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Home My WebLink AboutCORRESPONDENCE - RFP - P988 ACTUARIAL SERVICES AND POLICY REVIEW GERP (8)PERSONAL RETIREMENT PLANNING STATEMENT Prepared especially for: Sample Using data as of: December 31, 2004 Social Security Number: 5555 Date of Birth: January 01, 1943 Date of Hire: January 01, 1990 Adjusted Credited Service Date: January 01, 1990 Normal Retirement Date: January 01, 2008 Annual Pay Rate as of 12/31/2004: $35,000 Note: These statements are prepared only for members remaining in the GERP after January 1, 2005. Retirement projections are based on the pay rate shown above. PURPOSE ICMA RC Contributions As of 12/31/2004 12/31/2004 City Employee Balance 457 Deferred Compensation Plan 0.0% 1.8% $15,000 401(a) Money Purchase Plan 3.0% 3.0% 20,000 Total 3.0% 4.8% $35,000 This Personal Retirement Planning Statement from the General Employees' Retirement Committee and the Human Resources Department provides you with a projection of your personal retirement income through your employment with the City of Fort Collins. This projected income is compared to the estimated income you will need at retirement. In some cases, your projected income may be inadequate at the age you would like to retire, so steps to reduce any shortfall are suggested. YOUR PROJECTED RETIREMENT INCOME In order to maintain your standard of living, some financial experts estimate that you will need retirement income equal to about 80% of your annual income just prior to your retirement, depending upon your individual circumstances. Here is your projected retirement income based upon your participation in the General Employees' Retirement Plan (GERP), Social Security, the 457 Deferred Compensation Plan (457 DCP), and/or the 401(a) Money Purchase Plan (401(a) MPP), compared to the 80% target: 200% a m a 100% LL w 0 0 0% 55 60 62 65 70 Projected Income Retirement Age Available N/A N/A 59% 80% 116% Shortfall N/A N/A 21% 0% 0% 0401(a) MPP and 457 DCP Social Security' GERP* —60%Target * No Social Security is shown for ages 55 and 60 because age 62 is the earliest a benefit is payable. ** The GERP benefit is calculated based on the employee's life only. Optional forms of payment with benefits for a spouse or beneficiary will reduce the amount of the payment. The increases in GERP benefits are due to increases in the number of years of service with the City. Sample Location Code 1004 IF YOU HAVE A SHORTFALL If you have a shortfall at the age you would like to retire, you may choose to contact a financial planner. You may want to take the actions listed below to reduce a projected shortfall. Contact Human Resources for information about #1 and #2. 1. Increase your contribution to the 457 Deferred Compensation Plan or your personal savings. 2. Reallocate your investments in the 457 Deferred Compensation Plan, the 401(a) Money Purchase Plan, and/or personal savings (see page 4 for ICMA RC fund comparison). 3. Retire at a later age or work part-time after retirement. ASSUMPTIONS USED FOR PROJECTED FIGURES ON GRAPH Return on Investments -The assumed annual return on the assets you have invested in the City of Fort Collins 457 Deferred Compensation and the 401(a) Money Purchase Plans is based on the following data: Allocation of Your Current Historical Type of Investment Contributions Returns Equities 100% Refer to your ICMA RC 8.5% per year Fixed Income and Cash 0% Statement (Quarterly Financial Report) for your 3.5% per year fund allocations Total 100% These projections estimate your long-term annual return will be about 8% per year. Social Security - If you were to continue working and were to retire at age 65, your monthly Social Security benefit is estimated to be $1,172, based on your estimated Social Security contributions. This assumes that the current law remains in effect unchanged until your retirement. Under the current law, unreduced benefits are payable if you retire at age 66. Salary Increases - Salary assumptions used in projecting the increases in benefits shown on the graph are based on an increase of 3% per year, beginning in 2006. _ Inflation - These projections assume inflation will be 3v% per year. This is consistent with historical levels. GERP BENEFITS Age 65 Retirement Benefit - Your monthly benefit at age 65 is estimated to be $1,000, which you would receive for the rest of your life. This benefit estimate assumes your pay remains the same as the annual amount shown on page 1 for the rest of your working career and that you choose a benefit payable for your life only. Earned Benefits Based on Current Vesting Status - You have earned an approximate monthly benefit of $500 based on 100% vesting for 12.66 years of employment as of December 31, 2004. This amount is calculated using pay you received and your years of credited service. It is the benefit you could receive at age 65 if you were to leave City employment now and elect a benefit payable for your life only. However, you can not receive less than your minimum monthly benefit of $750 as of June , 0-n �cl _5 A614,A7vc. CWl t4 ; WL--6z"�— tj P G_ �_ Pe 'c SOURCES OF