On Monday, February 25th the Joint Public Retirement Committee (JRC) meeting will be video streamed over the Internet. Just visit the Arkansas Legislative Meetings and Events web page on Monday at 10:00 a.m. Look for the item “PUBLIC RETIREMENT & SOCIAL SECURITY PROGRAMS-JOINT” and click on the “video camera” icon. The committee will hear HB1173 which requires the Arkansas pension systems to perform stress testing.
HB1308 and HB1316 were passed out the the Senate this week. They are on the Governor’s desk to sign. Thank you to Senator Bill Sample for presenting these bills on the Senate floor this week.
On Monday, February 25th, the Joint Public Retirement Committee (JRC) will hear two ATRS Package bills, SB218 and SB222. Thank you to Senator Eddie Cheatham for sponsoring these bills for ATRS.
SB218 clarifies the T-DROP deposit calculation. It is a technical correction bill with the purpose of making it easier to understand how T-DROP deposits are calculated. Currently the calculation of the T-DROP deposit is split over two sections of the Arkansas Code. This bill removes obsolete language and streamlines language already existing in code. This bill does not change the amount of the T-DROP deposits from the way they are currently administered.
SB222 clarifies the law regarding noncontributory eligibility. It is a technical correction bill with the purpose of accurately and logically organizing the language of the statute in order to prevent ambiguity. The statute that allow members to accrue noncontributory service has changed many times over the past years. This legislation will clarify the current state of noncontributory service eligibility as well as preserve past eligibility.
Next week the Joint Retirement Committee will hear HB1173 which requires the Arkansas pension systems to perform stress testing. First of all, stress testing is a valuable tool that provides pension administrators with information that is helpful in making difficult system management decisions. In fact, ATRS just had a stress test performed by our investment consulting firm (Aon Hewitt). Our actuary, GRS Retirement Consulting, will be performing an increased level of stress testing next year, as required by Actuarial Standard of Practice 51 (ASOP 51). All of the results from these stress tests are available to the Arkansas Legislature to assist them in their pension system oversight role. It is the position of ATRS that we already perform a prudent level of stress testing and there is no need for the extra cost of additional stress testing required through legislation.
ATRS opposes HB1206 that would be a legislated reduction of retirees’ cost of living adjustment (COLA). HB1206 sets the maximum adjustment to 3% or the percentage change in the Consumer Price Index (CPI) for the year whichever is lower. Since the COLA is capped at 3% regardless of how high inflation runs, a reduction of the retirees’ purchasing power will occur over time. With the maximum COLA being limited to that year’s CPI percentage, there is no opportunity for a retiree’s purchasing power to be restored in times of lower inflation. The current ATRS fixed 3% simple COLA protects both the ATRS system and the retiree’s purchasing power. In times of high inflation, the 3% COLA limits the liability accrued by ATRS. In times of lower inflation, any reduction to the retirees’ purchasing power due to the 3% maximum is restored. Furthermore, since the CPI is an unpredictable future number, it is likely that the ATRS actuaries will just use the maximum 3% COLA allowed when projecting ATRS' future liabilities out to infinity. This bill may not help ATRS lower the projected unfunded liabilities, but will reduce our retirees' purchasing power over time.
It is a busy time for ATRS and its staff. ATRS will try to keep its members informed about the bills that impact ATRS, its members and employers.
For more information regarding the ATRS Bill Package and bills that may impact ATRS visit the Legislation page on our website.
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 16,500 members have direct account access to individualized account information. Here is the link to the instructions to sign up: www.artrs.gov/registration.
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 19,600 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 4,900 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 940 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.
Best regards,
Clint Rhoden
Executive Director
(501) 291-1623 Mobile
(501) 588-4367 Office
clintr@artrs.gov