Celebrating accomplishments and continuing our important work
It’s a tradition at ERS to take time in the first quarter of each fiscal year to celebrate our achievements of the past year and discuss activities in the current year.
By Porter Wilson, Executive Director
Fiscal Year 2022, which ended on August 31, was especially challenging in many ways, but also a year of important advancements. Most critically, the main ERS retirement plan is back on the path to actuarial soundness. As I’ve written before, this is primarily due to ongoing “legacy” payments the state is making to the Retirement Trust Fund each year, in addition to the regular percent of payroll they contribute to the Fund annually. We got the first of these legacy payments in Fiscal Year 2022 and are grateful for this significant commitment from the state to the retirement plan.
In addition to the first legacy payment, FY22 saw another key development in restoring the ERS retirement plan: new retirement benefits for state employees starting work on or after Sept. 1, 2022. Many ERS staff worked throughout the last year to have systems in place for this new retirement group, whom we call Group 4. Although their benefits will be calculated differently, Group 4 will still have access to a pension with annuity payments that last their entire lives after they retire. Since Fiscal Year 2023 began on Sept. 1, we’ve welcomed about 5,000 new members into Group 4.
We’ve tried to be very open about the staffing and customer service challenges we’ve had in the post-pandemic world. While we remain short staffed in departments throughout ERS, we’ve managed to bring a number of new employees on board in a relatively short time. Last year, when the extent of workforce issues became clear, we began enhancing our hiring practices and streamlining customer service processes. We still have a number of positions to fill and more work to do, but we have made real progress over the last few months.
We will maintain our focus on customer service improvements and staffing in FY23, even as we continue and begin other projects. This fiscal year, we expect to award a contract to upgrade our benefits administration system. The current system offers a lot of self-service functionality for you, including the ability to initiate beneficiary updates and review 1099-R information. However, the current system is not as user-friendly as more modern systems. We have much complicated work ahead of us, and the upgrade is still a few years away. When completed, it will greatly increase efficiencies within ERS and make it easier for you to use these online features.
Another big project in FY23 is adjusting the investment allocations for the ERS Retirement Trust Fund. Investment earnings are critically important to the Fund. They pay about 60% of your annuity check every month. (The rest is from a combination of your contributions and the state’s contributions over your career.) We carefully invest Trust assets across a variety of investment types, or asset classes. This allows the Fund to grow steadily without too much risk, while ensuring we have enough cash to pay about 100,000 annuity checks every month. Every few years, the ERS Board of Trustees and Investment Advisory Committee look at our asset allocation—that is, how much of the Fund we invest in each asset class—and make adjustments as needed. Following an asset liability study in FY22, the investments team is working now to achieve the new allocation targets. You can learn more about the asset liability study and other ERS investment activities by reviewing information presented in the August 2022 Board meeting. In addition, you can find ERS’ monthly investment reports.
These are only some of the projects we’ve taken on in Fiscal Year 2023. In just a matter of weeks, we’ll be embarking on another legislative session, even as we keep up our efforts on many other special projects and day-to-day tasks. With the main retirement plan and health insurance funding in good shape, our primary focus for the upcoming session is restoring the financial soundness of the retirement plans for law enforcement and custodial officers and state judges.
As busy as the weeks and months ahead will be, I remain grateful for the opportunity to serve you. I wish you all the best this holiday season and in 2023!