Secure Your Future
When you’re fit is the best time to think of your mortality
Apr 28, 2005 1:01 AM
The passing of a greatly admired religious leader, Pope John Paul II, has saddened people of all faiths. The tragic story of Terri Schiavo made the headlines for days. These two recent events demonstrate why all members of the Teachers’ Retirement System and the Board of Education Retirement System should think about their own mortality.
In-service members have a very significant death benefit that is paid to their designated beneficiary(ies) or estates. Who is going to get this significant sum?
What are your wishes for medical treatment if you become terminally ill and no longer able to make important decisions?
In-service death benefit
The Tier I death benefit is equal to:
- the amount of money in the deceased’s Annuity Savings Fund (ASF);
- the amount of money in the deceased’s Increased Take-Home Pay (ITHP) account; and
- a death benefit based on years of service. This benefit can be equal to one-half of a year’s salary for members with fewer than 10 years of service; to one year’s salary for members with 10 to 20 years of service; and to the entire pension reserve for a member who is eligible to retire but continues to work.
Most Tier II, III and IV members get a benefit equal to:
- the money in their ASF —Tier II — or Member Contribution Accumulation Fund (MCAF) — Tier III/IV; and
- a benefit equal to one year’s salary upon completion of one year of service; two years’ salary upon the completion of two years of service; three years’ salary upon the completion of three or more years of service. At age 61, the size of the benefit begins to diminish by 5 percent per year but is never below 50 percent of three years’ salary while the person is working.
As you can see, the death benefit is significant and should go directly to the person(s) listed on the TRS or BERS designation of beneficiary form. If no designation is listed, the money goes to the estate of the deceased and will have to be probated.
Even worse, as the headline in the Newsday March 20 issue screamed, “He’s not the beneficiary after all.” The husband of a deceased TRS member applied for the death benefit he thought due him from TRS after his wife passed away. Lo and behold, he discovered that his late wife had filed her designation form 30 years ago, before they knew each other, and she named her sister as beneficiary (not uncommon). His wife never changed the beneficiary form. TRS under law can only pay the considerable benefit to the sister.
We have been saying in this column and at meetings for years that you must have an up-to-date designation of beneficiary form on file at the TRS and at the UFT Welfare Fund. You should also check all other institutions where you may have the right to name a beneficiary. Every time there is a life altering event, the designation must be reviewed and changed if appropriate.
Each year in your Annual Benefits Statement (ABS), the TRS reports both the value of the death benefit and the name of your beneficiary(ies) for both the Qualified Pension Plan (QPP) and the tax-deferred annuity (TDA). You need a separate designation form for the QPP and TDA. Most people name the same people for both but it is not necessary to do so. Please, please act on this so you do not cause problems for those you love.
End of life wishes
Planning end-of-life care is difficult. Your decision to accept or reject medical procedures ultimately depends upon your personal wishes. The events we just witnessed in the tragic Terri Schiavo case point out clearly the need to make your health care wishes known so that they can be honored if and when you are unable to make decisions yourself. Preparing a few simple legal forms known as Advance Directives can help ensure that your wishes are respected and your health care stays in the hands of people you trust.
Advance directives include:
A Living Will — a document that contains your health care wishes and is addressed to unnamed family, friends, hospitals, caregivers, etc. You may use a Living Will to specify your wishes about life-prolonging procedures and other end-of-life care so that your specific instructions can be read by your caregivers when you are unable to communicate your wishes.
A Health Care Proxy — designation of a person named by you to make health care decisions on your behalf if you are no longer able to do so. You may give this person (your agent) authority to make decisions for you in all medical situations.
In summary
Advance directives work best when accompanied by discussions with your family and loved ones. You may also wish to speak with hospital representatives, your doctor or lawyer.
Advance directives can help you ensure your health care wishes are followed if you are unable to make decisions for yourself.
Advance directives can be canceled at any time, if you change your mind.
While thinking about this, you may want to help ensure your wishes regarding property, financial and other legal non-health care decisions on your behalf through a Power of Attorney. You may wish to discuss this with your attorney or, if you have none, call for information about NYSUT’s legal services plan at 1-800-626-8101.
A very complete guide to planning for your health care in advance and how to make your end-of-life wishes known and honored is available from New York Attorney General Eliot Spitzer’s office Web site at www.oag.state.ny.us. Select How to Make End-Of-Life Wishes Known and Honored under the Reports section.
Advance directives are not just for the elderly and chronically ill. Recent events show that health emergencies can strike at any age and at any time. Act now!
Important dates
April 29: Date by which the TRS must receive a QPP Investment Election Change Form (MA7) in order for Tier I/II members to effect QPP investment election changes beginning July 1.
May: Expected distribution of the Quarterly Account Statement (QAS) for the QPP and TDA. The QAS summarizes account information from Jan. 1, 2005, to March 31, 2005.
June 1: Date by which the TRS must receive a TDA Investment Election Change Form (TD45) or an online election in order to effect TDA investment election changes beginning July 1.
“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).
