TFFR Member Handbook

View pdf version of TFFR Member Handbook

Effective 7/1/2007

North Dakota Retirement & Investment Office
1930 Burnt Boat Drive
P.O. Box 7100
Bismarck, ND 58507-7100

Telephone: 701-328-9885
Toll Free: 1-800-952-2970
Fax: 701-328-9897
Email: rio@nd.gov
www.nd.gov/rio

The TFFR Member Handbook is printed and distributed by the ND Retirement and Investment Office (RIO) to provide you with a quick reference source for questions regarding TFFR. This booklet is not intended to encompass all aspects of TFFR. It is updated to reflect changes made to the plan by the 2007 Legislature. Detailed information can be obtained by contacting RIO. This publication can be made available in alternative formats.

Table of Contents

General Information

• Letter to TFFR Members
• TFFR Board
• State Investment Board
• Retirement and Investment Office
• Type of System
• 2007 Legislative Highlights

Membership

• Mandatory Membership
• Tier Membership
• Dual Membership with NDPERS
• Salary
• Contributions
• Beneficiary
• Confidentiality of Records
• Marriage Dissolution - Qualified Domestic Relations Order (QDRO)
• Exemption from Legal Process
• Borrowing from Your Account
• Right to Appeal
• Fraud Against the Fund

Service Credit

• Vesting
• Earned Service Credit
• Purchase of Refunded TFFR Service Credit
• Purchase of Additional Service Credit
• Types of Additional Credit Eligible for Purchase
• General Purchase Information
• Employer Service Purchase

Refund

• Refund/Lump-Sum Distribution

Retirement Benefits

• Retirement Benefits Information
• Benefit Limitations
• Eligibility for Retirement Benefits
• Computing Your Benefits
• Summary of Benefits
• Table of Monthly Retirement Income
• Retirement Options
• How to Apply for Benefits
• Enrollment for Benefits
• Payment of Benefits
• Taxation of Benefits
• NDPERS Group Insurance
• Employment after Retirement
• Retiree Postretirement Benefit Increases

Disability Retirement Benefits

• Eligibility for Disability Benefits
• Application Process
• Benefit Calculation and Payment Options
• NDPERS Group Insurance
• Postretirement Benefit Increases
• Return to Employment

Survivor Benefits

• Eligibility for Survivor Benefits
• Death Prior to Retirement
• Death After Retirement

Investment of Funds

• Prudent Investor Rule
• Exclusive Benefit
• Asset Allocation

Member Services

• Annual Statement
• Publications
• Conferences and Group Presentations
• Preretirement Program
• Benefits Counseling Program
• Financial Planning Program
• Retirement 101
• Teachers in Transition Program
• Telephone and Written Communication
• Web Site

Actuarial Tables for Benefit Options

• Table 1 - 100 Percent Joint & Survivor
• Table 2 - 50 Percent Joint & Survivor
• Table 3 - 10-Year Term Certain
• Table 4 - 20-Year Term Certain
• Table 5 - Level Income Option

Glossary of Terms

Index

Map

Teachers' Fund For Retirement

Mission Statement

The mission of TFFR, a trust fund, is to advocate for, develop, and administer a comprehensive retirement program for all trust fund members within the resources available.

Investment and Funding Goals:

• Prudently invest assets in a well diversified portfolio to optimize long term returns while controlling risk to the fund.
• Accumulate sufficient funds to pay all current and future benefit and expense obligations when due.
• Improve and maintain adequate funding of all promised benefits to ensure the financial integrity of the system.
• Build a funding cushion to provide for future benefit improvements.

Benefit Goals:

• Provide 2.0% benefit formula for all current and future retirees.
• Provide ad hoc retiree benefit adjustments (fixed formula and percent based) for all current and future retirees to maintain purchasing power of retirement benefits and assist with rising health care costs. Benefit adjustments may be considered when Board believes it is prudent based upon actuarial funding measurements including:
  1. Positive contribution margin
  2. Amortization of UAAL within GASB 30-year funding period
  3. Funded ratio of 90% or greater

Service Goals:

• Administer accurate, prompt, and efficient pension benefits program.
• Deliver high quality, friendly service to members and employers.
• Provide educational outreach programs including pre- retirement seminars and individual benefits counseling sessions.

Letter to Members

July 2007

Dear TFFR Member:

Whether you are a new teacher, a mid career educator, or a seasoned veteran, TFFR is here for you. As you go about your career, TFFR is behind the scenes - answering your questions, safeguarding your benefits, and administering a financially sound retirement plan - so that when it comes time for you to retire, you can enjoy your retirement years.

Please review the 2007 edition of the TFFR Member Handbook. It summarizes the benefits available to you and your beneficiary/beneficiaries in the form of retirement, disability, and death benefits. You can obtain additional information from our website, newsletters, brochures, outreach programs, and personal consultations with retirement counselors. We hope that you will find the information helpful in your retirement planning.

TFFR has been helping North Dakota teachers prepare for the future for 90 years. Our purpose has always been to provide adequate and equitable retirement benefits to our state's educators. While TFFR faces funding challenges today, recent legislative changes, along with a strong, healthy economy, should strengthen the TFFR plan, and help it to remain financially stable for decades to come.

