April 14, 2010

Governor signs 55/25 early-retirement option

Source:  NYSUT News Wire

Gov. Paterson signed the 55/25 bill for NYSUT members today, less than 24 hours after it landed on his desk.

Under the one-year plan, NYSUT members in both the New York State Teachers’ Retirement System and the New York State and Local Employees' Retirement System who are 55 or older and have at least 25 years of service will have an opportunity to retire without incurring a penalty.

"This is a win-win for educators looking to retire and schools crafting budget plans," NYSUT Executive Vice President Andy Pallotta said. "This bill will help schools better address their local budget needs and avert staff layoffs."

The window for NYSUT members in K-12 positions to retire is June 1 through Aug. 31. A timeframe for members in higher education positions at SUNY operated campuses and its community colleges will be set by the SUNY Board of Trustees but must end no later than Dec. 31.

Statewide, more than 6,000 educators and staff will qualify for the early-retirement option; more than 20,000 educators could face layoff under proposed budget cuts. Unlike previous early-retirement incentives, this option is available entirely at the employees' choice and does not require the district to opt in.

55/25: Frequently Asked Questions

These questions appeared in New York Teacher's TRS column written by Sheila Salenger, Michael Corn and Paul Farfaglia, your Teacher-Members on the New York State Teachers' Retirement System Board of Directors. In-service TRS members with pension questions can e-mail ssalenge@nysutmail.org or call Sheila Salenger (800-342-9810, ext. 6618) Michael Corn (315-735-8421) or Paul Farfaglia (315-431-4040).

Q: If the 55/25 legislation goes through, is it district-optional? My district is saying they do not have to honor it (or buy into it) and therefore it will not be available to me. The wording of the bill does not imply anything like that. Many of us assumed that it would be a blanket offer for anyone who meets the 55/25 requirement.

A: Whoever in the district is under the impression that the district has to "opt" in to the 55/25 is WRONG! If the bill is enacted, it will be between the individual and the New York State Teachers' Retirement System. Just as you don't need permission from your district to retire under normal circumstances, similarly you may retire under the 55/25 provisions, provided it is enacted and you are eligible.

Q: After reading your recent column 'Early-retirement option prompts many questions,' I was confused. I heard that it would be possible to retire at 55 with 25 years and get same pension as if I had worked 30 years. Is this not true?

A: At age 55, service of 25 years would provide a pension of 50 percent, or 2 percent for each year. It does not equate to 30 years.

Q: I will have finished 25 years after the 2012-13 school year and turn 57 that August (2013). Would this be a one-time offer if it gets passed, or would I be able to retire in 2013 with same terms as this early-retirement option?

A: The bill before the Legislature would apply only for 2010.

Q: I will be 59 1/2 years old in June with 23 years and 4 months of service in Tier 2. Will participation in the 55/25 retirement incentive have any impact on my retirement if I opt to retire in June? Would the yearly amounts be calculated differently with the new incentive or does it exclude me entirely?

A: Unfortunately you are not eligible for the 55/25 because you must be at least 55 (you qualify) and have at least 25 years of credited service (you do not qualify). Both factors must be fulfilled or you are excluded, and the usual penalties for retiring with less than 30 years will apply.

Q: I recently met with a retirement representative regarding the 55/25 retirement option that might be offered to prospective candidates this year. Unfortunately, I will have 24 years and five months of service credit at the end of this school year. It's frustrating that I'm so very few months short for this early-retirement incentive, and more so because in the last issue of New York Teacher, it was stated that the incentive will be a one-time offer. Now, I've missed very few days of work while teaching and have numerous sick days accrued, but I was told this can't be used as credit. Is there a possibility of purchasing five months of credit, or could I apply for the incentive should it be passed and have it take effect in January of next year? Are there any options available to me?

A: Unfortunately, there is no flexibility in further interpretation of the verbiage of the intended statute. Should it be enacted, it will ONLY establish eligibility for those members who meet BOTH requirements of minimum age (55) and minimum years of credited service (25) at the time of retirement; which MUST be during June, July or August of 2010. There is no provision to apply under the incentive and retire at a later date.

Q: I retired on July 1,2009, and am wondering if I would be eligible for the 55/25 if it passes. I have 25 years in the public school and retired at 59. If I am, what would I have to do?

A: Only Teachers' Retirement System members in service from Feb. 1, 2010, until June 1, 2010, would be eligible for the 55/25 option, assuming they meet the age and credited service requirements. The bill, which was approved by the Senate recently, would not be a retroactive law.

Q: I have been following the 55/25 issue. I will not be 55 for three more years. I wrote to Sen. Savino and Assemblyman Abbate to ask if there is any discussion of making this permanent. What are your thoughts on this?

A: As of now, there is no indication of a permanent 55/25; however, NYSUT will keep the bill to make 55/25 permanent in its Legislative Program.

Q: One of our district reps tells me the 55/25 early retirement option being considered would mean that one can retire early with 60 percent of salary as if you had worked 30 years. I understood it to mean only that the early-retirement penalty would be removed. Hence, a person retiring with 25 years would get 50 percent and so on. Who's right?

A: You are correct! Please tell your district rep before he/she misinforms others. It's nice thinking to provide us with more benefits, but the whole point of 55/25 is that people do not have the penalty.

Q: I am retiring from teaching as of July. I am 62 years old with 23.6 years of time in the system. Can you tell me if the proposed early-retirement bill has any provision to encourage a Tier 1 like myself to retire? I am sure there are not many teachers out there like me, but it occurred to me that perhaps the state might be motivated to also entice someone like myself to retire. I am aware that Tier 1 folks are not "penalized" for leaving without the 25/55 combination, but I would feel really foolish if I did not explore the question because I am sure that it would not be an aspect of the bill that would be widely publicized when it is passed.

A: The 55/25 bill would only be for Tiers 2, 3 and 4 members, who are at least 55 and have a minimum of 25 years of credited service. It is meant to provide a one-time opportunity to retire without the penalty for not having 30 years of credited service. Tier 1 is a 55/20 plan. You qualify to retire without penalty.

Q: If 55/25 does go through this year, will it be a one-year opportunity, or will it be the standard from now on?

A: It will be a one-time offer for 2010 only.

Q: I see that NYSUT is pushing legislation for the early-retirement option for pre-K-12 employees, but what about the SUNY employees?

A: Under the legislation, the eligibility criteria is membership in either TRS or the Employees' Retirement System, and NYSUT membership. Therefore, a SUNY employee who is a NYSUT member and belongs to either the TRS or ERS would be eligible.

Q: I have a question regarding the possible 55/25 retirement option. My colleagues and I are unclear as to what retiring without penalty actually means. I have 25 years of service and will be 58 before the end of the school year. If the option becomes a reality, will I receive 60 percent of my FAS or 50 percent?

A: The FAS formula is as follows: 2 percent for each year of credited service. If a member has 30 years the percentage factor is 60 percent. Obviously then, with 25 years of credited service the factor would be 50 percent. Normally, if the member is not 62 and does not have the 30 years of service, there is a penalty. The whole point of the 55/25 is that during the designated three months in 2010, Tier 2, 3 and 4 members who qualify (through age and service) and retire at that time will receive the 2 percent per year and not sustain any penalty.