Apr 27, 2006 11:02 AM
Our new contract includes a provision that states:
The UFT committee dealing with this issue is headed by Randi Weingarten. She has made this the number one legislative issue in the UFT’s legislative program. In an attempt to get action in this legislative session, several meetings with the city have taken place and the actuary for the TRS has already given us his preliminary costings. We have asked him for further analysis, as we believe the preliminary costings are not appropriate.
As you are probably aware, defined- pension plans are under attack both nationwide and here in New York, which makes it an exceedingly difficult climate in which to negotiate a benefit improvement to a defined-benefit plan — which all the tiers, I, II, III and IV are. But we believe that this improvement is possible because the contract language, which predates the pension controversy that the Transit Workers Union strike triggered and it provides a blueprint on how to construct a 55/25 plan for tier III/IV members. This benefit, when negotiated, will allow up to seven years of additional retirement without an age reduction and so the city is pressing to consider related additional costs for health insurance and Welfare Fund benefits. We are confident that we will get to the finish line despite the current obstacles because this time we are using “pattern bargaining” to support our cause as other unions have negotiated similar benefits in recent years.
The issue now is not being overcharged. For instance, many Tier III and IV members of the New York City Employee Retirement System can retire with unreduced retirement benefits. In 1995, DC 37 negotiated a deal that allows members who entered service after July 1995 to retire at age 57 if they had 10 years of service. The cost of this benefit was originally set at 4.35 percent of salary in addition to the 3 percent that Tier IV members pay. It was also 4.35 percent of salary in addition to whatever the rate that the Tier II members pay. Experience showed that this rate was too high and the 4.35 percent was ultimately reduced to 1.85 percent of salary. A Tier IV NYCERS member now pays 4.85 percent of salary for the first 10 years of her or his career and 1.85 percent for the next 20 years. A Tier II member pays the entire total contribution for 25 years.
For transit workers in Tier IV, legislation was enacted in 1994 to change retirement benefits from a plan that allowed them to retire at age 62 with a pension of 2 percent of final average salary (FAS) for each year of service to a plan that allowed retirement with a pension of 2 percent of FAS per year of service at age 55 with 25 years of service. The original cost for this benefit was an additional 2.3 percent of salary contribution (on top of their regular 3 percent contribution) for their entire career. These additional contributions were eliminated effective Dec. 15, 2000, during the bull market, and now transit workers must pay 2 percent of their salary for their entire career. Part of the TWU tentative settlement (which TWU members ratified on the second try but the MTA refuses to honor) was to give transit workers refunds of the 2.3 percent form 1994 to 2000.
For sanitation workers in Tiers II and IV, legislation was enacted in 1992 that changed their pension benefits. Tier II members had their benefits improved from half pay after 25 years to half pay after 20 years. For Tier IV members, 2 percent of FAS per year at age 62 was replaced by 20-year half-pay. Additional member contributions of 5.35 percent of salary above basic contributions are required. Members are required to contribute the additional contributions for 20 years.
Since the benefits of each retirement system and the demographics of each system are different, we may have a different cost structure. You should feel confident that we will negotiate the most cost-effective rate and a benefit structure that best meets the needs of our members.
Usually, by the second April issue of the New York Teacher we can bring you news of the annual report of the Social Security trustees. But as this is written, the report for 2006 has not been issued. We are trying to find out when it will be.
The TRS’ tax-deferred annuity program is one of the most successful supplemental retirement programs in America. As you may have heard, true financial security in retirement is provided by a combination of Social Security, a traditional (defined benefit) pension, a supplemental retirement savings program and a solid retiree health insurance program. UFT members have all four. You have read in the papers how few other Americans have all four.
More than 70,200 members participated in the TDA program at the end of the last fiscal year. The latest report available shows total investments in the TDA of more than $13.2 billion. This is the largest TDA program in the country. It is so popular that even after they retired more than 30,000 TRS members left their TDAs with the TRS for continued investment. Still, the large number of retirements (more than 18,900 in the last four fiscal years) means that many TDA participants left the school system so the participation rate in TDA fell from 76 percent of TRS members to 65 percent of TRS members.
The TRS is attempting to increase the participation of younger/newer members by holding what it calls “The Spring Campaign.” TRS is sending a letter, a TDA enrollment form and a brochure with the theme “Peace of Mind” to all TRS members (approximately 35,000) who are not participating in the TDA. The UFT has been proactive in the design of this program and we join the TRS in urging non-participating members to participate in the TDA.
In addition, we urge that members who have reached 10 years of credited or memb er service consider adding to their TDA contributions all or part of the no-longer-required 3 percent Qualified Pension Plan contributions. Members should also consider increasing their contributions on the basis of the recent salary increase we received.
If you have any questions about the TDA, contact TRS or your UFT borough office.
Today’s older Americans live longer, have lower rates of disability, achieve higher levels of education and less often live in poverty than Americans who came before them. The report “65+ in the United States: 2005” finds the U.S. population aged 65 and older is expected to double in size to 72 million within the next 25 years. The age group 85 and older is now the fastest-growing segment of the U.S. population. The population with a disability fell from 26.2 percent in 1982 to 19.7 percent in 1999. The population living in poverty decreased from 35 percent in 1959 to 10 percent in 2003, mostly attributed to income from Social Security. Florida, with 17.6 percent of its population 65 or older, is the “oldest” state in America. More of the report is available at www.census.gov.
“On retirement” is compiled and written by Mel Aaronson, Sandra March and Mona Romain, teacher-members of the NYC Teachers’ Retirement Board. For further information on items discussed, call your UFT borough office or the TRS. BRONX: 1-718-379-6200; BROOKLYN: 1-718-852-4900; MANHATTAN: 1-212-598-6800; QUEENS: 1-718-275-4400; STATEN ISLAND: 1-718-605-1400; Teachers’ Retirement System: 1-888-8NYC-TRS (692-877).