Kansas Public Employees Retirement System • September 2010 — VOL. 2
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Inside This Issue
- Access Your KPERS Account Online
- New Valuation Shows Modest Improvement; Action for Long-Term Funding Still Needed
- Leaving Employment and What It Means for Your Benefits
- Naming Separate Beneficiaries Has Advantages
- What's Your Game Plan for the Future?
- State Treasurer's Office Has Online Tools to Help You Reach Your Financial Goals
- We'll Discuss Your Account, But Only If You Say So
- Consolidating Retirement Accounts Could Mean Fewer Fees and Simpler Planning
Access Your KPERS Account Online
KPERS’ member portal at www.kpers.org offers easy and convenient access to your Retirement System account. You are able to securely view your account information and even complete some of your KPERS business online.
What You Can Do Online
- View your account details
- contributions and interest
- service credit
- membership date
- final average salary - View your beneficiaries
- Download annual statements
- View life insurance benefits
- View disability benefits
- Benefit estimate calculator
Getting Started Is Easy
To access your personal account, you must first enroll. It takes two to three minutes and you’ll only have to do it once. Enrollment lets us identify you and protects your personal information. After that, you can login anytime using the user ID and password you set up. If you need help to enroll, call toll-free, 1-888-275-5737, or e-mail kpers@kpers.org.
New Valuation Shows Modest Improvement;
Action for Long-Term Funding Still Needed
Each year, KPERS’ valuation provides a snapshot of the system’s financial health. This summer, KPERS released the new valuation, with data as of December 31, 2009.
According to the new valuation, KPERS’ unfunded actuarial liability decreased by $600 million. KPERS’ new funded ratio is 64 percent, up somewhat from 59 percent the year before. The funded ratio is the ratio of actuarial assets to liabilities. For public pension plans like KPERS, funding over 80 percent and rising is good. Funding below 60 percent is poor and needs prompt attention.
Even with this year’s modest short-term improvement in funded ratio, the fundamental, long-term shortfall remains and will continue to grow.
Strong investment performance last year accounts for the modest bump in funding status. However, even with a yearly 8 percent return, the unfunded liability will continue to increase in the coming years. Investment returns alone cannot fix the ongoing funding problem.
- KPERS will continue to absorb significant 2008 investment losses over the next three years.
- Employers are not contributing at the required actuarial rate.
Key Statistics |
|
| Total Members | 277,000 73,000 retirees, 161,000 actives, 43,000 inactives |
| Benefits | $1.1 billion in annual benefit payments est. 85-90% stays in KS |
| Average Monthly Benefit | $1,100 for all retirees $1,000 for KPERS plan retirees only |
| Assets | $11.8 billion |
| Unfunded Actuarial Liability (UAL) | $7.7 billion |
| Funded Ratio as of 12/31/09 |
64% |
Paying Current Benefits
KPERS currently has about $11.5 billion in assets and receives contributions to the fund of over $700 million, annually. Although the system has a significant funding shortfall that requires serious attention, assets, plus incoming contributions, can pay benefits for decades.
Reasons for KPERS Funding Shortfall
- Benefit increases in the 1990s, funded mostly through actuarial changes
that put off paying for them until later. - State and local governments haven’t contributed at the required actuarial rate
for over 15 years. - The recession caused large investment losses.
- Members living longer and members retiring earlier under the 85 point rule
have increased liabilities.
Efforts Over the Last Year
KPERS worked with the Kansas Legislature’s Joint Committee on Pensions, Investments and Benefits and other legislative committees to develop a range of options to address the problem. Last session, the Joint Committee introduced SB 564. It would have increased employer and employee contribution rates and increased the multiplier for future service.
The House Select Committee introduced House Sub for HB 2400 that would have raised employer contributions.
Both bills had hearings, but neither bill passed.
Next Steps
The legislature and the governor are ultimately responsible for benefits and funding. Legislative action is needed.
