New York City public schools have been inundated in recent years with solicitations from financial-product vendors pretending to be “pension consultants” or “advisers.”
Some have tricked principals into inviting them into schools. Others have invited Teachers’ Retirement System members to so-called “seminars,” at which attendees are told that the TRS’ pension options for retirees are inferior to the insurance products sold by the event’s organizers.
Since such vendors also typically sell investment products, their seminars always include disparagement of the TRS’ investment choices and a suggestion that TRS members should remove all available funds from the retirement system and invest with the vendor. They don’t mention that their insurance and investment products come with much higher fees than are incurred at the TRS.
Another problem is that these salespeople who purport to be pension experts give every TRS member the same advice: “Take a maximum loan; remove any excess funds; remove your TDA funds at retirement; and buy an insurance policy instead of taking an option from the TRS.”
Does every TRS member have the same characteristics and needs at retirement? Nonsense! Yet these hucksters prescribe the same one-size-fits-all formula no matter the health, age or financial situation of a retiree or the retiree’s beneficiaries. Their only interest is their own commission — not the welfare of their clients.
Of course, there are scrupulous, bona fide financial planners who can truly help retirees. We tell you below how to find them.
UFT has pension consultants
For 50 years, the UFT has maintained a staff of pension consultants. Each has passed a rigorous training program and attends monthly meetings to keep up to date on pension issues.
The sole interest of the UFT’s pension consultants is to make sure you fully understand your TRS benefits and the ramifications of various decisions you make in regard to your retirement system benefits.
As a TRS member, you will meet with UFT pension consultants prior to retirement to receive information on a variety of matters, including:
- an estimate of your maximum retirement allowance;
- the various methods of providing for heirs and beneficiaries and the costs for each choice;
- your right to remove available funds from your TRS accounts and the effect of doing so, such as the reduction in benefits and the tax consequences of the removal;
- health insurance and Welfare Fund benefits in retirement; and
- general information on taxes related to your retirement allowance.
The UFT provides this service and other preretirement educational services for all dues-paying members. Our pension consultants are available to speak at your school during a UFT meeting or faculty conference.
UFT pension consultants are paid by the union, not the TRS or a private investment firm, which helps to ensure that the information they give you is impartial. They do not offer advice on how to invest your money. But once you have absorbed their impartially presented information and understand your financial situation, you may want more help if you have complex planning needs. Where should you turn for unbiased financial information?
For more help on financial planning
These days, ordinary people without any expertise in finance can find a great deal of helpful articles in newspapers and magazines.
In addition, many colleges give continuing education courses on finance, as do many adult school programs.
You should read and take courses well in advance of either your retirement or your withdrawal of sizable amounts of money from your retirement accounts. Withdrawals should be taken only after getting advice from a person whom you have carefully vetted.
It is also important that you seek financial advice on your own initiative. Beware of salespeople who come into schools soliciting your business. This is a violation of the city Department of Education’s policy and bylaws. If a vendor of financial products appears in your school, report it to the UFT through your chapter leader. Similarly, no notices of financial sales meetings should be posted on school bulletin boards.
There are two main ways to pay for financial planning services. Some charge a fee for their services, while others make commissions on the products they sell.
Financial planners are neither licensed nor governmentally regulated. But some belong to professional organizations that certify a standard of performance or educational achievement. It is suggested that you contact one of the following groups for referrals:
- National Association of Personal Financial Advisors, 1-800-366-2732.
- American Institute of Certified Public Accountants, Personal Financial Planning Division, 1-800-862-4272.
- Society of Financial Service Professionals, 1-800-392-6900.
All of these groups recommend that you interview at least three candidates. It is also wise to get several references and to talk to at least two clients of a financial planner to determine if the planner satisfactorily addressed the clients’ concerns.
NYSUT Member Benefits endorses many popular programs like catastrophic health insurance, the NYSUT legal service plan and others such as financial services. For more information, you may wish to call NYSUT Member Benefits at 1-800-626-8101.
Remember, for most members, the benefits that the UFT has earned for them through the Teachers’ Retirement System are the most valuable financial asset they own.
Lifelong income for all, in addition to a large savings account for participants in the Tax-Deferred Annuity and Social Security, which was obtained for TRS members by the UFT’s predecessor organizations in the 1950s, ensures that UFT members can retire with a level of dignity that exceeds mere financial security.
Ask any UFT retiree you know.
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For more information, see Pension.