On behalf of the TFFR Board of Trustees and RIO administrative staff, we pledge to you our continued commitment to lifetime security and service for North Dakota's public school teachers.

Sincerely,

Fay Kopp, CRA
Deputy Executive Director/
Chief Retirement Officer

TFFR Board of Trustees

The TFFR Board of Trustees is responsible for administering the TFFR retirement program. The Board has the authority to establish investment policy; arrange for actuarial and medical consultants; pay benefits and consultant fees; submit proposed legislative changes; and determine appropriate levels of service to TFFR members. The TFFR program is administered by the Retirement and Investment Office (RIO).

The TFFR Board consists of the state treasurer, state superintendent of public instruction, and five members appointed by the Governor. Members are appointed for five-year terms and include one active school administrator, two active teachers, and two retired members.

Current TFFR Board Members

Vacant, Active Administrator
Mike Gessner, Active Teacher
Kim Franz, Active Teacher
Clarence Corneil, Retired Member
Lowell Latimer, Retired Member
Kelly Schmidt, State Treasurer
Wayne Sanstead, State Superintendent

Four TFFR Board members also serve on the State Investment Board (SIB) and three serve on the TFFR Benefits/Services Committee.

State Investment Board

The State Investment Board (SIB) is responsible for setting policies and procedures guiding the investment of nearly $2 billion in assets for TFFR. The funds are invested following the "Prudent Investor Rule" and must be invested exclusively for the benefit of TFFR members. The investment program is administered by the Retirement and Investment Office (RIO). The SIB is also the administrative board for RIO.

Current SIB members:

Jack Dalrymple, Lt. Governor, Chair
Jim Poolman, State Insurance Commissioner
Kelly Schmidt, State Treasurer
Designee, Workforce Safety and Insurance (WSI)
Gary Preszler, University and School Land Commissioner
Vacant , TFFR Trustee
Mike Gessner , TFFR Trustee
Clarence Corneil, TFFR Trustee
Howard Sage, PERS Trustee, Vice Chair
Ron Leingang, PERS Trustee
Mike Sandal , PERS Trustee

Retirement & Investment Office

The North Dakota Retirement and Investment Office (RIO) exists in order that:

• SIB clients receive cost-effective investment services directed at meeting their written financial goals under the Prudent Investor Rule.
• SIB clients receive investment returns consistent with their written investment policies and market variables.
• Potential SIB clients have access to information regarding the investment services provided by the SIB.
• TFFR benefit recipients receive their retirement benefits in a cost-effective and timely manner.
• TFFR members have access to information that will allow them to become knowledgeable about the issues and process of retirement.
• SIB clients and TFFR benefit recipients receive satisfactory services from the boards and staff of the office.

Type of Plan

TFFR is a qualified defined benefit public pension plan covered under Section 401(a) of the Internal Revenue Code (IRC). TFFR must be administered in compliance with IRC regulations, in particular with Section 415 maximum benefit limitations; Section 401(a)(9) minimum distribution requirements; Section 401(a)(17) maximum compensation limit; and Section 401(a)(31) rollovers and transfers.

North Dakota Century Code (NDCC) Chapter 15-39.1 contains the actual language governing the Fund. The NDCC, along with Title 82 of the North Dakota Administrative Code (NDAC), are summarized in this handbook. If differences exist between the information in this handbook and state or federal law, the laws shall govern.

The TFFR plan is funded on an actuarial reserve basis. That is, money is invested for your future retirement benefits while you are actively teaching. Benefit funding comes from three sources:

• Employee contributions
• Employer contributions
• Investment earnings

TFFR serves almost 10,000 teachers from 246 employer groups and pays benefits to over 5,800 retirees and beneficiaries.

2007 Legislative Highlights

Significant TFFR plan changes were made by the 2007 Legislature to improve TFFR funding. Approved legislation:

• Requires employer retirement contributions of 7.75% on re-employed retiree’s salary beginning July 1, 2007. Employer contributions increase to 8.25% on July 1, 2008.
   
• Increases employer retirement contributions from 7.75% to 8.25% of active member’s salary beginning July 1, 2008. Employer contributions will return to 7.75% once the plan reaches a 90% actuarial funded level.
   
• Creates new tier of reduced member benefits for new TFFR members (and returning refunded members) employed on or after July 1, 2008.
   
  Tier 1 Members include all current active, inactive, or retired members who have TFFR service credit on July 1, 2008. Tier 1 members who do not refund their service credit would maintain the current TFFR benefit structure and member contribution rates.
   
  Tier 2 Members include all new members and returning refunded members who are employed on or after July 1, 2008. Tier 2 members would have the following benefit changes:
   
  • Rule of 90, instead of Rule of 85
  • 5-year vesting, instead of 3-year vesting
    • Early (reduced) retirement eligibility would be age 55 and 5 years of service (instead of age 55 and 3 years)
    • Normal (unreduced) retirement eligibility would be age 65 and 5 years of service (instead of age 65 and 3 years)
  • Final average salary would be computed as a 5-year average, rather than as a 3-year average
  
   
• Removes automatic refund requirement and reenacts various other provisions to comply with IRS qualification requirements.
   
• Allows employees of CTE to transfer retirement plan membership from TFFR to PERS.

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