The longer we wait to fix the problem, the more it will cost. KPERS staff, board and actuary are working with the new valuation information to continue the funding analysis. Our goal is for the board to take action on a proposed legislative agenda for the 2011 session.
As a fiduciary devoted to the best financial interest of members, we’ll continue to advocate for policies that promote the long-term financial health of the Retirement System.
Leaving Employment and What It Means
for Your Benefits
Switching jobs is a time of transition. A new boss, new coworkers and new responsibilities to get used to. It's also a time you need to be thinking about your Retirement System benefits and how they will transition. Ultimately, what you need to do depends on your scenario. Some of these frequently asked questions may help you decide what is best for you.
Do I have to withdraw my contributions if I leave employment?
If you are not vested
You are not guaranteed a retirement benefit. You need to withdraw within five years. After five years, your contributions stop earning interest and you forfeit your service credit.
If you are vested
You are guaranteed a retirement benefit if you leave your contributions in your account. Your contributions continue to earn interest.
If you don't withdraw, you will become an inactive member. Inactive members don't make contributions or earn service credit. We'll continue to send you an annual statement so be sure to keep your address current.
If you happen to return to covered employment, you will become active again and resume making contributions and earning service credit.
What happens to my life insurance?
Your basic life insurance and any optional coverage ends when you leave or move to a position not covered by KPERS.* You can continue your current coverage on your own within 31 days. You have two options:
- Individual whole life insurance
- Portable group term life insurance
The Minnesota Life Conversion and Portability election forms explain the benefits and costs for each option. You can get the forms from your designated agent or download them at www.kpers.org.
*Note: KP&F members do not have basic life insurance coverage. KPERS members moving to a Board of Regents position keep their life insurance coverage.
When can I withdraw my contributions?
You can apply to withdraw your contributions 31 days after your last day on payroll. If you begin employment with another KPERS employer, you cannot withdraw.
If you withdraw, you will give up all Retirement System rights, benefits and service credit. Employer contributions made on your behalf stay with the Retirement System.
In certain situations, you are still considered employed and cannot withdraw.
- Leave of absence
- Military service
- Move to a position not covered by KPERS with same employer
What are my options for withdrawing contributions?
You can receive your contributions as a direct payment to you or roll over the amount into an eligible retirement plan. A direct rollover keeps you from paying taxes right away, giving your money more time to compound, and helps you avoid paying federal penalties for early distribution.
What happens if I go to work for another Retirement System employer?
Make sure that your new employer knows you are already a KPERS member. You'll continue making contributions and earning service credit right away with your new employer.
For more information about leaving employment
Naming Separate Beneficiaries Has Advantages
You have the option to name separate beneficiaries for your retirement benefits and your group life insurance. This option allows you to name your spouse as sole retirement beneficiary, and still be able to provide life insurance benefits for another loved one. If you meet the criteria, your spouse can then opt for continuing monthly benefits.
What Your Beneficiary Receives If You Are an Active Member
- Basic group Life Insurance (150 percent of your annual salary)
- Any optional group life insurance
- Returned contributions and interest or a continuing monthly benefit
for your spouse if you meet the criteria
Surviving Spouse Benefit Option
If you die before retirement, your spouse may be able to receive a monthly benefit for the rest of his or her life, instead of receiving your returned contributions and interest. You must have designated your spouse as your sole primary retirement beneficiary.
Situation 1 ... If you were eligible to retire, your spouse begins receiving a monthly benefit immediately.
Situation 2 ... If you were not yet eligible to retire but had ten years of service, your spouse begins receiving a monthly benefit when you would have reached age 55.
You can name contingent beneficiaries or separate beneficiaries for your life insurance without affecting this benefit option.
How Do I Name Separate Beneficiaries?
Complete and return a Designation of Beneficiary (K-7/99) form. The form has different sections for naming your retirement beneficiaries and life insurance beneficiaries. You can also name contingent beneficiaries in each section. A contingent beneficiary receives your benefits if your primary beneficiary is not living.
