October 2010 Issue
September 30, 2010

TRS: Studies confirm health of pensions

Source: NYSUT United

At a time when public pensions are under attack and alarmists claim the system will soon go bankrupt unless we trim benefits, we'd like to call your attention to a pair of recent independent studies that arrive at one conclusion: Public pensions are healthy.

Not only have public pension plans seen their overall health improve in recent months, they're also outperforming their private-sector counterparts and seeing better-than-expected returns on investments.

Those were the findings of a pair of recent independent studies reviewing the current condition of state and local pension plans. The non-profit National Institute on Retirement Security found public pension plans returned an average of 16 percent in 2009.

This was 3 percentage points better than the investment returns for their defined-benefit counterparts in the private sector. Long-term results have actually exceeded expectations, according to a recent review by the National Association of State Retirement Administrators.

NASRA found the median public pension return for the period ending Dec. 31, 2009, was 9.25 percent, well ahead of the assumed 8 percent rate of return.

Over the past 27 years, the New York State TRS rate of return exceeded the 8 percent assumption 18 times, or almost 70 percent of the time. In 17 of those 18 years, returns were in the double digits.

The bottom line: Our pension system is healthy. Over the last 20 years, investment returns accounted for 86 percent of NYSTRS income — not taxpayer money. For more details, read the full articles posted at www.nystrs.org.

Q: I will be 62 in 2014. At the end of the school year, June 2014, I will have worked as a teacher in my district for 23 years. I will not turn 62 until the third week in September. Can I retire in June without a penalty or do I need to work until my birthday?

A: You would be wise to set up a video consultation in your geographic area with a TRS representative by calling toll-free 800-348-7298, ext. 6100. The small reduction for retiring three months prior to your 62nd birthday might be worth it so that you can receive retirement payments for July, August and September. The math will help you make your decision, and the TRS rep will explain everything to you.

Q: What happens to my pension if I quit or resign? I've been in TRS for 25 years but I am not yet 55 years old.

A: Your pension will be vested, or on hold, until you are age-eligible. Your best avenue for official information on your specific case is to contact the TRS and set up an interactive video consultation in your geographic area. You'll receive answers to your questions and printouts of pension estimates for retirement.