Q: I'm hearing a lot about the threat the upcoming constitutional convention vote poses to my pension. How does the constitution protect my pension rights?
A: In New York State, our pension system is unique. Under our constitution, the agreement between members and the New York State Teachers' Retirement System is a contractual relationship, meaning that, by law, your benefits can't be diminished. That's a good thing, because it keeps the state and other public employers, like school districts, on track with their required employer contributions to the retirement system. These protections are guaranteed by article 5, section 7, of the New York State Constitution. However, if that provision is eliminated or changed, those protections could go away.
New Jersey is a cautionary tale. For decades state officials underfunded the New Jersey pension system producing a $40 billion plus unfunded liability and placing the pension system for New Jersey teachers and government workers on the brink of collapse. Our current constitution guarantees that a similar situation can't happen in New York State. But if that wording is removed, there's no guarantee New Jersey's reality couldn't become ours.
Q: It's reassuring to know that current New York State law requires the state and other public employers to contribute to the pension system. How much are employers mandated to contribute?
A: The NYSTRS is funded in three ways: investments, employer contributions and member contributions. Investment income is generated through equities, fixed income, real estate and other financial vehicles according to an asset allocation policy that maximizes returns through diversification, and limits risk. Members contribute varying amounts to the pension fund according to their retirement tier.
Employers contribute a fixed percentage of member payroll. The contribution rate is determined annually based on NYSTRS' investment performance. For the 2017–18 school year, the employer contribution rate is 9.80 percent — a 16 percent decrease from the 2016–17 rate of 11.72 percent and the third consecutive year the rate has declined. NYSTRS remains one of the best-funded pension plans in the country.
Did you know
A constitutional convention vote takes place Nov. 7 in New York State. Vote "no" to protect your retirement security!