Tuesday, November 07, 2017
The TDA Fixed Rate Fund Is A Winner!
In New York City, teachers are known as"the smartest", due to their educational requirements that require a masters degree to achieve tenure and passing a content specialty test. Of course I question that designation based upon teachers voting, time and again, for the same old disconnected union leadership who negotiate inadequate contracts, provide massive "givebacks" and fail to include member concerns when negotiating with the DOE. A case in point the requirement of four to six observations when the rest of the State only needs to have two observations and the use of the punitive Danielson rubric. However, there is one item that makes us teachers "the smartest", that is contributing to our Teachers Deferred Annuity (TDA) Fixed Income option.
Why do I say the teachers are "the smartest"? Easy, the TDA Fixed Income option give the educator a fixed rate of 7% for UFT members and 8.25% for non-UFT educators. With inflation running a little over 2% and money market funds giving a measly 1%, the no-fee Fixed Income Fund is a godsend and a windfall for educators who contribute to it.
According to the conservative and anti-union Citizens Budget Commission (CBC) the TDA's Fixed Income Option is attracting more and more educator money and in the last report in 2015, the percentage of TDA funds in the Fixed Income Option has risen to 65% of the total TDA contribution. Compare that to 38% in 2006 and 25% at the creation of th Fixed Income option. Moreover, as of 2016, the average TDA balance was $325,000 and at 7% interest the UFT member can supplement their pension by taking out $22,750 annually.
While I sometimes question the designation as "the smartest", there is no doubt that educators who contribute to the TDA's Fixed Income option are "the smartest".