Secure Your Future

Things to consider if you’re retiring soon — and other matters

Feb 3, 2005 3:06 PM

July 1 is the most common retirement date of the year. If you are planning to retire at the end of this school year or after your summer program is completed, now is the time to make an appointment for a final pension consultation. Call the UFT Pension Department at 1-212-598-6866 to set up this invaluable meeting. If your appointment is made early enough it will be at the UFT office most convenient to you. It is advisable that you bring your spouse or significant other to become informed about the decisions which must be made in conjunction with retirement. The final consultation will cover:

• an estimate of your retirement allowance;
• a discussion of lump-sum distributions you may take;
• a discussion of your TDA account;
• assistance in filling out all required forms;
• an overview of retiree health insurance and Welfare Fund benefits;
• an explanation of taxation of your retirement allowance; and
• any last minute questions you may have.

Terminal leave vs. termination pay

One of the important decisions you have to make before your retirement date is whether to take Terminal Leave or Termination Pay.

A Terminal Leave is an extension of service of one day for every two days in the Cumulative Absence Reserve (CAR). It is available for people who are eligible to retire or will be eligible by the end of the leave.

• Terminal leave may be used if you are under age 55 but will turn 55 during the leave.
• Terminal leave may be used to reach some service goal such as 20 or 25 years.
• Terminal leave will give you a chance to try out retirement without committing yourself to retire. Except in January, or June, you can resume service by filing an application.
• Terminal leave time will give you more service credit and will also give you longer coverage in the in-service health insurance and Welfare Fund programs, as well as increased pro rata summer pay.

Termination pay on the other hand, provides you with a lump sum cash payment at the rate of 1/200 of a year’s pay for half the number of days remaining in your CAR when you retire. Payment is made in three annual lump-sums after retirement.

By taking termination pay, you collect your pension and an additional lump sum.

You should discuss your individual situation with a pension consultant. In order to take a terminal leave you must file an application one month before the leave begins. To collect termination pay, you should file an application when you retire.

Variable A

2004 was a very good year for Variable A. For the second year in a row it earned a double-digit return of 13.13 percent. This column will feature more details of Teachers’ Retirement System investment results in upcoming issues of the New York Teacher.

TDA

Did your TDA deductions for 2005 begin? You can still contact TRS for enrollment information. The sooner you start and the more you contribute the greater will be your financial security in retirement.

If you wish to make any investment changes in the TDA program for the second quarter of 2005, which begins April 1, you must apply in February. The filing deadline is March 1. Our next column will describe the investment choices and report on the returns for 2004.

Important documents

Who can make important decisions for you about your health or finances if you are severely disabled?

Last week we received a call from the wife of a member who was dying in the hospital. After some discussion it was obvious that for the benefit of the family the member should retire for disability. However, he was in a comatose state and couldn’t act. We asked if he had a Durable Power of Attorney naming a person to act for him in case of incompetence. Unfortunately, there was none.

It is essential that in order to deal with problems that can arise if a person becomes unable to conduct his or her affairs a Durable Power of Attorney should be completed by everyone. A Durable Power of Attorney names another person to act for you. Since the person named, known as the attorney in fact, has broad powers it should be someone you trust completely.

A second reminder at this time concerns your designation of beneficiary listing at TRS, the UFT Welfare Fund and other appropriate places. You must check to see if beneficiaries are listed in all places that you have the right to name one and if the listing is up to date. It is especially important to keep your beneficiary listing up to date at TRS and at the UFT Welfare Fund.

If you have no lawyer of your own who handles your legal affairs you should consider joining the NYSUT Legal Service Plan (which can be reached through the NYSUT Member Benefits Department at 1-800-626-8101). Discuss with your legal advisor the following documents:

• Durable Power of Attorney;
• will and other appropriate estate documents;
• Health Care Proxy;
• Living Will.

By having these documents prepared before they are needed you will go a long way toward easing the pain for your family if tragedy should strike.