NON-CERTIFICATED EMPLOYEES RETIREMENT PLAN
March 29, 2011
Volume 46
investment rePort: annuity Payments for life
versus lumP sum Payments:
“Should I take a lump sum or annuity payments for life?” Many NCERP
participants nearing retirement pose this question, and there is no empirical
evidence that one is any better than the other. The answer depends largely
on the perspective and risk tolerance of the one making the decision. Some
NCERP participants are comfortable that they (or their investment
manager) will invest their lump sum payment well and it will earn a good
return. Others do not want to take this risk in retirement and want (or
need) the security that comes with knowing they will receive a monthly
annuity benefit from this plan for the rest of their life. Statistically about 50
percent of all plan participants take the annuity payments for life and about
50 percent take the lump sum benefit.
Anyone considering retirement should weigh their options carefully,
perhaps by speaking with a trusted financial advisor.You might discuss your
risk tolerance and pose the questions, “What investment return will I be
able to earn if I invest this lump sum payment? How much monthly income
can I receive from my investment?” If you need the monthly income, you
can then compare that amount with the monthly annuity amount NCERP
provides. Compare the results, and based on your financial situation and the
level of risk you are comfortable with, make an informed choice. Remember,
everyone’s financial situation is different and there is no perfect answer that
fits everyone.
You should also remember that NCERP allows you to receive your
benefit as 50 percent annuity/50 percent lump sum option. This option
provides half of what the full lifetime annuity payment would have been and
pays the other half as a lump sum.
It is important to understand that your lump sum is equal to your
monthly annuity amount multiplied by a lump sum factor that is based on
the interest rate for the year and your expected future lifetime. The lump
sum factors are provided annually by the plan’s actuary, usually in early May,
and go into effect on the upcoming July 1 of the same year. If interest rates
have decreased since the prior year these factors increase (increasing the
lump sum benefit). If interest rates have increased since the prior year, the
lump sum factors decrease (decreasing the lump sum benefit). The interest
[AFFIX LABEL HERE]
rate being used for the year ending June 30, 2011, will not decrease as of July 1
since it is at the lowest rate allowed by the plan, 4.5 percent.
If you have not yet reached the plan’s normal retirement age of 60 and
interest rates have not increased, your lump sum payment will increase if you
work longer. This is true not only because your benefit will increase due to
additional credited service, but also because benefits paid prior to age 60 are
reduced for early retirement.
However, we have received some questions and comments about what
happens to a participant’s monthly benefit and lump sum if he or she decides
to work after age 60. It is important to remember that each month an
NCERP participant keeps working increases his or her credited service,
increasing the amount of the monthly lifetime benefit. However, since the lump
sum factor depends on your future life expectancy, the lump sum amount can
actually decrease if you work an extra year since your life expectancy is
shorter by one year. The impact on individuals will vary depending on how
much service you have, how much your earnings increase and how old you
are. Generally, the older you are and the more service you have, the greater
the likelihood that your lump sum payment will decrease.You can always
discuss your situation with the plan coordinator as you plan for whether you
will work after age 60. If you have any further question concerning the lump
sum benefit please contact your plan coordinator, James Hayden, at ext. 5217
for further explanations.
Columbia management’s investment
Presentation as of DeCember 31, 2010
Jim Wilkinson, the plan’s portfolio manager, opened his quarterly
presentation Feb. 9, 2011, by stating that the plan has progressed well this
quarter due to the diversified asset allocation. The asset allocation is presently
fixed at 64 percent equities and 36 percent fixed income.
Wilkinson further informed the committee that initial jobless claims have
improved to their lowest level in over two years and consumer confidence
has risen. Markets continue to improve and this month the Gross Domestic
Product is up to 3.2 percent from 2.6 percent last month. Additionally, the
unemployment rates continue to decline slowly, as the current rate is 9.0
percent down from 9.4 percent at the end of December 2010. There have
been 36,000 jobs added last month, but 140,000 became unemployed. The
current pool of those seeking employment has declined and companies
remain underemployed as the labor force reduces. Wilkinson expressed his
opinion is that 70-75 percent of companies earnings are exceeding
expectations, but the expectations are higher using less employees and
companies are not that interested in increasing their labor force.
Wilkinson has articulated that there has been an inflation rumble in the
food markets and we have seen obvious increases in the price of petroleum.
Economic problems have continued throughout the world. The drought in
China and its effect on the cost of grain, the sovereign debt in Europe, the
turmoil in Egypt, and various other potentially hot spots in the Middle East are
all concerns. Meanwhile, the U.S. continues to support these nations as the
federal debt continues to increase and this affects tax payers in the area of
state budget cuts.
