Annual Convention and Client Overview: Financial Insights
Explore key insights from the OREA Annual Convention 2018, including client statistics, average salaries, actuarial conditions, and financial overviews. Gain valuable information on active vs. retired clients, funding ratios, assets vs. liabilities, and contributions for FY-2018.
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Presentation Transcript
OREA ANNUAL CONVENTION October 3, 2018 Tom Spencer, Executive Director Teachers Retirement System
Client Overview (June 30, 2018) Total Clients 177,888 88,534 Active Clients 63,796 Retired Clients (incl. beneficiaries) 12,243 Inactive Vested Clients 13,315 Inactive Non-vested Clients 1
Client Overview Active vs. Retired Clients 100,000 90,388 90,167 89,896 89,570 89,388 89,333 88,678 88,534 88,085 87,795 87,778 80,000 63,796 62,391 60,680 58,929 56,389 54,581 60,000 52,716 50,829 48,756 46,796 45,238 40,000 20,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Active Clients Retired Clients 2
Client Overview (FY 2017) Average Active Client $46,878 Salary 46.0 Years of Age 11.1 Years of Service Average Retired Client $20,908 Annual Benefit (regular ret ees) $20,443 (reg. & disab. ret ees, benefic. & spouses) 3
Client Overview Average Salary vs. Average Benefit $60,000 $40,834$42,304 $42,600 $42,880 $42,837$44,713 $44,027 $44,690$46,819 $47,188 $46,878 $50,000 $40,000 $30,000 $16,994 $17,532 $17,775 $18,112 $18,430 $18,775 $19,097 $19,846 $20,242 $20,598 $20,908 $20,000 $10,000 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average Annual Salary Average Annual Benefit 4
Financial Overview Actuarial Condition 2017 Funded Ratio 70.4% on actuarial basis (65.7% in FY 2016) 70.1% on a market value basis (62.2% in FY 2016) Funding Period 17 Years (23 years in FY 2016) *Board lowered investment return assumption from 8.0% to 7.5% for FY 2016 actuarial report 5
Financial Overview Assets vs. Liabilities $25,000 80% 70% $20,000 60% 50% $15,000 40% $10,000 30% 20% $5,000 10% $0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Assets (Left) Liabilities (Left) Funded Ratio (Right) 6
Financial Overview FY-2018 Contributions - $1.07 Billion Client Contributions - $312.8 M Employer Contributions - $415.9 M State Contributions (& grants) - $344.6 M FY-2018 Expenditures - $1.4 B Benefit Payments - $1.36 B Refunds - $42.9 M Administrative Expenses - $4.2 M *Ratio of Contrib. to Expenditures 76.2% 7
Financial Overview Contributions vs. Distributions ($M) $1,600 $1,310$1,357 $1,400 $1,009$1,072$1,128$1,186$1,240 $1,200 $948 $913 $1,000 $847 $806 $1,008 $1,032 $1,022 $998 $991 $973 $800 $925 $911 $907 $884 $821 $600 $400 $200 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Contributions Distributions 8
Financial Overview Investments FY-2018 Investment Earnings/Loss $1.49 Billion (10.00% rate of return) Income: $417.5 M Appreciation: - $1.14 B Investment Expenses - $69.3 M 9
Financial Overview Investments Investment Returns by Fiscal Year 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 10
Financial Overview Investments Positives in Recent TRS Performance (thru 6/30/18 Earned 8.7% for last 10 years (1st percentile) Earned 9.50% for last 5 years (5th percentile) Earned 10.00% for last 12 mos. (9th percentile) Long term returns good from active domestic equity managers and private equity. Very difficult to get returns from fixed income investments as interest rates rise. Source: Oklahoma State Pension Commission, NEPC Consultant 11
Financial Overview Investments SUMMARY System is underfunded but trending higher. Very good returns in last two fiscal years. Funding period is 17 years down from infinity Long-term financial performance is still very good Contributions & Revenue almost equal Actuarially Determined Contributions 12
Legislation 2018 HB 1340 (Rep. McDaniel, et al; Sen. Treat, et al) One-time stipend to members retired as of 10/1/13. Two percent of the gross benefit up to $1,000. Minimum $350 for those with at least 20 years. (Eff. 10/1/18). HB 2553 (Rep. McDaniel; Sen. Pugh) TRS request bill. Section One - Permits the TRS Board to gradually wind down the TRS 403(b) plan. Transition to local plans. Section Two - TRS staff approves disability retirements after Medical Board approval. The TRS Board hears denials. Section Three Eliminates a loophole in ESIP that a few higher education members had. (Eff. 8/2/18). SB 527 (Sen. Stanislawski; Rep. McDaniel) Permits TRS members employed in higher education to purchase up to two years of service credit toward retirement at full actuarial cost, if within two years of retirement. (Eff. 11/1/18) 13
Retirement in America: Out of Reach for Working Americans? Nat l Inst. on Retirement Security Nearly 60% of the 100 million working Americans have no retirement account assets Typical worker with retirement account has a balance of $40,000 68.3% of those between ages 55 to 64 have retirement savings less than their annual income Some states are offering retirement savings plans to their residents. (California, Oregon, Washington & Illinois) (President Trump issued executive order (8/31/18) for U.S. Labor Department to look at relaxing regulations to permit employers to create multi-employer plans to hold down costs) 14
Tom Spencer Executive Director (405) 521-4745
