REPORT

The goal of this project is for you to collect information about a state or local pension system that covers public employees, do some calculations about the system's solvency, and to make policy recommendations about how to improve those plans. This project will be done in teams. Each team must select a state or local pension system in the United States. rofessor !auh will also provide a list of suggested plans. "t least one participant on each team should live in pro#imity to the chosen pension plan.

Data items:
Name of Plan: Employees' !etirement System of $eorgia Abbreviation of Plan: E!S$" Name of Sponsoring State or City: $E%!$&" Year end Date: '()jun)*+ Membership Total Covered Individuals: *,+.-.+ Total A tive !or"ers: /'.0/' #etirees$%enefi iaries: 1+.(.' #etirees $ %enefi iaries $ Survivors: 1+.(.' Total Ina tive: -/.-'/ Pension Assets Total &net' pension assets( mar"et value: 2*1.-.+.-(* Total pension assets( a tuarial value: *+.//-...Date of a tuarial value: '(3(/3+(** Pension )iabilities A rued a tuarial liabilities &AA)' of the pension system: */././.0(. Dis ount rate used to al ulate AA): -,.(4 *nfunded a rued a tuarial liabilities &*AA)': '.0,0.'1, +lo,s Total administrative e-penses: 2*,.0'/ Investment in ome: 2+.1.+(1.((( Total employee . member ontributions: 211.111.'(( Total government ontributions: 2+0+.+-,.((( Asset Allo ation Short/Term Investments: /.,0(4 Domesti 01uity: +-,'(4 Domesti Debt: /,,(4

State.City )evel 2ariables

Total #evenues: '1./0'..01.((( Ta- #evenues: *..0-1.-(/.((( All 3ther #evenues: *,.-*,.,,,.((( Date of a tuarial report: '(3(/3+(*+ Plan Names Plan4: E!S Plan5: T!S

+eatures: Plan 4
%enefit +a tor5 +4 6t Definition of Pensionable Salary: 14 annual compensation C3)As . other benefit in reases post/retirement: (4 Normal #etirement Age: .0,. 0arly #etirement Age: "fter *( years 2esting: *((4 +eatures: Plan 5 %enefit +a tor: +46t Definition of Pensionable Salary: 14annual compensation C3)As . other benefit in reases post/retirement: '4 Normal #etirement Age: .0,. 2esting: *((4

Comprehension 6uestions
47 Is the *AA) in the report a good measure of the funding status of the pension system8 !hy or ,hy not8 7e can not assume that the report U""8 is a good measure of funding status. The actuarial assumptions are not adjusted to reality, for e#ample the fund assumes -..4 &nvestment rate of return, when most of them have performed poorly. The fund is too optimistic on the rate of return so the contribution of the employer is lower, based on the formula. 9et return lower than e#pected plus insufficient employee and employer contributions will result in a fund that will no be able to cover all the obligations. 57 Is the dis ount rate appropriate8 !hy or ,hy not8 The discount rate is not appropriate. The rate used 1.5% is low, although the fund management can adopt the rate they believe is appropriate, not always is the case. They can adopt a rate that show a good present value with the intention of cover up the real situation, which in most cases is bad enough, that makes the fund future doubtful.

97 !hat is the ratio of ontributions to government e-penditures8 Is this a good measure of the burden of the pension system on the government8 !hy or ,hy not8 :7 !hat is the ratio of the normal ost to government revenues8 Is this a good measure of the burden of the pension system on the government8 !hy or ,hy not8

+eatures of this system ;ood7

The :efined ;enefit ension lan provides for a guaranteed monthly income after you retire, as long as you have a minimum of *( years of creditable service with the State of $eorgia. <ontributions are *.+.4 of your pensionable* salary and participation in the lan is mandatory. =onthly benefits are determined based on the following formula5 *4 # years of service # highest average salary+ ;ottom line5 the more years of service, the higher your monthly benefit. 8aws governing the :efined ;enefit ension lan provide service retirement and death and disability benefits, and permit a refund of lan contributions and interest to members who leave state employment. Employer and employee pension contributions are paid into the retirement fund for the welfare of members and their beneficiaries, and all pension benefits are paid from this fund.

