Tuesday, July 01, 2014

The Tier 6 Pension Plan For New Teachers Is Inferior To Previous Pension Plans And The City Loves It!



























One of the reasons that the City wants to rid the school system of experienced teachers is that these teachers, if they can reach retirement age, will cost the City quite a bit of money once they start collecting a pension.  Furthermore, the ever increasing health care costs for retirees is a major factor in the City's budget projections.  Therefore, the City and the State came up with a less generous pension tier to save money down the road.  This is known as the tier 6 pension plan which came into effect on April 1, 2012 and any State or City employee hired from that date on is now part of the tier 6 pension plan.

In New York City the majority of teachers are part of the tier 4 pension plan while a few newer teachers are part of the tier 5 plan that came into effect on January 1, 2010 and lasted just two years.  This post will compare the three pension plans for New York City educators.


Tier 4 Pension Plan
Employee Contribution.............3% for ten years, 0% after
Final Average Salary................Top three consecutive years
Full Retirement Age..................62 years of age
Vesting Period..........................5 years
Multiplier, less than 20 years.....1.67% per year
Multiplier 20 years or more........2.0% per year
Multiplier more than 30 years.....1.5% per year
Retiree Health Benefits..............10 years of service
 Special Requirements................Full Retirement 30/55
Special Requirements.................Full Retirement 25/55
Age Reduction Factor
55(.73)56(.76),57(.79),58(.82),59(.85),60(.88),61(.94)

Tier 5 Pension Plan
Employee Contribution.............3% until retirement
Final Average Salary................Top three consecutive years
Full Retirement Age..................62 years of age
Vesting Period..........................10 years
Multiplier, less than 25 years.....1.67% per year
Multiplier 25 years or more........2.0% per year
Multiplier more than 30 years.....1.5% per year
Retiree Health Benefits..............15 years of service
 Special Requirements................Full Retirement 30/57
Age Reduction Factors
55(.62),56(.67),57(.72),58(.77),59(.82),60(.87),61(.93)

Tier 6 Pension Plan
Employee Contribution.................3.5%-6% until retirement
Final Average Salary....................Top five consecutive years
Full Retirement Age......................63 years of age
Vesting Period.............................10 years
Multiplier, less than 20 years.........1.67% per year
Multiplier 20 years or more............1.75% per year
Multiplier more than 30 years.........1.75% per year
Retiree Health Benefits..................15 years of service
 Special Requirements....................None
Age Reduction Factors 
55(.48), 56(.55),57(.61),58(.68),59(.74),60(.81),61(.87),62(.93)


3.5%$45,001,4.5%>$55,000,5.75%>$75,000,6%>$100,000.

A comparison summary by NYSUT for all tiers 1-6 can be found Here.

When you compare the tier 6 pension plan to the tiers 4 & 5 there is little doubt that the tier 6 pension is vastly inferior to the other pension plans previously and will cost the City less in pension and retiree health benefits in the future.  While the City will claim they want "quality teachers", their actions are dictated by how much savings they can obtain and that means pushing experienced teachers under tier 4 out and hiring "newbie teachers" not only with a lower salary but subject to the inadequate tier 6 pension, assuming they can last long enough to be vested.

11 comments:

Anonymous said...

Hey Chaz. What about the 25/55 program? Can you explain how that works in a tad more detail. (For tier 4 members) I am enrolled in it and my understanding is that I can retire at 55 if I have at least 25 years in the system. Thanks!

Anonymous said...

I didn't realize how bad Tier 6 is. Very slim chance of anyone in that tier staying for the long haul. If the economy improves it'll be a mass exodus. There's so much disrespect directed at us from all ends that you'd have to be nuts not to leave. There's only so much abuse people can take without snapping or getting sick. I recently had a 20 year old thug screaming over and over "suck my
d--k", I felt myself getting ill because I was afraid I would attack him. (The principal refused to suspend him; his mother came in and laughed about it after he did the same thing the second time in front of her - I took out an order of protection and had the entire staff do the same. He was then moved into YABC.)

Anonymous said...

TO ANON 1123am:
It is exactly the act you described (thug screaming suck my...)that the DOE will no longer suspend for. That's right. The DOE is sending a message to the "CHILDREN" (don't you love when an admin refers to 21 year old thugs who has "been away" several times as CHILDREN?hahahaha)
that this type of behavior WILL BE tolerated (not encouraged, but tolerated)and will only result in a parent meeting. Nothing more. No SAVE room, no superint. susp either.

No nothing advocacy groups believe the CHILDREN (again, 19 years olds with 6 credits referred to as CHILDREN)are being suspended for infractions that only warrant a parent meeting.

Cursing directly at a teacher in front of a packed class will result in zero consequence... in September. New discipline book comes out with annual changes. You'll see.

Anonymous said...

No more suspensions in Newark either. Teachers will make everybody happy like one big family.

Anonymous said...

With regard to the 25/55 program, you can retire at anytime after the age of 55, but if you dont have 25 years in, you will tak a hit on your pension. As knowlegeable as Chaz is , the only person that can answer your question is the counselor at a TRS retirement consult.

Go sign up

Anonymous said...

Anon 3:30...wasn't that a special, one-time offer, to buy in? I know many teachers who bought it, and others who didn't because their Tier offering the same deal??

This new Tier will eat up salaries. Probably why new teachers voted for this awful contract.

Anonymous said...

What does multiplier less than 20 years..... 1.67%, mean(for Tier 4)?

Anonymous said...

"...this type of behavior WILL BE tolerated (not encouraged, but tolerated)and will only result in a parent meeting. Nothing more. No SAVE room, no superint. susp either."

"...in September. New discipline book comes out with annual changes"

This whole deal is nationwide and is pushed by Eric Holder and Arne Duncan who think that young black "boys" are disproportionally targeted discipline wise. As always, Google it and educate yourself.

I just feel sorry for you people dealing with the lunacy of what teaching has become.

retired teacher said...

to 7:22: that multiplier is used to calculate your pension.If you are regularly appointed then every year you earn 1.67% towards your pension. TRS calls them units. When you retire you'll have so many units. The final average salary multiplied by the unit value determines your pension.
I retired with 40.70 accrued units so my computed pension (I was Tier 1) was the final year's salary multiplied by 40.70.
The pension is a complicated business. I can't emphasize enough that people need to take the time and see the UFT pension specialists and go to the group meetings (this is your dues money at work.) When you talk pension your are discussing YOUR money and YOUR future.

Anonymous said...

I called the dept of labor relations at 55 water street and they said this article has bogus data in it, there was no change in tier 6 vesting for health benefits, I suggest that you either fix the post or take it down. Maybe you can point to where it is documented that tier 6 teachers need to teach 15 yrs to access retirement health benefits? This page on the uft site says 10 yrs. http://www.uft.org/new-teacher-articles/time-think-about-your-retirement As a new teacher I would think this would be a significant change that is clearly documented.. Thank you...

Chaz said...

You need 15 years to get retiree health benefits in Tier 6. They gave you incorrect information.