Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2007 BASIC FINANCIAL STATEMENTS - Notes To Financial Statements - Note 11 State Retirement Systems

State of Connecticut

Notes to the Financial Statements

June 30, 2007

Note 11 State Retirement Systems

The State sponsors three major public employee retirement systems: the State Employees' Retirement System (SERS)-consisting of Tier I (contributory), Tier II (noncontributory) and Tier IIA (contributory), the Teachers' Retirement System (TRS), and the Judicial Retirement System (JRS).

The State Comptroller's Retirement Division under the direction of the Connecticut State Employees Retirement Division administers SERS and JRS. The Teachers' Retirement Board administers TRS. None of the above mentioned systems issue stand-alone financial reports. However, financial statements for SERS, TRS, and JRS are presented in Note No. 13.

Plan Descriptions, Funding Policy, and Annual Pension Cost and Net Pension Obligation
Membership of each plan consisted of the following at the date of the latest actuarial evaluation:

SERS TRS JRS
6/30/2007 6/30/2006 6/30/2007
Retirees and beneficiaries
receiving benefits 37,420 26,695 218
Terminated plan members
entitled to but not yet
receiving benefits 1,693 1,341 2
Active plan members 52,438 51,015 218
Total 91,551 79,051 438

State Employees' Retirement System
Plan Description
SERS is a single-employer defined-benefit pension plan covering substantially all of the State full-time employees who are not eligible for another State sponsored retirement plan. Plan benefits, cost-of-living adjustments, contribution requirements of plan members and the State, and other plan provisions are described in Sections 5-152 to 5-192 of the General Statutes. The plan provides retirement, disability, and death benefits, and annual cost-of-living adjustments to plan members and their beneficiaries.

Funding Policy
The contribution requirements of plan members and the State are established and may be amended by the State legislature. Tier I Plan B regular and Hazardous Duty members are required to contribute 2 percent and 4 percent of their annual salary, respectively, up to the Social Security Taxable Wage Base plus 5 percent above that level; Tier I Plan C members are required to contribute 5 percent of their annual salary; Tier II Plan Hazardous Duty members are required to contribute 4% of their annual salary; Tier IIA Plan regular and Hazardous Duty members are required to contribute 2 percent and 5 percent of their annual salary, respectively. The State is required to contribute at an actuarially determined rate. Administrative costs of the plan are funded by the State.

Teachers Retirement System
Plan Description
TRS is a single-employer defined-benefit pension plan covering any teacher, principal, superintendent or supervisor engaged in service of public schools in the State. Plan benefits, cost-of-living allowances, required contributions of plan members and the State, and other plan provisions are described in Sections 10-183b to 10-183pp of the General Statutes. The plan provides retirement, disability, and death benefits, and annual cost-of-living adjustments to plan members and their beneficiaries.

Funding Policy
The contribution requirements of plan members and the State are established and may be amended by the State legislature. Plan members are required to contribute 6 percent of their annual salary. The State is required to contribute at an actuarially determined rate. Administrative costs of the plan are funded by the State.

Judicial Retirement System
Plan Description

JRS is a single-employer defined-benefit pension plan covering any appointed judge or compensation commissioner in the State. Plan benefits, cost-of-living allowances, required contributions of plan members and the State, and other plan provisions are described in Sections 51-49 to 51-51 of the General Statutes. The plan provides retirement, disability, and death benefits, and annual cost-of-living adjustments to plan members and their beneficiaries.

Funding Policy
The contribution requirements of plan members and the State are established and may be amended by the State legislature. Plan members are required to contribute 6 percent of their annual salary. The State is required to contribute at an actuarially determined rate. Administrative costs of the plan are funded by the State.

Annual Pension Cost, Net Pension Obligation, and Related Information
The State's annual pension cost and net pension obligation to SERS, TRS, and JRS for the current year were as follows (amounts in thousands):

SERS TRS JRS
Annual required contribution $ 663,926 $ 416,061 $ 12,375
Interest on net pension
obligation 193,056 124,596 4
Adjustment to annual required
contribution (131,973) (98,855) (3)
Annual pension cost 725,009 441,802 12,376
Contributions made 663,931 412,101 12,375
Increase (decrease) in net
pension obligation 61,078 29,701 1
Net pension obligation
beginning of year 2,271,249 1,465,841 46
Net pension obligation
end of year $ 2,332,327 $ 1,495,542 $ 47

Three-year trend information is as follows (amounts in thousands):

Annual Percentage Net
Fiscal Pension of APC Pension
Year Cost (APC) Contributed Obligation
SERS 2005 $ 582,082 89.1% $2,208,839
2006 $ 685,473 90.9% $2,271,249
2007 $ 725,009 91.6% $2,332,327
TRS 2005 $ 317,978 58.3% $1,427,420
2006 $ 434,670 91.2% $1,465,841
2007 $ 441,802 93.3% $1,495,542
JRS 2005 $ 12,238 100% $ 45
2006 $ 11,731 100% $ 46
2007 $ 12,376 100% $ 47

Defined Contribution Plan
The State also sponsors the Connecticut Alternate Retirement Program (CARP), a defined contribution plan. CARP is administered by the State Comptroller's Retirement Office under the direction of the Connecticut State Employees Retirement Division. Plan provisions, including contribution requirements of plan members and the State, are described in Section 5-156 of the General Statutes.

Unclassified employees at any of the units of the Connecticut State System of Higher Education are eligible to participate in the plan. Plan members are required to contribute 5 percent of their annual salaries. The State is required to contribute 8 percent of covered salary. During the year, plan members and the State contributed $30.7 million and $20.0 million, respectively.