June 30,1999
Note 9 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.
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 | |
|---|---|---|---|
| 6/30/98 | 6/30/98 | 9/30/98 | |
| Retirees and beneficiaries | |||
| receiving benefits | 31,631 | 18,615 | 196 |
| Terminated plan members | |||
| entitled to but not yet | |||
| receiving benefits | 828 | 5,637 | - |
| Active plan members | 51,383 | 43,452 | 201 |
| Total | 83,842 | 67,704 | 397 |
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, contributions 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 and Hazardous Duty members are required to
contribute 2 percent and 4 percent respectively, of their salary 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 IIA members are required to contribute 2
percent and hazardous duty members are required to contribute 5 percent. The State is
required to contribute at an actuarially determined rate.
Teachers Retirement System
Plan Description
TRS is a single-employer defined-benefit pension plan covering any teacher, principal,
superintendent or super-visor 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 10-183nn 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. For fiscal year 1999, the annual required contribution (ARC) was $221.6 million;
however, the State contributed $188.3 million to the plan, reflecting a reduction of $36.4
million by the legislature to the State's TRS appropriation. 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 | $ 315,562 | $ 221,570 | $ 9,283 |
| Interest on net pension | |||
| obligation | 148,986 | 72,924 | 3 |
| Adjustment to annual required | |||
| contribution | (75,040) | (42,534) | (2) |
| Annual pension cost | 389,508 | 251,960 | 9,284 |
| Contributions made | 315,562 | 188,334 | 9,283 |
| Increase (decrease) in net | |||
| pension obligation | 73,946 | 63,626 | 1 |
| Net pension obligation | |||
| beginning of year | 1,752,773 | 857,929 | 34 |
| Net pension obligation | |||
| end of year | $1,826,719 | $ 921,555 | $ 35 |
Actuarial information related to the calculation of the annual required contribution for SERS, TRS, and JRS is as follows:
| SERS | TRS | JRS | |
|---|---|---|---|
| Actuarial valuation date | 6/30/98 | 6/30/98 | 9/30/98 |
| Actuarial cost method | Projected | Entry age | Projected |
| unit credit | unit credit | ||
| Amortization method | Level | Level | Level |
| percent | percent | percent | |
| of pay | of pay | of pay | |
| Remaining amortization | |||
| period | 34 years | 15-34 years | 32 years |
| Asset valuation method | 5-year | 4-year | 4-year |
| smoothed | smoothed | smoothed | |
| market | market | market | |
| Actuarial assumptions: | |||
| Investment rate of return* | 8.5% | 8.5% | 8.5% |
| Projected salary increases* | 3.25-14.0% | 5.0% | 5.5% |
| *Includes inflation at | 6.0% | 5.0% | 5.5% |
| Cost-of-living adjustments | 2.5-4.0% | 3-5% | 3.0-5.5% |
Three-year trend information is as follows (amounts in thousands):
| Fiscal Year |
Annual Pension Cost (APC) |
Percentage of APC Contributed |
Net Pension Obligation |
|
|---|---|---|---|---|
| SERS | 1997 | $ 597,128 | 58.5% | $ 1,457,327 |
| 1998 | 630,293 | 53.1% | 1,752,773 | |
| 1999 | 389,508 | 81.0% | 1,826,719 | |
| TRS | 1997 | $ 206,110 | 71.8% | $ 797,416 |
| 1998 | 239,878 | 74.8% | 857,929 | |
| 1999 | 251,960 | 74.7% | 921,555 | |
| JRS | 1997 | $ 9,343 | 100% | $ 33 |
| 1998 | 9,310 | 100% | 34 | |
| 1999 | 9,284 | 100% | 35 |
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 contributions 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 $15.6 million and $24.5 million, respectively.
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