%ads7
" disadvantage of fi#ed annuities is that market interest rates may increase as the types of annuity are unchanged.

%enefits for its members Death benefits

> ?or an actively employed member age /( with minimum *( years of creditable service at time of death, the named beneficiary receives a monthly lifetime benefit. > ?or an actively employed member less than age /( with at least *. years of creditable service at time of death, the named beneficiary receives a monthly lifetime benefit. > ?or an inactive @terminated employment with the state and not retiredA member, regardless of age or length of service at the time of death, or an active

member less than age /( and with less than *. years of creditable service, the named beneficiary receives a refund of the employeeBs contributions and interest.

Disability retirement
Cou must have at least *. years of creditable service and be under age /( to be eligible to apply for disability retirement benefits. "pplicants must be in active employment with the state at the time of application. &f approved, the retirement benefit would be based upon years of service # *4 # the highest average salary.

3nline pension plan a

ount a

ess

Cou have access to information about your pension plan account via the E!S =ember "ccount "ccess, available anytime at www.ers.ga.gov. "fter your first month of service youBll need to establish a username and password, after which you can access your account to review information and obtain estimates of pension benefits.

Is the system fis ally stable8

Ces, the S! 1(*@kA lan is designed to be a vehicle for saving toward retirement. =onies may be withdrawn from your S! account, as permitted by federal regulations, upon retirement, separation from service, and in the event of death, with benefits paid to a beneficiary@iesA. Under very specific and e#tremely limited situations, in)service withdrawals are permitted.

#eforms
"!8&9$T%9, D" @9ovember +/, +(*+A > The "merican Society of ension rofessionals E "ctuaries @"S "A today launched the Save =y 1(*k campaign to defend more than /( million "merican workersB 1(*@kA plans from congressional budget cuts. FThe single most important factor in determining if a worker is saving for retirement is whether or not there is a plan at work. 8ast time <ongress took up ta# reform in *0,/, employeesB 1(*@kA plans were cut by -(4, resulting in a mass termination of plans,G said ;rian $raff "S "Bs E#ecutive :irector and <hief E#ecutive %fficer. Save =y 1(*@kA is a grassroots campaign to protect the ta# incentives of employer)sponsored retirement plans from the threat of ta# reform. The goal is to educate members of <ongress and urge them to preserve the 1(*@kA ta# incentives that are the foundation of "merican workerBs retirement savings.

"ccording to data from the Employee ;enefit !esearch &nstitute @E;!&A more than -(4 of workers earning from 2'(,((( to 2.(,((( participate in their employer 1(*@kA plans, compared with only .4 who save for retirement without a plan at work. $iven these plans growing importanceHwhen families have a retirement savings accountHthose savings represent more than /.4 of their financial assets.

Proposal for Ta- #eform:

Staff !etirement lan and the Special Savings "ccount is maintained. &n the first case states that you can deduct up to *(4 of salary with a ma#imum of . annual minimum wage. This means that the amount of the deductible retirement savings is reduced more than ,(4. Saving for retirement should be effectively be deductible for a middle class person.

strategy
7e propose to conduct a massive campaign by &nternet promcionando our website where all the recommendations to carry out our policies to reform this system were published.

%ibliography and !ebgraphy

http:..online7,s<7 om.home/page ,,,7;a%ree=e7ga7gov7 ;ooklet ;S0PS Plan highlights, ?inancial EnginesI is a trademark of ?inancial Engines, &nc. "ll advisory services, including rofessional =anagement and %nline "dvice, are provided by ?inancial Engines "dvisors 8.8.<., a federally registered investment adviser and wholly owned subsidiary of ?inancial Engines, &nc 0mployees> #etirement System of ;eorgia(( <omprehensive "nnual ?inancial !eport Serving those who serve $eorgia E !S$" EmployeesB !etirement System of $eorgia " component unit of the State of $eorgia ?iscal Cear Ended June '(, +(*+