Wilkinson finalized his report by stating the plan’s assets increased from
$57,161,779, as of Oct. 1, 2010, to $60,855,175 on Dec. 31, 2010 for an
increase of $3,693,396. The quarter showed a 7.37 percent increase and 14.5
percent increase for year to date.
rePort
from
aCtuary
Don Schisler, the plan’s actuary, discussed their firm’s analysis after the
question raised at the meeting Nov. 11, 2010. Steve Kanterman raised a
question concerning the averaging of annual salaries used to calculate pension
benefits. The plan currently utilizes the highest four years of annual earnings
during the last 10 years of employment, and Kanterman asked about changing
this to use the highest four years in the last 15 years. Schisler expressed at the
time that, since this would only affect a small percentage of plan participants,
the main issue to consider is the additional administrative time and cost.
Towers Watson examined plan participants’ last 20 years of annual earnings
and found that 75 percent of the participants had their highest earnings during
the last four years and another 10 percent of the participants had their highest
four years of earnings during the last five years. Another employee had
questioned the current practice because they had a year in the past with high
earnings, and this year would not be included in the final average if the
employee works beyond the normal retirement age. Towers Watson
determined that, if this specific employee receives pay increases that average
just two percent per year between now and age 60, the final salary will be
larger than the highest earnings year in the past. It was also noted that since
future benefits will include additional service credit this will also increase the
benefit. Schisler noted the following example: If a participant has worked 20
years by age 60, working an extra five years will result in a 25 percent benefit
increase since the benefit will be based on 25 percent more service more
than offsetting the impact of a small decrease in final average earnings.
The current definition of average annual earnings (the average of the highest
four years during the last 10 years of employment), protects employees against
inflation during their working years by determining pension benefits based on
earnings near the time of retirement. The intent is to allow participants to
maintain their standard of living in retirement, but it was never meant to
guarantee that the highest four years of earnings would always be used. After
much discussion at the Feb. 9 quarterly committee meeting, the NCERP
retirement committee agreed with this analysis and decided not to pursue a
change in the plan provisions.
THE QUARTERLY UPDATES
During the period of Oct. 1, 2010 through Dec. 31, 2010, there were 10 new
participants were added to the plan, three employees separated from the
college, and their returned contributions and credited interest totaled
$12,414.83.
During the same period, there were five plan participants that chose to
retire. One retiree chose the annuity payments for life, two chose the 50
percent Lump/50 percent Annuity Option, two others chose the Lump Sum
option payment totaling $180,698.32.
During this period, Susan Lagunoff, who worked at Florissant Valley, passed
Nov. 18, 2010.
retirement interview sCheDule
The fiscal year budget report as of Dec. 31, 2010, includes the following:
• Total budget for FY 2010: $393,175
• Total invoices paid at the end of quarter as of Dec. 31, 2010: $168,260.62
• Balance of FY2011 budget as of Dec. 31, 2010, after all bills
paid: $224,914.38
nCerP CoorDinator’s ProPoseD sCheDule of
CamPus visits
If employees would like an estimate of their retirement benefits, attend any
of the campus visits made by James Hayden, plan coordinator, ext. 5217.
Please call at least one week before the scheduled visit to ensure the
retirement assessment is complete. Every participant is encouraged to contact
Hayden at any time to obtain a retirement benefit assessment.
Date:
Location:
Time:
April 7, 2011
Forest Park
Noon
April 11, 2011
Florissant Valley
2 p.m.
April 21, 2011
Meramec
2 p.m.
May 5, 2011
Forest Park
Noon
May 12. 2011
Florissant Valley
2 p.m.
May 19, 2011
Meramec
2 p.m.
May 26, 2011
Cosand Center
2 p.m.
June 2, 2011
Forest Park
Noon
June 9, 2011
Florissant Valley
2 p.m.
June 16, 2011
Meramec
2 p.m.
July 7, 2011
Forest Park
Noon
July 14, 2011
Florissant Valley
2 p.m.
July 21, 2011
Meramec
2 p.m.
July 28, 2011
Cosand Center
2 p.m.
Aug. 4, 2011
Forest Park
Noon
Aug. 11, 2011
Florissant Valley
2 p.m.
Aug. 18, 2011
Meramec
2 p.m.
Sept. 1, 2011
Forest Park
Noon
Sept. 8, 2011
Florissant Valley
2 p.m.
Sept. 15, 2011
Meramec
2 p.m.
Sept. 22, 2011
Cosand Center
2 p.m.
Oct. 6, 2011
Forest Park
Noon
Oct. 13, 2011
Florissant Valley
2 p.m.
Oct. 20, 2011
Meramec
2 p.m.
Nov. 3, 2011
Forest Park
Noon
Nov. 10, 2011
Florissant Valley
2 p.m.
Nov. 17, 2011
Meramec
2 p.m.
Dec. 1, 2011
Forest Park
Noon.
Dec. 8, 2011
Florissant Valley
2 p.m.
Dec. 15, 2011
Florissant Valley
2 p.m.
Locations are:
Cosand Center, Room 208, Florissant Valley, Training Center, TC-109;
Forest Park,VP Academic Affairs’ Conference Room; Meramec, BA-106;
nCerP Committee
meeting sCheDule
S
M
T
W
T
F
S
The quarterly NCERP Committee meetings now are being rotated from
various campus locations. The tentative schedule is as follows:
May 11, 2011, Florissant Valley, 9:15 a.m.