RETIREMENT INCOME Social Security - The current Social Security system allows you to begin receiving reduced benefits at age 62. Social Security benefits are adjusted annually for changes in cost of living. For an estimate of your Social Security benefit using your personal earnings history (which may include other previous employment contributions), you can call the Social Security Administration at 1-800-772-1213 or visit their website at www.ssa.gov to request a statement. Employer -Provided Benefits - A. The General Employees' Retirement Plan provides unreduced retirement benefits at normal retirement age of 65. This is based on a formula using years of Credited Service x 1.5% x Final Average Monthly Compensation (the 60 consecutive calendar months out of the last 10 years of your eligible employment with the City that produced the highest average). Reduced retirement benefits may begin as early as age 55. Optional forms of payment and benefits for a spouse or beneficiary will reduce the amount of payment. B. The 457 Deferred Compensation Plan offers you the ability to save and invest income on a pre- tax basis. This means that you do not pay federal or state taxes on any contributions to this plan until the money is withdrawn at a later date. You may voluntarily contribute to the 457 Deferred Compensation Plan. If you are not participating in the 401(a) Money Purchase Plan, you may be eligible for a matching contribution to the 457 DCP of up to 3% from the City. The maximum deferral to a 457 Deferred Compensation Plan is either 100% of includible compensation or $14,000 (effective January 1, 2005) per year, whichever is less. Plan benefits are based on the total amount of money in your account at retirement. C. The 401(a) Money Purchase Plan also offers you the ability to save and invest income on a pre- tax basis. If you participate in the 401(a) Money Purchase Plan, both your contribution and the City's contribution are a fixed percentage of your salary. This cannot be changed. Plan benefits are based on the total amount of money in your account at retirement. Other - You may have other sources of retirement income, such as an Individual Retirement Account, personal savings or investments, and/or benefits payable by a prior employer. These other sources are not included in this Personal Retirement Planning Statement projection. Note: this statement does not take into account any Domestic Relations Order. Questions? Call Human Resources at (970) 221-6562 The projected benefits shown on this statement are only estimates and are not guarantees. You may want to consult your personal financial advisor regarding these projections. If there is any inconsistency between this statement and the Plans, the Plan documents will govern. Page 3 PLANNING YOUR ICMA RETIREMENT CORPORATION (RC) INVESTMENT STRATEGY ` The ICMA-Retirement Corporation offers a broad range of funds specifically designed for public sector 401(a) money purchase and 457 deferred compensation plans. Most investment professionals agree that allocating your assets among several funds provides you with greater diversity, enhanced stability, and improved long-term returns. For more complete information on these funds, see the ICMA Retirement Corporation's Retirement Investment Guides available from the Human Resources Department. For more information on your ICMA RC fund, call 1-800-669-7400, or visit the ICMA RC web site at www.icmarc.or. Fund Name Degree of Market Risk* Morningstar Rating Equity Funds Equity Income Moderate Growth & Income Average Growth Above average Aggressive Opportunities Significant International Significant N/A 500 Stock Index Moderate Broad Market Index Moderate to above average Mid/Small Company Index Significant Overseas Equity Index Significant Lord Abbett Large Company Value Moderate American Century Value Moderate Calvert Social Investment Moderate to above average Fidelity Contrafund Moderate to above average *tit *tit Fidelity Magellan Moderate to above average Gabelli Value Moderate to above average MFS Large Company Growth Moderate to above average American Century Ultra Significant * tik it T. Rowe Price Small Cap Stock Above Average T. Rowe Price Small Cap Value Above Average Invesco Small Company Growth Significant Balanced Asset Allocation Moderate Funds Fidelity Puritan Moderate Fixed Income Money Market Low N/A Funds U.S. Government Securities Low to moderate; subject to changes in interest rates Core Bond Index Moderate; subject to changes in interest rates * k Pimco Total Return Moderate; subject to changes in interest rates Pimco High Yield Above Average Cash Funds PLUS Low; principal backed by companies issuing contracts N/A ICMA uses historical asset class volatility to determine degree of market risk; and within each asset class the 3-year standard deviation is used to develop a risk order. After the risk order is calculated, based on asset class and standard deviation, the descriptive historical volatility words are slotted into the ranking system: Low, Moderate, Average, Above Average, and Significant. Note that volatility changes over time. Page 4