October 1, 2018 - Executive Director Update: Executive Director Retiring after a Decade at ATRS

Today I informed the ATRS Board that I will retire in December. After 10 years as ATRS executive director, I decided now is a good time to leave to allow new leadership while ATRS is in calm waters. I have been eligible to retire for over 6 years but never felt the timing worked until now.

ATRS has strong benefits, a great investment portfolio that delivers among the VERY highest (top 1%) investment returns of public retirement plans in the United States, and has no significant legislative agenda for the 2019 session (for the first time in 10 years). This is the calm that is good timing for a leadership change. Thankfully, the member-elected ATRS Board is the real leader of ATRS. You can always trust the member-elected ATRS to protect all members.

I am so grateful for the opportunity I have had to serve ATRS members. It has been a life changing experience for me. Words cannot express the depth of respect, gratitude, and love I have for all who have dedicated their lives to improve the lives of the children of Arkansas.

ATRS has been an active place for the last 10 years. Benefits were closely examined and changed to ensure a few did not benefit at the cost of the many. ATRS weathered the 2008 and 2009 financial crisis without even an employer contribution increase. ATRS totally changed the investment mix to bring strong returns with relatively lower risk. ATRS focused on a direct farmland program, real assets, opportunistic investments, and direct investments like Big River Steel.

I am attaching several slides I recently presented to a legislative committee on the strength and sustainability of ATRS. ATRS is now positioned to absorb market ups and downs and to protect members.

Respectfully,

George Hopkins

List of Attachments:

1. Strength and Sustainability of ATRS

 

June 6, 2018 - Executive Director Update: ATRS Board Helps Members/ Modifies the Phase-in for T-DROP Annuitization

The ATRS Board Modifies the Phase-in for T-DROP Annuitization Formula to Help Members

The ATRS Board just reduced the impact on current T-DROP participants who plan to convert part or all of their T-DROP balance into a supplemental monthly annuity.

Due to my interaction with members at school hall meetings, the ATRS Board has tweaked the formula for annuitization of T-DROP balances at the time of retirement. For members retiring out of T-DROP and converting all or part of their T-DROP balance into a supplemental monthly benefit, now the supplemental benefit is materially higher than recently projected. The ATRS Board balanced the need to absorb new actuarial standards with the impact the 6 year phase in of the new T-DROP annuitization would cause on extra retirements from T-DROP.

Starting immediately, all T-DROP balances accrued through the end of this fiscal year (June 30, 2018) will have an assumed rate of return of 7% for the T-DROP balance annuitized at the point of retirement.  This will prevent the annuitization amount per month from flat lining or actually decreasing over the next few years. Now the amounts will still increase to be much closer to the old formula. Also for all members in T-DROP as of June 30, 2018, the minimum assumed rate of return on all balances annuitized will be no lower than 5% (instead of a 3% assumed rate becoming effective in fiscal year 2023 as had been set in the phase in period adopted on November 13, 2017).  Hopefully this change will eliminate the pressure on this group of members to retire due to benefit projections that show declining T-DROP annuitization monthly benefits. This means that if you are in T-DROP and plan to annuitize any part of your T-DROP balance when you retire, GET A NEW PROJECTION!  If you just filed to retire from T-DROP due to the new formula's impact in a few years, you can still withdraw the retirement application and have time to think about it after getting a new projection.

For example, if a T-DROP participant has $100,000 in a T-DROP account on June 30, 2018  and the member decides to annuitize 50% of the T-DROP balance when the member retires 6 years from now, then $50,000  would be annuitized (1/2 of $100,000) with a guaranteed 7% assumed rate of return.  The balance accrued after June 30, 2018 would have a guaranteed 5% rate of return instead of a 3% assumed rate on the entire balance being annuitized according to the schedule adopted on November 13, 2017. This is good news for T-DROP participants, especially those who had planned to work longer but saw little or no additional monthly benefits since the added value of the T-DROP balance was essentially offset by the lower assumed rate of return on the whole balance being annuitized. Essentially, the ATRS Board has now modified the phase-in period on the changes to the T-DROP annuitization formula.

Monthly CBA Distributions Now Available!

When retiring out of T-DROP, establishing a Cash Balance Account (CBA) is an important option to consider.  The CBA allows you to leave all or a portion of the T-DROP balance in an interest bearing cash account.  The interest rates start at 2.5% and grow to 4% over time.

In order to make the T-DROP Cash Balance Account (CBA) program more attractive to members, ATRS now allows scheduled monthly CBA distributions.  In the past you were limited to two distributions per quarter, but now you can set up a request to receive a monthly distribution of a fixed amount.  The monthly distributions will be processed at the same time as the existing benefit payroll schedule (see ATRS website for the benefit payroll schedule).  To setup a monthly CBA withdrawal, simply complete the attached CBA Monthly Distribution Request form.  All forms received at ATRS by the 10th of any month will result in monthly deposits beginning in the same month; otherwise the deposits will start the next month.  CBA withdrawal requests in addition to the scheduled monthly distributions can be made but would require executive director approval.

Stay in Touch with ATRS and View YOUR Account Information

The ATRS website allows members to have direct access to specific member account information.  Now, approximately 14,000 members have direct account access to individualized account information.  Here is the link to the instructions to sign up: www.artrs.gov/welcome.

You can also sign up to obtain these executive director updates through your private email address.  Updates are made throughout the year such as at retirement season and other times when information needs to be shared.  Now, over 16,400 people have signed up to receive this executive director update by direct email delivery.  It is always a great pleasure for ATRS staff to learn of more ways to provide information to ATRS members, employers, beneficiaries, government officials, and the public.  The ATRS Board is committed to providing a system that is member friendly and transparent.

You can also get helpful ATRS information on the ATRS Facebook page under the name of Arkansas Teacher Retirement System.  Over 4,500 Facebook users get updates via the ATRS Facebook page.  Go to the Facebook page and "like" ATRS to get daily updates.  I try to go to the Facebook page every day to post information and answer member questions about ATRS.  In addition, if you use Twitter, you can join over 920 others by following events at ATRS and issues of interest on the ATRS Twitter page.  Remember that ATRS is here to serve you!  If you have questions, email me or call.

Respectfully,

George Hopkins

(501) 682-1820 Office
(501) 318-5998 Cell
georgeh@artrs.gov

List of Attachments:

1. CBA Monthly Distribution Request Form