Brief History of Retirement Plans (TRS and ORP)

In 1943 the Teachers Retirement of Georgia (TRSGA) was created for the secondary school system of Georgia and later became available to Educators of the University System of Georgia. In 1990 the Board of Regents through legislation created a Regents Retirement Plan known as the Optional Retirement Plan (ORP) effective 1991. The plan is available only to qualified teaching faculty, administrative faculty and certain specialty positions.

In 1991 the law provided for additional compensation to TRS

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GA for the projected loss of funds resulting from (a) qualified employees electing in 1991 to leave TRS in favor of ORP and (b) for those in later years who would choose upon employment the ORP instead of TRSGA. By law, such compensation is ensured by granting specific authority to the Board of Trustees of TRSGA in the matters of (a) employee contributions to an optional plan, (b) employer contribution to an optional plan, and (c) employer contribution to the TRS to compensate for the loss resulting from election of optional retirement plans. The additional supplement to TRS was projected to last approximately ten years.

Some of the provisions of the law as enacted are as follows:

• Qualified employees who choose the optional retirement plan will contribute not less than 5% nor more than 6% of his or her salary, with the exact amount to be determined by the Board of Trustees of TRSGA.
• Prior to January 1, 1997, the contribution of the employer to the ORP elected by qualified employees shall be 4% of the person's salary.
• On January 1, 1997, the contribution of the employer shall be determined by the Board of Trustees of the TRSGA in accordance with other provisions in public law provided that the contribution is not less than 4%.
• The University System of Georgia (employer) shall remit to TRSGA other amounts for each qualified member who elected the ORP to compensate TRSGA for actuarial loss.

The History of contributions by employer and employee to TRSGA since 1991 is as follows:

• Members of the Teachers Retirement System of Geogia (TRSGA)
  • The employee contribution dropped from 6% to 5% in 1994-95 and has remained at 5%.
  • The employer contribution went up in 1998-99 from 11.81% to 11.95% but then fell in 1999-2000 to 11.29% and stabilized at 9.24% in 2002.
• Members of the Optional Retirement Plan (ORP)
  • The employee contribution dropped from 6% to 5% in July of 1996 and has remained at 5%.
  • The employer contribution was 4% from January 1991 until 1994-95 when it began to increase. That year it was raised to 6.79% and stabilized at 10.02% in 2002. (Note: Even though the law as enacted in 1990 guaranteed that the employer contribution would be 4% until January 1, 1997, and never less than 4% at any point in the future, the university system began to contribute more than 4% at an earlier date.)
• The TRSGA compensation (an additional employer contribution) that the law required to be remitted to TRS for each person who elected an optional retirement plan was 5.6% until 1995-96, when it began to drop. It reached 2.33% for 2000-2001 and was eliminated entirely in March 2001.

(Note: The decision to totally eliminate the employer additional supplement to TRS on behalf of ORP participants was, by law, determined by the Board of Trustees of TRSGA ten years after it's inception).

The history cited above indicates that an additional retirement plan with varied retirement options was added to the University System in 1991. The first ten years involved the employer supplementing the original TRSGA plan to ensure that TRSGA did not suffer financial consequences due to the new ORP. The additional amount paid to TRSGA for each ORP member by the employer for ten years is associated with a lower employer contribution to each ORP participant during that time period. In 2001 that trend was reversed.

Other important information to consider:

1. Percentages paid by the employer and/or employee reflect the current situation and are subject to change from year to year. However, according to present law, the employers contribution must be 4% or greater.
2. The law that allowed the Board of Trustees of TRS to acquire additional supplemental funding from the employer on behalf of each ORP member is still an open law and could be reinstated. (It is not contemplated that this would be a viable option due to the fiscal stabilizing of TRSGA.)
3. Employees participating in the TRSGA plan are allowed to apply up to two years of accrued sick leave time towards their retirement date. The ORP does not include this provision.

THE GOOD NEWS IS:

Qualified new employees of Augusta State University have a one-time irrevocable option to select one of two great retirement plans.

1. On the one hand, there is membership in the Teachers Retirement System of Geogia which is a defined benefits program in which retirement benefits are determined by the Board of Trustees of TRS, in accordance with public law, on the basis of years of service and salary level. The TRS requires ten years of creditable service for vesting purposes. A defined benefit plan also allows a member to request the purchase of additional years of creditable service from other sources (i.e. service time earned while employed at out of state public institutions, military service, etc.). The TRSGA uses a retirement benefits formula based on multiples of a member's salary and number of years of creditable service.
2. On the other hand, there is the choice of the Optional Retirement Plan (ORP) offered through American Century, Fidelity, TIAA-CREF or VALIC companies. The ORP is a defined contribution plan in which the qualified employee is immediately vested in accordance with provision of the United States Internal Revenue Code. The defined contribution plan provides benefits based upon the contributions of the employee, the contributions of the employer, and the earnings that are generated from the ORP investments selected by the plan member. The ORP participant, rather than the retirement system, determines his/her investment strategies. The plan is portable to other out of state institutions who offer the same investment companies.

Remember that your choice of plans must be made within sixty days of employment and the decision is not reversible.