PRESENTATION TO THE NYS PRESENTATION TO THE NYS ASSOCIATION OF SMALL ASSOCIATION OF SMALL CITY SCHOOL DISTRICTSCITY SCHOOL DISTRICTS

PENSION REFORM 2012PENSION REFORM 2012

CHAPTER 18 CHAPTER 18 OF THE LAWS OF 2012OF THE LAWS OF 2012

May 21, 2012May 21, 2012

TIGHTENING IN 2009: TIER 5TIGHTENING IN 2009: TIER 5

For TRS members first entering on or after January 1, 2010:

3.5% career contributions10 year vesting25 years of service needed to be eligible for

2% pension factorNo unreduced benefit prior to age 57 with 30

years of serviceMore severe pre-2000 Tier 3/4 early

retirement reductions brought back in Tier 5

IMPACT OF TIER 5IMPACT OF TIER 5

TeacherAge 55$70,000 FAS TIER 1 TIER 4 TIER 5

25 Years of Teaching

$37,800+ $25,550 $21,585

30 Years of Teaching

$44,800+ $42,000 $25,901

FURTHER TIGHTING IN 2012: TIER FURTHER TIGHTING IN 2012: TIER 66For TRS members first entering on or after April 1, 2012:

Member contribution rates (3%-6%) based upon wages Prior service and military service costs 6% of wages Benefit accrual rate generally reduced No retirement with unreduced benefit prior to age 63 6.5% per year early retirement reductions 5-year FAS with wages in excess of 110% of the

average of the previous four years’ wages excluded from calculation

Annual wages in excess of $179,000 not pensionable Wages from more than 2 employers excluded from FAS

calculation 10 year vesting unchanged

TIER 6 MEMBER CONTRIBUTION TIER 6 MEMBER CONTRIBUTION RATESRATES$45,000 or less = 3%More than $45,000 to $55,000 = 3.5%More than $55,000 to $75,000 = 4.5%More than $75,000 to $100,000 = 5.75%More than $100,000 to $179,000 = 6%Contribution rates are generally

determined on 2 year lag basis; in first 3 plan years of membership on employer projections

Transitional 3.5% rate until April 1, 2013

CHANGES IN ACCRUAL RATESCHANGES IN ACCRUAL RATES

TIER 4 TIER 5 TIER 6

LESS THAN 20 YEARS

1.67%/year 1.67%/year 1.67%/year

20 TO LESS THAN 25 YEARS

40% plus2% for eachadditional

year

33% plus1.6% for each

additional year

35% plus2% for each additional

year

25 TO 30 YEARS

50% plus2% for eachadditional

year

50% plus2% for eachadditional

year

45% plus2% for eachadditional

year

MORE THAN 30 YEARS

60% plus1.5% for each

additional year

60% plus1.5% for each

additional year

55% plus2% for eachadditional

year

CHANGES IN EARLY RETIREMENT CHANGES IN EARLY RETIREMENT REDUCTIONSREDUCTIONSAge

TIER 4 TIER 5 TIER 6

55 73.0% 61. 7% 48.0%

56 76.0% 66.7% 54.5%

57 79.0% 71.7% 61.0%

58 82.0% 76.7% 67.5%

59 85.0% 81.7% 74.0%

60 88.0% 86.7% 80.5%

61 94.0% 93.3% 87.0%

62 100% 100% 93.5%

63 100%

CHANGES IN FAS CALCULATIONCHANGES IN FAS CALCULATION(figures rounded to whole numbers for presentation purposes)(figures rounded to whole numbers for presentation purposes)

Yrs Bef Ret

Salary* 110% AvP4

Usable FAS

9 $60,0008 $62,4007 $64,8966 $67,4925 $70,192 $70,067 $70,0674 $72,999 $72,870 $72,8703 $75,919 $75,785 $75,7852 $78,956 $78,816 $78,8161 $82,114 $81,969 $81,969

Tier 5 3-Yr FAS $78,996*4% an.

incr.Tier 6 5-Yr FAS $75,901

EARLIEST UNREDUCED BENEFITS BY EARLIEST UNREDUCED BENEFITS BY TIERTIER

TIER 4 TIER 5 TIER 6

EARLIEST AGE FOR UNREDUCED RETIREMENT

55(w/30 or more

yrs)

57(w/30 or more

yrs)

63(w/10 or more

yrs)

RETIREMENT BENEFIT (30 YRS)

60% of 3 Year FAS

60% of 3 Year FAS

55% of 5 Year FAS

RETIREMENT BENEFIT (35 YRS)

67.5% of3 Year FAS

67.5% of3 Year FAS

65% of 5 Year FAS

EARLIEST UNREDUCED BENEFITS IN EARLIEST UNREDUCED BENEFITS IN DOLLARSDOLLARS

Teacher$70,000 FAS

TIER 4 TIER 5 TIER 6

EARLIEST AGE FOR UNREDUCED RETIREMENT

55(w/30 or more

yrs)

57(w/30 or more

yrs)

63(w/10 or more

yrs)

RETIREMENT BENEFIT (30 YRS)

$42,000 $42,000 $38,500-

RETIREMENT BENEFIT (35 YRS)

$47,250 $47,250 $45,500-

COST IMPACT OF CHANGESCOST IMPACT OF CHANGES

TIER 4 TIER 5 TIER 6

EMPLOYEE CONTRIBUTION RATE

3%(10 yrs.

only)

3.5% 3-6%

LONG –TERM EXPECTED EMPLOYER COST(% OF PAY)

10.9% 7.9% 4.6%

LONG –TERM EXPECTED EMPLOYER/EMPLOYEE SPLIT

89/11 69/31 49/51

CHAPTER 18 DC FEATURECHAPTER 18 DC FEATURESUNY ORP opened to non-unionized

public employees after June 30, 2013To be eligible, employee must be

initially hired (not promoted) to a position with an estimated salary of $75,000 or more

Employers required to contribute 8% of wages

Employees contribute on same rate schedule as in Tier 6

OPTIONAL 57/30 BENEFIT OPTIONAL 57/30 BENEFIT ENHANCEMENTENHANCEMENTEligible members may retire with

unreduced benefit at age 57 with 30 years of service

Eligible members must hold a position represented by NYSUT bargaining unit

NYSUT must ask the Governor to implement the enhancement

Eligible members must make sufficient additional contributions to cover the cost of the enhancement