Assumptions Used to Determine the Transfer Benefit

Several assumptions are used to determine the benefit so that, over a large population, the present value of future payments will equal the amount transferred minus the one-time processing fee. Below are the assumptions used to calculate that present value:

• Interest Rate assumption: Future payments are discounted using the 20 Year U.S. Treasury Constant Maturity. If the COLA option is selected, the Inflation Indexed rate is used. If the No COLA option is selected, the Nominal rate is used. Current values of this index can be found at this Federal Reserve Site. U.S. Treasury rates are used, as required by statute, because those are the interest rates investors can earn on securities of similar default risk.
• Mortality assumption: The number of retirees and beneficiaries remaining alive to collect payments is calculated using the RP-2014 Mortality Table, adjusted to reflect the mortality experience of the TSERS and LGERS population over the period 2010-2014, and projected on a static basis to dates between 2032 and 2036 using projection scale MP-2015. First, male and female tables are developed based on the composition of the TSERS and LGERS active membership by teachers, general employees, and law enforcement. Then member mortality is based on 80% of the female table plus 20% of the male table. Beneficiary mortality is based on 20% of the female table plus 80% of the male table. These rates have been determined to roughly match the experience of the eligible population, averaged across genders and employee types, and adjusted for an expectation that females are more likely to elect the Transfer Benefit than males. Your expected lifespan may differ from the average for a variety of reasons.
• Fee: A one-time fee of $100 is subtracted from the amount you transfer before the monthly benefit is calculated. This fee is used to cover the administrative costs associated with the initial transfer. There are no ongoing fees.