Secure Your Future

Your union has come through for you

Jan 22, 2009 5:13 PM

We have been back for a while and it does not seem appropriate to make New Year resolutions at the end of January, but we want to wish you a healthy, good year and may 2009 be a year in which you continue to “Secure Your Future.”

Hopefully you took the time over the holidays to review our six suggestions on meeting your financial objectives. You should act on those that need your attention.

UFT does it again

Sometimes people question what the union does for them. We would like to give you the latest example of why membership in the UFT is so valuable. Few people knew that a provision in the Pension Protection Act (PPA of 2006) stipulated that, beginning January 2009, public pension funds (the Teachers’ Retirement System is one) could not credit member contributions with higher than a risk-free rate of return (currently 3 to 4 percent). Since federal law takes precedence over New York law, that would have immediately ended the 8.25 percent crediting rate we currently have in the Fixed Return Fund.

Randi Weingarten and the AFT figured out a way to attach an amendment to the pension bill that passed Congress in December. This amendment eliminated the requirement that the interest credit rate be reduced. Even though it affected all public employee retirement systems, it was the UFT through the AFT that led the charge for this amendment. Because of the AFT’s action, the TRS is still legally able to credit eligible accounts at the 8.25 percent rate until June 30, 2009, when the rate will be reviewed. We owe a great deal of credit to Bill Cunningham, the AFT legislative rep who honchoed this issue for us. This is another example of how COPE contributions are so important to our lives. Everyone who is invested in the Fixed Return Fund should immediately begin to contribute to COPE if they are not already doing so.

Loans

Another benefit provided by TRS is our right to borrow against our Qualified Pension Plan (QPP) and/or Tax-Deferred Annuity (TDA) accumulations. TRS has brochures on both kinds of loans. These brochures are available from the TRS or UFT.

Loans are very valuable when needed. TRS loans are easier to obtain than loans from private sources, may have favorable interest rates (see loan brochures) and are repaid by deductions from payroll. They are, however, not to be considered lightly, because if a QPP loan from the TRS is not repaid by retirement it may result in a taxable situation and will permanently reduce a member’s retirement allowance. TDA loans may be repaid after retirement if a retiring member defers removing the TDA, but must be repaid at retirement if the member is removing the TDA fund.

In November, more than 1,000 members took QPP loans totaling $6,322,950. More than 850 members took TDA loans totaling $9,126,240.

TIER V

It seems like déjà vu: the government does not learn from its past errors. There were years of good investment results which reduced the amount of money that the city had to pay for pensions (freeing up this money to provide other city services). But as soon as investment results temporarily go south, there is a knee-jerk reaction calling to reduce pensions for new employees, even though the city knows that a new pension tier causes divisiveness and poor staff morale. Every knowledgeable person knows a new pension plan will not give the city or state immediate financial relief during the current budget crisis. A new plan will not result in any savings at this time and only minimal savings in the near future.

Let us reassure those of you who are already retirement system members that your benefits are protected by a provision of the New York State Constitution, which says your benefits cannot be “diminished or impaired.” All the talk that is heard is referring to cuts for future hires. At this point we urge all paras, subs and other part-time workers to join the appropriate retirement system (TRS for paras, BERS for others) now. The union will strenuously fight to prevent passage of a Tier V. We saw what happened in the past when the city and state faced severe fiscal problems. We remember the breakdown in staff morale that occurred previously when new pension plans were implemented and it took us from 1973 to 2008 to eliminate the most onerous parts of the new plans.

Everyone must be alert to challenges to our defined benefit pension plan. The union will call on you to fight in the defense of our pensions.

So 2009 has begun and because of the terrible fiscal crisis, we are going to have a very active and challenging year. We know the UFT can count on you to take actions as needed.

Some major TRS achievements during 2008

• Implemented the most critical provisions of the age 55/25 law enacted because of the UFT’s political efforts. About 400 members have already retired under this law and approximately 40,000 members opted into the program.

Almost 6,000 new TRS members are already participating under the 55/27 provisions of the law.

• Passport Funds introduced three additional investment options, as well as increased flexibility and control over investment choices by offering more frequent and more rapid conversions of funds.

We thank TRS staff for their good work in these areas.

“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), www.trs.nyc.ny.us.