fees, performance-based allocations, brokerage fees and other expenses applicable to the Fund. Investors will experience individual returns that vary materially from those illustrated in this presentation depending on various factors, including but not limited to, the timing of their investment, the level of fees, and the effects of additions and withdrawals from their capital accounts. Certain of the performance information presented herein are unaudited estimates based upon the information available to the Firm as of the date hereof, and are subject to subsequent revision as a result of the Fund’s
documents. This presentation includes forward-looking statements. All statements that are not historical facts are forward-looking statements, including any statements that relate to future market conditions, results, operations, strategies or other future conditions or developments and any statements regarding objectives, opportunities, positioning or prospects. Forward- looking statements are necessarily based upon speculation, expectations, estimates and assumptions that are inherently unreliable and subject to significant business, economic and competitive uncertainties and contingencies. Forward- looking statements are not a promise or guaranty about future events. The projections or other information generated herein regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There are frequently substantial differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.
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1Stress in America: Paying with our health. (n.d.). Retrieved from
http://www.apa.org/news/press/releases/stress/2014/highlights.aspx
2Mitchell, J. (2016, April 07). More Than 40% of Student Borrowers Aren't Making Payments. Retrieved from
https://www.wsj.com/articles/more-than-40-of-student-borrowers-arent-making-payments-1459971348
3Millennials and Retirement: Already Falling Short. (2018, March 07). Retrieved from https://www.nirsonline.org/reports/millennials-
andretirement-already-falling-short/
4McCarthy, N. (2016, September 23). Survey: Americans Have Less Than $1,000 In Savings [Infographic]. Retrieved from
https://www.forbes.com/sites/niallmccarthy/2016/09/23/survey-69-of-americans-have-less-than-1000-in-savings- infographic/#256771751ae6
5New Research Finds Millennials Not Saving Adequately For Retirement. (2018, February 27). Retrieved from
https://www.nirsonline.org/2018/02/new-research-finds-95-percent-of-millennials-not-saving-adequately-for-retirement/
6Underestimating Expenses. (n.d.). Retrieved from http://longevity.stanford.edu/6921-2/ 7Frankel, M. (2017, January 24). Here's the average American's credit card debt -- and how to get yours under control. Retrieved
from https://www.usatoday.com/story/money/personalfinance/2017/01/24/heres-the-average-americans-credit-card-debt-and-how- to-get-yours-under-control/96611546/
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Chris Jamail cjamail@tcgservices.com Mike Cochran mcochran@tcgservices.com Gordon Taylor Gordon.Taylor@region10.org