Q: I saw that the TRS board approved a "pension-smoothing" plan to take some of the pressure off school districts. How will this work and will it jeopardize my pension?
A: After the governor proposed the idea in January, the New York State Teachers' Retirement System studied the issue carefully, including an internal review and hiring Cheiron Inc., a Virginia-based actuarial consulting firm, to conduct an independent analysis. The Legislature approved the plan as part of the state budget, which the governor signed into law on March 29. At a special meeting on April 9, the NYSTRS Retirement Board unanimously approved implementation of the plan.
The plan allows NYSTRS employers to elect a seven-year stable contribution option, rather than paying the annual contribution rate as calculated by TRS. (In 2013-14, districts are slated to contribute 16.25 percent.)
Districts will have one year, starting July 1, to decide whether to opt into the alternative plan.
Under the seven-year stable contribution plan, employers would contribute 14 percent in years one and two; up to 16 percent in years three and four; and up to 18 percent in years five, six and seven. Beginning in year eight (2020-21), employers would return to paying the actuarially required contribution rate set by TRS.
Participating employers will be able to opt out of the stable contribution plan at any point. Those opting out will resume payment of the actuarially required contribution rate and will be required to begin repaying any deferred amount, with interest.
It's important to note that the law has built-in safeguards to protect the TRS fund and pension benefits.
If TRS' funded status falls below 80 percent, the alternative plan will terminate and all participating employers will resume paying the actuarially required contribution. Currently, NYSTRS has 95 percent or more of the funds needed to pay benefits to retirees and beneficiaries, as well as the accrued benefits of active members - making TRS one of the best-funded plans in the nation.
NYSUT supported the pension smoothing plan to give school districts a potential solution to the short-term spike in the employer contribution rates, while maintaining the integrity of the state retirement system fund.
Prior to the current spike in employer contribution rates, school district payment rates were in single digits for more than 20 years. In six of those years, the rate was less than 2 percent — including three years when it was less than one-half of 1 percent.
Magee and Keefe endorsed for TRS board
Karen Magee and David Keefe were unanimously endorsed by RA delegates for re-election to the board of the New York State Teachers' Retirement System.
Magee, a remedial math teacher and president of the Harrison Association of Teachers, is seeking a full term as one of three teacher-members on the board. A longtime political activist, Magee was first elected in 2011 to fill the seat vacated by longtime board member Sheila Salenger.
Keefe, of Hempstead Classroom Teachers Association, is running for re-election as the retiree representative on the board. He is currently vice president of the TRS board and was first elected in 2004.
Magee's re-election bid will take place at the TRS Annual Convention in November. Keefe's re-election will be considered by retiree delegates this fall.