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55/25!
Feb 28, 2008 12:06 PM
Governor signs bill making landmark pension gain a reality
A 55/25 retirement option long sought by the UFT took effect on Feb. 27 when Gov. Eliot Spitzer signed the legislation needed for it to become law. The landmark pension bill enables eligible UFT-represented educators to retire with unreduced benefits five years sooner than they could before.
“It took 14 years of relentless work — in the political arena and at the negotiating table — for us to obtain this age 55 retirement plan,” said UFT President Randi Weingarten. “Twenty-five years constitutes a career. It’s really hard work to teach, and our members deserve to be able to retire with an unreduced pension after that length of service.”
Under the new retirement option, in-service educators in Tiers II, III and IV will be able to retire with 25 years of service and begin collecting an unreduced pension at age 55. Previously teachers and other Teachers’ Retirement System members hired after 1973 had to work 30 years or wait until they were 62 in order not to have their pensions reduced, while Board of Education Retirement System members, such as therapists and nurses, had to be 62 to retire with an unreduced pension.
180-day opt-in window
Starting on Feb. 27, eligible UFT members have a one-time-only 180-day window to opt in.
Those who opt in will have an additional 1.85 percent of their salary deducted from their paycheck retroactive to Feb. 27. The additional contribution will continue until June 29, 2008 or until the member completes 25 years of service, whichever is later. The earliest that an eligible member may retire is June 30, 2008.
The plan for future hires is somewhat different. Their retirement plan will automatically be an age 55, 27 years of service plan, paying the same 1.85 percent of salary.
The timing of this pension improvement was remarkable in light of the growing attack on defined-benefit pensions at the local and national levels and the fight by many workers simply to preserve their existing retirement benefits.
“We were swimming against the tide and we still managed to achieve this new benefit,” said Weingarten. “It shows the importance of collective bargaining, political action and a willingness to fight for what members need, even against the tide and after several defeats.”
A long struggle
For years, the UFT lobbied aggressively for an age 55 retirement plan, which the union viewed as especially vital for female educators who took time off for child-rearing or other family obligations.
The first breakthrough was in 1997, when the state Legislature passed a voluntary 55/25 plan only to have a governor veto it. Then, in the 2005 collective-bargaining agreement, Weingarten negotiated a “placeholder” on 55/25. In that contract, the city agreed to jointly seek 55/25 legislation in Albany if the plan was “cost neutral.” The city’s support was crucial since its opposition had torpedoed earlier attempts that the UFT had made since 1995 to get a 55/25 bill enacted in Albany.
Over the next two years, the union and the city wrangled over the cost but were unable to reach agreement — particularly since the 55/25 plan that Transport Workers Union Local 100 had, for which they paid approximately 2 percent of salary, was so much an issue in their 2005 contract negotiations and strike. Management had wanted them to pay triple.
The opening came this past October. The U.S. Congress was considering an individual merit pay plan as a condition of getting No Child Left Behind funding. Instead, the union and the Bloomberg administration agreed to work on the two remaining issues in the 2005 contract: schoolwide bonuses and 55/25. Weingarten tied the adoption of the voluntary schoolwide bonus plan, which shut the door on individual merit pay, together with the administration’s agreement to support 55/25.
The bill moved quickly. The Assembly passed it on Feb. 11 by a vote of 134 to 8. The Senate, on Feb. 13, approved it 54 to 0. The governor signed it on Feb. 27. Under state law, the Legislature and governor must approve changes to pension plans for New York City public employees, including teachers.
Cost in dispute
The ultimate cost of the early retirement plan is in dispute, due to differing actuarial assumptions about how many people will opt in to the plan and when they will eventually retire. The mayor’s fiscal plan estimated the salary savings at $43.1 million next year, rising to $101.2 million by 2012. City Actuary Robert North concluded that the pension plan would cost the city $99.2 million in the first year.
Budget watchdogs, including the Citizens’ Budget Commission, opposed the granting of the pension improvement.
“You can’t have a more generous pension system and not have it cost more money,” CBC Research Director Charles Brecher told The New York Times. “It’s taking a pension system that is already pretty generous and making it even more generous.”
Joel Frank, the pension columnist for the civil service Chief newspaper, lauded the UFT’s 55/25 plan.
“This is a tremendous improvement to the current benefit formula,” he wrote. “In my view, it is the most significant improvement in the formula benefit since the TRS instituted Tier I benefits on July 1, 1970.”
Most importantly, according to Weingarten, it gives Tiers II, III and IV members the right to an age 55 pension after 25 years of hard work: a right they have wanted since 1973.
She concluded: “Even with all the fights we must wage for respect and dignity and for quality teaching and learning conditions, particularly in this era of economic uncertainty and top-down accountability, today, Feb. 27, is a great day for educators.”
