Pension planning pays off

Welcome back from your well-deserved rest. We are starting the year on the heels of an enormous victory: preventing the layoff of 4,200 teachers. Can you imagine how much more difficult our already very difficult jobs would have been if we had that many fewer teachers this year?

We are heading into another year without a contract, but because of a state law that the UFT helped enact, our salaries and other contractual rights remain intact while members continue to get the differentials and step increases they are entitled to. With all the attacks on unionized workers around the country, you can see how valuable this protection is.

Did you notice that you received a 2 percent increase in take-home pay last year? As a matter of fact, all working Americans did when the Social Security payroll tax was reduced from 6.2 percent to 4.2 percent of salary. This was part of the stimulus package designed to put more money in the pockets of Americans in the hope that they would spend it, which would be good for the economy. President Obama is suggesting that the 2 percent reduction should continue next year. Social Security advocates do not favor this, arguing that Social Security does not add to budgetary deficits and therefore Social Security benefits should not be reduced if budgets are tight. But this argument doesn’t hold much water because the shortfall to Social Security created by the payroll tax reduction last year was made up from general taxes.

Social Security Trustees report

Did you know that 54.2 million people, about 1 in 6 Americans, received Social Security benefits in January?

This year’s Social Security Trustees Report found that Social Security had an annual surplus of $69 billion in 2010. These annual surpluses are projected to continue from 2011 to 2022, resulting in the growth of projected reserves to $3.7 trillion by the end of that period. Beginning in 2023, if Congress takes no action in the meantime, reserves will start to be drawn down to pay benefits. In the unlikely event (we were about to say very unlikely, but if we get future Congresses like the current Congress, who knows?) that Congress does not act before 2036, the reserves would be depleted and revenues coming into the fund would cover only about 77 percent of scheduled benefits and administrative costs. In a nutshell, Social Security is strong in the near term, and relatively modest changes can bring it into long-term balance over the next 75 years.

Social Security surplus funds are invested in U.S. Treasury Bonds, which, despite the recent rating downgrade by Standard and Poor’s, are generally accepted worldwide as the safest investment.

UFT offers many pension services

A recent survey by Fidelity of more than 500 corporate employees in U.S. employer-sponsored defined-benefit pension plans showed that 71 percent of these participants were not aware of how their plans worked. Even though more than half of those surveyed said they were counting on pension benefits to help pay for living expenses during retirement, 31 percent did not know when they became vested in their pension plans and 27 percent did not know the age at which they can begin to receive benefits.

UFT members who take advantage of the union’s many pension services are more knowledgeable. The UFT seeks to keep you informed by supplying the following services:

• this column, which appears in each issue of the New York Teacher;
• a pension newsletter, PensioNews;
• factual pension handbooks;
• speakers for chapter meetings or faculty conferences;
• pension consultants in each borough office for consultations, when appropriate, or to answer questions by phone;
• boroughwide meetings on Tax-Deferred Annuities and other current issues;
• the Ready-or-Not program for those five to 10 years from retirement;
• pension clinics for all tiers for those two to three years from retiring [see dates on this page];
• a final consultation to give detailed information to members about to retire;
• three teacher-members who represent you on the Teachers’ Retirement Board; and
• up-to-date information on the union’s website, www.uft.org.

Pension file

Each Teachers’ Retirement System member should set up and maintain a file of important pension-related papers. This file should be accessible to a trusted person and should include:

• your copy of the up-to-date Designation of Beneficiary for the Qualified Pension Plan (QPP) and, if you participate in the Tax-Deferred Annuity program (and we hope you do), a separate TDA Designation of Beneficiary form;
• your most recent Annual Benefits Statement, which, among other things, has a record of your credited service and lists your beneficiaries;
• your most recent Quarterly Account Statement(s), one for the QPP and one for the TDA, if you participate; and
• any other document relevant to your retirement benefits (such as tier change and other correspondence from TRS).

Pension calendar

September: Newly appointed members and paraprofessionals who have not already done so should file TRS enrollment applications. Non-appointed pedagogues, part-timers and other titles that are eligible to join the Board of Education Retirement System (BERS) who have yet not enrolled in BERS should also do so.

This is especially important this year since both the governor and the mayor are threatening to reduce pension benefits for new members. If you get your application in before a new law is enacted, you will be enrolled under the current program.

October/November: Learn about the TDA program by reading the articles in the New York Teacher and on the UFT website as well as the material provided by TRS. Join the TDA program as soon as possible if you are not currently enrolled in order to maximize your contributions for the 2011 tax year.

Dates for filing investment election change form

In-service members in Tiers I/II and all in-service TDA members as well as retirees who are TDA-deferred members:

Investment election changes take place on the following dates: Jan. 1, April 1, July 1 and Oct. 1.

You may submit the form at any time. Your election would take effect on the next conversion date that occurs at least 30 days after TRS receives your form.

Retired Tier I/II members and all retired TDA annuitants:

Investment elections take effect on the same dates as above.

You may submit the form at any time. Your election would take effect on the next conversion date that occurs at least 60 days after TRS receives your form.

Protect your loved ones

Thousands of in-service members as well as those of you joining TRS this fall must file a designation of beneficiary form for both the basic pension plan as well as the TDA. These forms will make sure that your loved ones will be protected by the substantial TRS death benefits payable if you pass away while in service.

In-service TRS benefits

Retirement may seem so far away that many of you are not thinking about it, but there are retirement system benefits and protections that are provided while you are still in service. In coming issues, this column is going to describe:

• Death benefit provisions
• Disability retirement provisions
• The TDA program
• Loan provisions

This column is written for you. If there is a subject related to your retirement security that you would like us to write about, please let us know. Submit your suggestion to nytmail@uft.org and it will be forwarded to us.

“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.