Secure Your Future

Preparing for the new year

Sep 7, 2006 10:27 AM

With this issue, “On retirement” becomes “Secure your future.”
Retirement may be only a distant dream for many UFTers, but making sure it’s a financially secure retirement should be an important priority for even the newest member. In every issue, this column, written by the teacher members of the TRS board, provides you with a blueprint for a secure future.

We hope you have had a good rest and are ready for a new school year. This year, we will be preparing for negotiations for our new contract, which begins in October 2007. The city is insisting that pensions for future Teachers’ Retirement System (TRS) members will be a topic of discussion.

As you may know — as a result of our last contract — a joint UFT/city committee has been working to develop a law to allow teachers to retire with an unreduced pension at age 55 with 25 years of service. The city is obligated by a contractual provision to jointly support 55/25 as long as it is cost neutral. The committee, chaired by UFT President Randi Weingarten, is working hard to come to an agreement, analyzing figures provided by an actuary. Progress is being made.

Retirement security will continue to be a big national issue. Even successful money-making private companies like Verizon and IBM have frozen pension plans. For IBM (a non-union firm), the freeze is for all employees; for Verizon, it is for all non-unionized employees. Unions are vital in the battle to protect their members’ pensions.

We are indeed fortunate to have a financially secure retirement to look forward to. Our members get a pension and Social Security benefits and they have the right to contribute to a tax-deferred annuity program as well as to New York City’s deferred-compensation plan.

Meanwhile, President George W. Bush is still pushing for the privatization of Social Security. In its mid-session budget review in mid-July, the Bush administration included a proposal to spend $721 billion over the next 10 years to privatize Social Security. Americans United, a coalition strongly supported by the AFT — the UFT’s national affiliate — is mounting a renewed campaign to call attention to the position of individual lawmakers on this issue. Two incumbents who support privatization are Sen. Rick Santorum, R-Pa., and Rep. Clay Shaw, R-Fla..

Because of the reduction in pension plans and meagerly funded retirement savings accounts, nearly half of baby boomers surveyed expect to work past age 65. Just to remind you, the baby-boom generation includes those born between 1946 and 1964. The first wave of which is now turning 60. It was reported that 60 percent of 60-year-olds, 32 percent of 65-year-olds and 19 percent of 70-year-olds were employed in 2005. It appears that longer work lives are in the future for American workers who do not develop health problems or lose their jobs because of company downsizing.

The Wall Street Journal, in its Aug. 12/13 edition, reported that Standard and Poor’s credit rating company has pronounced New York City’s municipal employee pension fund very sound financially. We report this because there has been some discussion in The New York Times about the funding of the city’s pension plans. We want to remind you that our pensions are guaranteed by the constitution of New York State and cannot be diminished or impaired.

2006 legislation

This year the 8.25 percent annual rate of return on the fixed dollar account in the Tax-Deferred Annuity (TDA) and the Annuity Savings Fund (ASF) was extended until June 30, 2009. This popular investment choice, which guarantees an annual 8.25 percent rate of return with no volatility, will be in effect for the next three years. At that time it will be re-examined.

This legislation — Chapter 152 — has been signed into law. It also includes various actuarial assumptions related to the city’s five retirement systems.

Here are some other pension-related bills that have been signed into law:

Chapter 27 — Prohibits for one year the unilateral diminution of health insurance benefits or reduction in contributions from employers of retired school district employees.

Chapter 74 — Increases the allowable earnings cap for retired public employees under age 65 who return to public service to $30,000 in 2007 from $27,500 in 2006.

Chapter 267 — Allows retirees to repay outstanding TDA loan balances from their retirement check.

UFT offers many pension services

For most of us, the benefits we enjoy through retirement system membership are our largest fiscal asset. The UFT seeks to keep you informed about these benefits by supplying the following services:

• This column, which appears in every issue of the New York Teacher;
• A pension newsletter, PensioNews;
• Factual pension handbooks;
• Speakers for chapter meetings or faculty conferences;
• Pension consultants in each borough office for consultations when appropriate or to answer phone questions;
• Borough-wide meetings on tax-deferred annuities and other current issues;
• Pension clinics for all tiers;
• The “Ready-or-Not” program for those nearing retirement;
• A final consultation to give detailed information to members about to retire;
• Three teacher-members who represent you on the Teachers’ Retirement Board; and
• Up-to-date information on the union’s Web site: www.uft.org.

Pension file

Each member of the Teachers’ Retirement System should set up and maintain a file of important pension-related papers. This file should be accessible to a trusted person and should include:

• Your copy of the up-to-date Designation of Beneficiary form for the Qualified Pension Plan (QPP). If you participate in the TDA program, a separate TDA Designation of Beneficiary form is required.
• Your most recent Annual Benefits Statement (ABS), which among other things has a record of your credited service and a listing of your beneficiaries.
• Your most recent Quarterly Account Statement(s) (QAS), one for QPP and one for the TDA, if you participate.
• Any other document relevant to your retirement benefits (such as tier change documents and purchase of layoff time documents).

Pension calendar

September: Newly appointed members and paras, who have not done so, should file TRS enrollment applications. Non-appointed pedagogues and part-timers, who have not done so, should enroll in the Board of Education Retirement System (BERS).

October: Study carefully the facts about the TDA program. Read the articles in the New York Teacher and study materials provided by the TRS.

April: Tier I/II members must make decisions on the investment of their Annuity Savings Fund and their Increased Take-Home Pay accounts. Review your investment goals carefully. April is the month to elect changes in your participation in the fixed program or the two variable programs. The deadline for filing for a change is May 1. Changes begin on July 1.

TDA quarterly investment changes: Here are the dates for quarterly investment changes for TDA, including deferred accounts:

• Nov. 1 to Dec. 1 (or the last business day of November, if Dec. 1 falls on a weekend);
• Feb. 1 to March 1 (or the last business day of February, if March 1 falls on a weekend);
• May 1 to June 1 (or the last business day of May, if June 1 falls on a weekend);
• Aug. 1 to Sept. 1 (or the last business day of August, if Sept. 1 falls on a weekend).

Changes would take effect on Jan. 1, April 1, July 1 and Oct. 1, respectively.

If you have any retirement-related items you would like to see in this column please feel free to contact one of us.

Major problems looming

Between Jan. 1, 2000, and Dec. 31, 2005, 56,436 new TRS members were enrolled. They were asked as part of the enrollment process to submit Designation of Beneficiary forms as well as proof of date-of-birth (DOB) documentation. Fewer than half of new members have done so. Only 45 percent have filed beneficiary forms (each person in the system needs one for the Qualified Pension Plan (QPP) and one for the TDA). Even fewer, 39 percent, have filed DOB documentation.

Members who have not filed these forms are leaving themselves and their loved ones at great financial risk. Beneficiary forms can be obtained at the UFT, TRS or downloaded from the TRS’ Web site at www.trs.nyc.ny.us. We cannot stress too strongly how important this matter is.

TDA

Members who enrolled in the TDA during the Spring Campaign should see deductions from their check on the first payroll in September.

“Secure your future” 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).