Thousands of new educators have recently joined the union’s ranks as older members move on or retire. This year alone, we have welcomed 5,200 teachers and the DOE is still hiring.
The union has supported its members since its inception through better salaries, better working conditions, a voice in how schools are run and financial security with city-provided, premium-free health insurance and a defined-benefit pension.
To help newer members understand the benefits of union membership, we’re reviewing some basics.
The Teachers’ Retirement System
TRS was established in 1917 to manage the pensions of New York City public school teachers. All TRS members participate in the Qualified Pension Plan, a defined-benefit plan. TRS also offers an optional Tax-Deferred Annuity Program. The TDA program allows members to build more retirement income.
TRS membership is mandatory for most New York City educators; membership is optional for paraprofessionals, but the UFT strongly urges them to join.
TRS members are eligible for a defined-benefit pension when they retire, which provides a guaranteed lifetime annuity. It is based on factors such as length of employment and final average salary.
Not surprisingly, unions have fought hard to protect defined-benefit pensions for members. (Download the brochure, Your TRS Benefits in Brief for Tier VI Members)
The Qualified Pension Plan
Contributions to your Qualified Pension Plan are based on your date of membership in TRS. All TRS members belong to one of five tiers, generally depending on the date they last became TRS members. Benefits may vary by tier. Members who joined TRS after Aug. 31, 1983, and before April 1, 2012, generally belong to Tier IV. Members who joined TRS after March 31, 2012, generally are enrolled in Tier VI.
If you have been a member of an eligible city or state public retirement system, your membership date and tier status may change if you transfer your membership from another system to TRS. This is also true if you are reinstated to a previous membership/tier.
The Tax-Deferred Annuity program
Members may contribute to the Tax-Deferred Annuity Program, TRS’ supplemental retirement plan, to save even more money. For 2017, the contribution limit is $18,000; in 2018, you may contribute up to $18,500. Members over 50 may contribute another $6,000. This money is taken from your pay before taxes and reduces your gross taxable income. Taxes are generally deferred on contributions and investment earnings until you withdraw funds as income.
You may leave money to beneficiaries in the event of your death after your first year of TRS membership. You must fill out separate beneficiary designations for your Qualified Pension Plan and your TDA account. We strongly urge you to keep your designations current at all times. This ensures your death benefits are distributed as you intended without unnecessary delays or complications. You can assign designation of beneficiaries online on the TRS website.
You may borrow money against your Qualified Pension Plan after your first year of TRS membership, and from your TDA after your first year of participation in that program. Loans must be repaid within five years, generally through payroll deductions. Download the TRS brochures, QPP Loans and TDA Loans, from the TRS website.
If you worked for either the city or the state before joining TRS, you may be eligible for credit for this prior service in New York. The TRS website has information about service credit, types of eligible service, how to claim your credit and any costs involved. Make sure TRS is aware of any prior service you have by filing a Record of Prior Service form, which is on the TRS website.