SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN

Transcription

1 SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN Alvord Unified School District July 10, 2018

2 5 Step SERP Development Process Purpose Demographics Economics Enrollment HR Controls Define intent and desired outcome for the incentive Understand the demographics to determine if an early retirement incentive makes sense Evaluate different benefit levels to determine the most advantageous offering Understand and secure the tools employees will need during their decision making process Ensure proper HR controls are in place to monitor postoffering re-hiring 2

3 Supplemental Employee Retirement Plan (SERP) is Keenan s early retirement incentive solution since The program is designed to: Address declining enrollment Assist in proactive staff planning Enhance retiree benefits Compensate long-term Employees 3

4 Why is SERP a Win-Win? SERP allows Districts to develop and offer an incentive plan that will enhance retiree benefits and improve job security for existing employees while providing an effective budget and staff planning solution 4

5 What is the Benefit for the Retiree? Start Retirement Early Allow Existing Investments to Grow Benefit Financial Bridge into Retirement Rollover into Eligible Retirement Accounts Several Payout Options to Match Needs 5

6 Step #2: Understanding the Demographics Purpose Demographics Economics Enrollment HR Controls Define intent and desired outcome for the incentive Understand the demographics to determine if an early retirement incentive makes sense Evaluate different benefit levels to determine the most advantageous offering Understand and secure the tools employees will need during their decision making process Ensure proper HR controls are in place to monitor postoffering re-hiring 6

7 Demographic Study: Scenario #1 1. Evaluate all employee groups 2. General Eligibility: 1. Employee must be at least 55 years of age 2. Employee must have at least zero (0) years of service Employee Group Certificated Classified Total Eligible Employees Average Age Average Service

8 Scenario #1 - Certificated 8

9 Scenario #1 Classified 9

10 Demographic Study: Scenario #2 1. Evaluate all employee groups 2. General Eligibility: 1. Employee must be at least 50 years of age 2. Employee must have at least zero (0) years of service Employee Group Certificated Classified Total Eligible Employees Average Age Average Service

11 Scenario #2 - Certificated 11

12 Scenario #2 Classified 12

13 Step #3: Evaluating the Economics Purpose Demographics Economics Enrollment HR Controls Define intent and desired outcome for the incentive Understand the demographics to determine if an early retirement incentive makes sense Evaluate different benefit levels to determine the most advantageous offering Understand and secure the tools employees will need during their decision making process Ensure proper HR controls are in place to monitor postoffering re-hiring 13

14 How Does SERP Work? SERP generates cost savings through the differential in salary costs for a retiring employee and a new hire. The benefit design depends on the size of differential. $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Year #1 Savings Concept $103,766 Retiree $21,755* $16,350 $65,661 New Hire Savings SERP Benefit Salary 14

15 Annuity Options: Certificated (85% of Salary) Estimated Monthly Payments Annuity Option Certificated Certificated Mgmt. 1 Life Only $ $ Joint & 50% Survivor $ $ Life or Ten Years $ $ Five (5) Year* $1, $1, Six (6) Year* $1, $1, Seven (7) Year* $1, $1, Eight (8) Year* $ $1, Nine (9) Year* $ $1, Ten (10) Year $ $1, * Eligible for tax-deferred IRA Rollover 15

16 Annuity Options: Classified (75% of Salary) Estimated Monthly Payments Annuity Option Classified Classified Mgmt. 1 Life Only $ $ Joint & 50% Survivor $ $ Life or Ten Years $ $ Five (5) Year* $ $1, Six (6) Year* $ $1, Seven (7) Year* $ $ Eight (8) Year* $ $ Nine (9) Year* $ $ Ten (10) Year $ $ * Eligible for tax-deferred IRA Rollover 16

17 SERP Analysis Certificated (85% of Salary) Classified (75% of Salary) Participation 67 retirees Non-Replaced Positions 8 Average Cost per Retiree $89, Break-Even Amount 26 retirees Estimated 5 yr. Savings $3,884,035 Participation 55 retirees Non-Replaced Positions All Replaced Average Cost per Retiree $30, Break-Even Amount n/a Estimated 5 yr. Savings -$1,418,259 17

18 Step #4: SERP Enrollment Planning Purpose Demographics Economics Enrollment HR Controls Define intent and desired outcome for the incentive Understand the demographics to determine if an early retirement incentive makes sense Evaluate different benefit levels to determine the most advantageous offering Understand and secure the tools employees will need during their decision making process Ensure proper HR controls are in place to monitor postoffering re-hiring 18

19 SERP Communication Plan SERPs are most successful when all involved parties are in coordination through collaboration: Involved Parties District Staff Labor Unions Board of Education 19

20 SERP Communication Plan SERP achieves maximum participation through effective communication and marketing of the plan: Group Sessions Ensure understanding of SERP Facilitate a transparent process On-Site Presentations Individual Counseling One-on-One Q&A sessions Facilitated by actual retirees On-Site or by Telephone 20

21 SERP Communication Plan Keenan Financial Services can assist in coordinating representatives and presentations from the following: 21

22 Medical benefits are a large part of the retirement decision. SERP provides access to Keenan Direct which can assist participants in shopping for individual medical plans. 22

23 Step #5: Ensure HR Controls Purpose Demographics Economics Enrollment HR Controls Define intent and desired outcome for the incentive Understand the demographics to determine if an early retirement incentive makes sense Evaluate different benefit levels to determine the most advantageous offering Understand and secure the tools employees will need during their decision making process Ensure proper HR controls are in place to monitor postoffering re-hiring 23

24 HR Controls Monitor Hiring Actions Know the Assumptions Communicate Hiring Restrictions 24

25 Timeline - Proposal July/August 2018 Development and Board Approval November 2018 Confirm participants and prepare final analysis July 2019 Plan Effective Date. Sept./Oct Group and Individual Counseling Sessions December 2018 Final Savings Analysis Presented to Board August 2019 First Benefit Payment 25

26 ANY QUESTIONS? 26