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During the 2008
Georgia Legislative Session, the legislature passed Senate Bill 328,
which provides for a new retirement plan for state employees hired on
and after January 1, 2009, pending signature by the Governor.
The State of Georgia
employs a diverse and multi-generational workforce. In order to become
competitive in the marketplace for talent and become an employer of
choice, the state must take steps to appeal to varying sets of employee
values, attitudes and compensation expectations.
Simply put, we should
have competitive benefits that attract the best and the brightest to
state government, and employees want “portable” retirement plans
that can travel with them throughout their careers.
The new Georgia
State Employees’ Pension and Savings Plan (GSEPS) will accomplish
both goals – it is competitive in today’s marketplace, and it is
portable.
Employees eligible for new membership in ERS hired on and after January 1, 2009 will be enrolled in the
news GSEPS Plan. Current employees maintain their membership in
either the ERS “new” or “old” plan.Y
GSEPS is
a combination Defined Benefit/Defined Contribution plan and works as
follows:
Defined
Benefit (DB) Plan provides a pension benefit formula of 1% x years of
service x highest average salary (30 years = approximately 29% of salary
as a monthly benefit*). Vesting for the DB plan is 10 years.
Defined
Contribution (DC) Plan provides State matching up to 3% with member
contributing 5%, utilizing the Peach State Reserves 401(k) Plan.
¨
Member
contributes 1% of compensation and receives 1% salary match from State
(100% match on the first 1% of compensation contributed)
¨
For each
additional percent contributed by member (up to 4%), the State will
match 50% of that amount (up to 2% of compensation)
¨
The DC
employer contribution is subject to a 5 year vesting schedule, vesting
20% for each completed year of service.
DB/DC
Plans combined – 30 years = approximately 59% of salary** (annuitized).
With Social Security benefits, total benefit could provide 90% or more
of final salary.
The Defined Benefit component allows us to retain employees that choose
to make state government their career – the more years of service, the
higher their monthly pension. The 401(k) savings plan allows us to
attract new employees to state government with a matching employer
contribution – the more the employee saves, the higher their retirement
savings. Together, the new GSEPS plan offers an attractive,
competitive and portable pension and savings plan that meets the needs
of today’s emerging workforce.
Look for more information to come from ERS as we develop the
functionality for GSEPS.
YCurrent
employees who are ERS members as of December 31, 2008 may opt-in to
GSEPS at any time on or after January 1, 2009. Click here for more
information.
Actuarial
Assumptions:
*Assumes annual
salary increase of 3.75% and retirement at age 60 with 30 years of
service.
**Assumes
annual employee DC contribution of 5%, average annual DC investment
return of 6% over 30 years, annual salary increase of 3.75% and
retirement at age 60 with 30 years of service.
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