Know your rights
TRS offers new ways for you to invest
Mar 27, 2008 3:51 PM
Teachers’ Retirement System investment choices are designed to provide a fiducially sound group of options intended to complement and supplement the defined benefit Qualified Pension Plan (QPP). These choices are now being enhanced with new choices that will become available beginning July 1.
The three choices that we now have — the Fixed Dollar Account, Variable Annuity A and Variable Annuity B — will continue to be available but their names are being changed:
The Fixed Dollar Account will now be called the Fixed Return Fund.
The Variable A fund will now be called the Diversified Equity Fund.
The Variable B fund will now be called the Stable Value Fund.
The three new funds that will be added are:
1. The International Equity Fund
2. The Inflation Protection Fund
3. The Socially Responsive Fund
All the investment options — old and new — will now collectively be known as the TRS Passport Funds.
The goals of the currently available funds will continue despite the name changes:
The Fixed Return Fund offers a guaranteed rate of return set by the New York State Legislature. The current rate is 8.25 percent and that is guaranteed through June 30, 2009. At that time, the rate will be reviewed by the Legislature.
The Diversified Equity Fund will continue to be a broadly diversified stock program mostly invested in domestic stocks, with a 15 percent allocation to international stocks in developed countries. There is also an investment in a defensive strategy to control volatility. The object is to achieve a rate of return comparable to the broad stock market.
The Stable Value Fund invests in low volatile fixed-income securities such as GICs, short-term bonds and cash. The goal of this fund is preservation of capital while returning current interest rates.
The goals of the new funds are:
The International Equity Fund invests in non-US companies listed on a variety of stock exchanges in developed countries around the world. The objectives are to provide long-term capital growth and to achieve a rate of return comparable to that of non-U.S. developed stock markets over a full market cycle. This fund does not invest in the stocks of companies in emerging markets. The fund will be invested in the same manner as the International component of the Diversified Equity Fund (Variable A).
This fund was added for those members who want to invest in international markets to a greater degree than the international investments in the Diversified Equity Fund.
The Inflation Protection Fund invests in funds that may include (but are not limited to) commodities, real estate securities and inflation-linked bonds. The objective is to provide a positive real rate of return that exceeds inflation over a full market cycle.
This fund was added as protection against inflation in our retirement savings. Inflation over the years has stealthily lowered the standard of living of retirees. This investment is designed to combat inflation over time.
The Socially Responsive Equity Fund invests in U.S. stocks. The fund attempts to avoid companies receiving a significant portion of revenue from alcohol, tobacco, nuclear power or firearms or that have poor labor relations or harm the environment. Objectives are to achieve positive long-term capital growth and to earn a rate of return comparable to that of the broader stock market while reflecting social priorities.
This fund was added to give members a chance to “do good” for the world while doing well financially for themselves.
While the objectives of these funds are meritorious, there is no guarantee that they will be met.
New rules for investment changes
Besides new investment choices there have also been changes in the rules and regulations of the investment program.
For in-service members:
• A choice of new, shorter conversion periods of three, six or nine months in addition to the current 12-month conversion period.
• QPP investment changes — in the Annuity Savings Accumulation Fund (ASF) and the Increased Take-Home Pay (ITHP) — for Tier I/II members will be permitted quarterly.
• Tax-deferred annuity (TDA) investment changes will continue to be quarterly.
• Simpler choices will be available at retirement or at TDA annuitization.
For retirees:
• Choices of new, shorter conversion periods of three, six or nine months in addition to the current 12-month conversion period.
• Quarterly investment charges will be permitted for QPP (ASF and ITHP) for Tiers I/II members and TDA (annuitized).
• Investment changes for deferred TDA will continue to be quarterly.
TRS pre-launch communication
• Articles in the winter 2008 editions of In-Service News (for in-service members) and Benefit Report (for retirees).
• Retirees should have received an announcement postcard at home (if TRS has your current address).
• During the week of March 31, retirees will receive a launch kit at home informing them of changes in program. This kit will include brochures describing the plan, a cover letter and forms.
• During the week of April 14, retirees will receive a reminder postcard at home.
• Retirees who wish to change their QPP investments beginning July 1 must act by May 1.
• In-service members should have received an announcement of the program at home (if TRS has your current address).
• During the week of April 28, in-service members will receive a launch kit at home informing them of changes in the program. This kit will include brochures, a DVD and forms.
• During the week of May 5, in-service members who do not participate in the TDA will receive a reminder postcard.
• During the week of May 12, in-service members who do participate in the TDA will receive a reminder postcard.
• In-service members who wish to change their investments beginning July 1 must act by June 1.
UFT pension consultants as well as TRS staff will be available to answer questions on procedures and the new investment flexibility. Call the numbers listed below. Neither the UFT nor the TRS is permitted by law to provide investment advice.
Readers know that we have warned members that the TRS does not have up-to-date addresses for many members. If you did not get a mailing on the Passport Program contact the TRS to provide your current address.
This is a permanent improvement. You do not have to act now to change your investment; you will be able to do so at any time in the future.
We believe that this new program is another helpful step in helping to “Secure Your Future.”
“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.