Remember that each time you complete a beneficiary form, it cancels all those you have previously completed. You need to completely fill out the form each time.
There are fitness coaches, tutors, health coaches, career mentors, and even life coaches. These people have a simple objective: to help you achieve your personal goals. So, why not have a savings coach to help you plan for your financial future?
National Save for Retirement Week is October 17-23. This week is designated to increase personal financial literacy and raise public awareness of the retirement-savings vehicles available to all workers. Our theme this year is "What's Your Game Plan for the Future?" Not only is it important to think about retirement savings and consider if you’ll have enough, it's also important to have some help along the way.
Whether it be your local ING representative, a financial adviser, or a trusted family friend, consider seeking help from a savings coach to help draw up a financial game plan for your future.
On the Sidelines
Kansas Public Employees Deferred Compensation Plan members already have a team waiting to help. Your local ING representative can:
- Provide a personalized paycheck review.
- Estimate your retirement income needs after evaluating KPERS,
Deferred Compensation
and Social Security. - Help you determine an appropriate Plan contribution level.
- Review the Plan’s investment menu and help you make choices that match your risk tolerance.
- Consolidate your benefits from other retirement plans through a rollover into your account.
- Develop retirement planning and income strategies.
Other Retirement Resources
State Treasurer's Office Has Online Tools to Help You Reach Your Financial Goals
The State Treasurer's office is offering free online financial tools through its website, www.treasurer.state.ks.us. This money management resource, called Tomorrow’s Money, is made possible by a partnership with a nonprofit organization.
Tomorrow's Money is a practical site that focuses on real-life issues like how to create a budget that works for you, pay your bills, invest your savings and keep your credit score in check. The site also has targeted information for whatever life circumstance you may be experiencing.
Targeted Information for Real-Life Scenarios
| - Banking and Saving | - Education | |
| - Credit and Debt | - Home Ownership | |
| - Buying and Spending | - Lifestages | |
| - Insurance Protection | - Retirement | |
| - Work and Taxes | - Investing | |
| - Health |
| - Losing Your Spouse | |
| - Losing Your Job | |
| - Divorce | |
| - Disability | |
| - Sudden Property Loss and Damage | |
| - Caregiving | |
| - Natural Disasters |
Other Site Features
- Budget worksheets
- How to make a personal or family budget work
- Tips for bill paying
- Ideas to save for college
- Information on mortgage lending
- Warnings about scams
- Long-term care insurance suggestions
- Credit reports
- Information on foreclosures
Visit www.kansas.tomorrowsmoney.org to take advantage of this valuable learning resource.
A Spanish language version is also available.
We'll Discuss Your Account, But Only If You Say So
KPERS takes great measures to protect your personal information. However, there may be times when you want KPERS to discuss details of your account with someone else, such as a financial planner or your spouse.
You will need to complete and return an Authorization to Release Information form (KPERS-14) to the Retirement System. This form allows you to specify an entity or individual as well as the type of information we can discuss with them. Remember that no action can be taken that affects your account.
The Authorization to Release Information form is available here.
Consolidating Retirement Accounts Could Mean Lower Fees and Simpler Planning
Do you have several retirement accounts from past jobs? That's not a bad thing. In fact, it shows you've been diligent in saving for a very important goal. However, there may be advantages to consolidating these accounts into one. Rollovers make it easy to do while maintaining the tax-deferred advantage.
| What Consolidation Does | How You Benefit |
|
|
Your first step is to contact your plan administrators. Kansas Public Employees Deferred Compensation Plan members can contact ING at 1-800-232-0024 or ksservice@us.ing.com.
You'll need to make sure your account is eligible for rollover and that your new plan will accept the rollover. Eligible assets include those from a 457(b) deferred compensation plan, 401(a) or 401(k) plan, 403(b) tax sheltered annuity plan, or an individual retirement arrangement (IRA). Amounts you choose to rollover continue to grow tax-deferred.
