Course Change on Annuity Accounts

October 21, 2013

Dear ISTA Members,

We want you to know that today's meeting of the Pension Management and Oversight Commission (PMOC) went well. Much of what happened today is the direct response to your thoughtful communications with members of the Commission.

Today, PMOC members sent a unanimous message about the direction it supports - not to privatize this annuity work but, instead, to find a better balance between what INPRS believes it needs and the needs of its members.

Today's motion from the Commission's final report reads:

1. The Commission considered the four proposals considered by the INPRS Board regarding the issuance of annuities to retirees for their ASAs.
2. The Commission recommends that INPRS pursue an option that would keep the annuitization of ASAs in-house and to not proceed with a 3rd party contract. Instead INPRS should periodically establish an interest rate that will not create an unfunded liability in their managed funds.
3. The Commission recommends the General Assembly not set a statutory interest rate at this time.
4. The Commission recommends that the date to undertake these activities occur not earlier than October 1, 2014.

Basically, the recommendation calls for NO PRIVATIZATION and that INPRS continue to annuitize in-house in a way that will not create an imbalance between what INPRS promises and what it can earn in investments.

This is a "non-binding" recommendation, but carries weight inasmuch as PMOC oversees the work of INPRS. INPRS will meet this Friday and it is hoped that INPRS will take new action to reflect PMOC's recommendations.

The reason for the Oct. 1, 2014 implementation date is to ensure that school employees interested in retiring next summer can do so under the current retirement system.

ISTA will continue to work to make positive impacts on behalf of members. Please stay tuned. We will keep you informed.

Please take time to thank Sen. Karen Tallian for her leadership on this issue and for offering her motion. Also, take time to thank the other legislative members of PMOC for voting for it.

Chairperson: Sen. Phil Boots (R-Crawfordsville): s23@in.gov
Sen. Gregory Walker (R-Columbus); s41@in.gov
Sen. Karen Tallian (D-Portage); s4@in.gov
Sen. Lindel Hume (D-Princeton); s48@in.gov
Rep. Jeff Thompson (R-Lizton); h28@in.gov
Rep. Woody Burton (R-Whiteland); h58@in.gov
Rep. Chuck Moseley (D-Portage); h10@in.gov
Rep. David Niezgodski (D-South Bend); h7@in.gov

ISTA knows this is a high-interest topic and will continue to hold its retirement workshops around the state as originally scheduled.

TRF / PERF Information Meeting

Below is the flyer for a TRF/PERF meeting on September 17, from 5 pm to 7 pm at ANTHIS CAREER CENTER AUDITORIUM, 1200 South Barr St, Fort Wayne. Gail Zerheralis will be presenting the latest information on the changes to INPRS.

All members and their spouses are welcome.

Any teacher who is considering retiring within the next three years will want to attend. Ultimately it will affect all of us, but it will affect that group’s immediate retirement decisions.

Click on the image to download a pdf copy of this flyer.

Indiana Public Retirement System (INPRS) update

The following are talking points compiled by chief ISTA lobbyist Gail Zeheralis regarding the changes to TRF/PERF. Please encourage share and take action!

1. It appears as though INPRS understands the issues surrounding current year teachers and their ability to retire and still come under the existing annuitization policy. Steve Russo, executive director of INPRS, in an email to me indicated that “The intent of the INPRS board was to make the changes effective on a date that would allow teachers to finish out the school year before having to retire. As you and others have pointed out, the rules specific to TRF would require a teacher to have a last day in pay status on or before May 31st, 2014. Now aware of this, I will recommend to the INPRS board a delay by 1 month that would in essence permit teachers’ to finish out the school year. The next INPRS board meeting is in September. I will see what flexibility we have in communicating the intent before the board considers the change in September.”

As you will note, Steve’s response is very much a teacher (TRF)-focused response. Other school employees (who might be under PERF) may not be jeopardized by a June retirement date, but I will investigate further.

2. The Pension Management Oversight Commission is meeting tomorrow (Tuesday, August 27) and Steve Russo is on the agenda to provide his annual report of the Pension Systems. I presume that the policy changes approved by INPRS dealing with the long-term rate and the outsourcing of the annuitization will come up because legislators who sit on the commission have likely heard about it. ISTA will testify if public testimony is scheduled. More likely, there will be a subsequent meeting on these changes specifically. Please stay tuned.

3. Nobody has really made the case that the annuitization change, in particular, is warranted. Even if there is rationale, there are many ways in which INPRS and/or the Legislature could address it—and INPRS took one of the most aggressive approaches—negatively impacting the most soonest.

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Below is a link to an article from August 28. It gives you some figures to go along with the changes in TRF/PERF. Be on the lookout for a flyer regarding an informational session with ISTA’s chief lobbyist on 9/17. She will provide details on the changes, information she received from her meeting with the governing board, and will also entertain questions from the audience. It will be in Ft. Wayne...members and spouses will be welcome – as well as those in PERF such as police and fire as it affects them as well. More coming your way very soon!!!

State board cuts public pensions

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Please use the link below to the Keep the Promise website to see an update on the changes to TRF/PERF. This will impact retirements for this year as well as in upcoming years.

Pension Management Oversight Committee Discusses Changes to TRF/PERF

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Changes in Your Retirement

August 29, 2013

ISTA Members,

Between ISTA's initial notification and recent local news coverage, we trust you have become aware of two changes the Indiana Public Employee Retirement System (INPRS) recently adopted and made effective July 1, 2014:

1. A change in the long-term interest rate assumption (from 7.5% to 6.75%); and
2. A change in how a member's Annuity Savings Account (ASA) funds will be annuitized (which will impact the overall monthly retirement benefit if a member had planned to have INPRS annuitize ASA funds and then combine them with his or her pension).

ISTA is working to rescind or amend the change described in (2) concerning the annuitization of PERF and TRF member ASA funds. As you can imagine, explaining the issue and the possible fixes can become detailed. In an effort to simplify the issues, please review the attached document which takes the format of using INPRS' FAQ responses with added ISTA commentary.

Please know that ISTA will continue to keep you informed about this important issue.

INPRS FAQ's.pdf

Retirement Workshops!

Horace Mann is offering two retirement workshops at the beginning of April, 2013.

The first is on April 9 at Albion Elementary in Albion, Indiana (Central Noble).

Click the flyer below for more details.

The second is on April 10 at Norwell High School in Ossian, IN (Northern Wells).

Click the flyer below for more details.