Retired Teachers Chapter News
Investment elections changes
Apr 26, 2007 12:01 PM
May 1 is the deadline for retirees who joined the TRS prior to July 27, 1976, and for every retiree who is collecting a TDA check each month, to request changes in his or her investment elections.
Changes elected by May 1 will begin in July. Take advantage of our retiree annuity workshops for additional and expanded information. Call 1-212-598-6879 to register for the workshops in the metropolitan area. In Florida, call 1-561-994-4929.
While you have the right to make changes at this time, it is not a requirement. Remember: This is your retirement income we are discussing and investment decisions should be based on that fact.
Investment choices: The New York City TRS is the only public retirement system that offers the beneficiaries of Tiers I and II and TDA annuitants three choices on investing retirement contributions. As a result of the UFT’s legislative success in Albany, the decision you make affects your Increased Take-Home pay (ITHP). The pension portion of your retirement allowance will be totally fixed and will not change each month. If you place the funds in the Variable program, the annuity portion of your retirement allowance will vary each month — some months up and some months down.
The UFT is extremely proud of making choices available to members, especially since the choices have provided more financial security to those who have made them in the past. A member’s decision about which program to invest in should be based on the individual’s own circumstances, knowledge of investment matters and tolerance for volatility or risk.
Fixed: Has no volatility. Your check will not grow or diminish each month.
Variable A: Participants in this program invest in a fund consisting mainly of common stocks. This is the most volatile of the three choices available. Over the past 10 years ending Dec. 31, 2006, Variable A has earned 8.67 percent, the greatest rate of return of all available choices. In common with other stock investments, this choice has the possibility of greatest growth along with the risk common to an investment in the stock market. For the first time in history, the Variable A program had losses three years in a row, during 2000, 2001 and 2002. While it is not easy to see our pension checks go down, they can go up again. And in 2003, 2004, 2005 and 2006 the Variable A Fund did just that. It increased by 16.17 percent in 2006. Variable A is probably right for you if your primary investment goal is long-term growth and you understand the risks of such an investment. Past results are no guarantee of the future.
Variable B: Participants invest in a fund which invests primarily in high-quality stable, fixed-income instruments designed to provide returns with a minimum of fluctuation. These instruments include Guaranteed Investment Contracts, short-term bonds and money-market-type investments. Variable B is designed to provide current rates of return and security of principal. In 2006, the rate of return was 3.93 percent at a time when two-year Treasuries earned 3.77 percent. Over the last 10 years, the average annual rate of return has been 5 percent. For the last year, because Variable B earned less than 4 percent, retirees have seen their pension checks slightly reduced. Past results are no guarantee of the future.
Retirees wishing to make a change in investment election may get forms by calling the TRS Service Line at 1-888-8NYC-TRS — that is, 1-888-869-2877. Forms are also available at the UFT Pension Department, 52 Broadway, 17th Floor, New York, NY 10004, or by calling 1-212-598-9536. Florida retirees should contact the Florida office at 1-561-994-4929, request form Investment Election Change — QPP; or form Investment Election Change — TDA.