Aug. 10, 2011, Meramec, 9:15 a.m.
Nov. 9, 2011, Forest Park, 9:15 a.m.
Feb. 8, 2012, Cosand Center, 9:15 a.m.
benefiCiary aCCuraCy
Make sure beneficiary information on file for NCERP retirement
contributions is accurate. Failure to do so could result in retirement
contributions being paid to the employee’s estate versus having the
contributions going to loved ones. If there are questions or concerns,
contact James Hayden, plan coordinator, at ext. 5217.
unoffiCial…
Financial Spring Cleaning
Sort through you financial papers and get rid of the ones you longer need. As a
general rule, you should save papers that support your tax returns for three to six
years in case of an audit and retain indefinitely records that serve as proof of
important financial transactions. The rest can go. Be sure to shred all documents
before you throw them out.Although your individual situation may vary, here’s a list
of what to toss and what to keep, according to Stephanie Denton, former
president of the National Association of Professional Organizers.
Dump after one year or less.
• ATM and bank-deposit slips after you’ve recorded the amounts in your check
register and checked them against your monthly statement.
• Sales receipts from minor purchases.
• Bank, brokerage, mutual fund and credit card statements after you’ve
reconciled them with your year-end summary.
• Pay stubs after you’ve checked the amounts against your W-2.
Keep three to six years.
• Copies of your W-2s and 1099s.
• Cancelled checks, mortgage statements and receipts for deductible expenses.
• Year-end credit card summaries that detail spending for deductible items.
• Year-end statements documenting mortgage and property interest paid.
Retain indefinitely.
• Your old tax returns (but not the supporting documents).
• Records of major purchases for insurance purposes.
• Transaction records and year-end brokerage and mutual fund statements for
as long as you own the investment, plus three to six years for tax purposes.
• Receipts for home improvements for tax reasons.
• Wills, living wills and trust documents.
• A list of the beneficiary designations on your retirement and other financial
accounts, as well as the financial firms with whom you do business and your
account numbers.Tell the person you’ve designated as executor where to find
the list and other relevant financial papers.
St. Louis
Community
College
FLORISSANT VALLEY FOREST PARK MERAMEC WILDWOOD
imPortant Points of ContaCt:
Board of Trustees Appointment
Calla White
6688 Chesapeake Drive
Apartment C
Florissant, Missouri 63033
Phone: 314-355-9112
Term expires: BOT’s pleasure
Board of Trustees Appointment
Ruth Lewis
10455 Litzsinger Road
St. Louis, MO 63131
Telephone: 314-567-7098
Term Expires: BOT’s pleasure
Unit Representative
Kevin White
FP - Media Services
Phone: 314-644-9213
E-mail: kwhite@stlcc.edu
Term expires: June 30, 2013
Physical Plant
Mike Wibbenmeyer - Vice Chair
MC – Utilities/HVAC
Phone: 314-984-7749
E-mail: mwibbenmeyer@stlcc.edu
Term expires: Oct. 30, 2013
Non-Unit Representative
Vicki Lucido - Chair
FV - VP Academic Affairs' Office
Telephone: 314-513-4214
e-mail: vlucido@stlcc.edu
Term expires: June 30, 2014
Individuals with speech or hearing impairments
may call via Relay Missouri by dialing 711.
Any suggestions for improvements,
questions, comments or other concerns
about the retirement plan may be directed
to any of the NCERP Committee
representatives.
Any proposed agenda items may be sent
to James Hayden or the employee
representative 10 days prior to the meeting
date.
aCCommoDations statement
St. Louis Community College makes every reasonable effort to accommodate individuals with disabilities.
If you have accommodation needs, please contact the Access office at the campus where you are
registering at least six weeks before the beginning of the class. Event or other public service
accommodation requests should be made with the event coordinator or applicable location nondiscrimination officer at least two working days prior to the event or public service.
non-DisCrimination statement
St. Louis Community College is committed to non-discrimination and equal opportunities in its
admissions, educational programs, activities and employment regardless of race, color, creed, religion, sex,
sexual orientation, national origin, ancestry, age, disability, genetic information or status as a disabled or
Vietnam-era veteran and shall take action necessary to ensure non-discrimination.
In furtherance of the college’s commitment, grievance procedures for the prompt and equitable
resolution of complaints are set forth in the college’s designated Administrative Procedures.
This newsletter is designed to summarize and explain basic changes in the Non-Certificated Employees Retirement Plan and
provides updates on other related matters. Since it is only a summary, this newsletter does not cover the plan's provisions in detail.
Therefore, if there is any conflict between this newsletter and the plan document itself, the plan document will always govern. An
official copy of the plan is available for inspection in the Human Resources department at the Joseph P. Cosand Community College
Center, 300 South Broadway, St. Louis, Mo. and in each campus’ library during regular business hours.
100387 3/2011