Tuesday, March 05, 2019

Why Defined Pensions Are Great For Teachers.

One of the great benefits in being a teacher in New York State is the defined pension benefit we have.  For the 40% of state teachers that are vested for a pension, the pension benefit averages about $41,703 annually, that is 54% of the teachers final three year salary, not including Social Security and other retirement plans like a 403b program.  In other words, most New York State teachers can expect to enjoy a well funded retirement.

The defined benefit pension plan is mostly funded by the State's School Districts.  For most Tier IV employees, the vast majority of recent retirees, the employee only pays a 3% contribution for the first ten years and nothing thereafter.  That means the School Districts pay the lion's share to fund the pension.

The table below shows how much the School Districts are required to pay to adequately fund the teacher pension system.

Year.........School District Contribution


The estimated School District contribution is expected to be 8.86% for the 2019-2020 fiscal year.

The NYC teacher pension plan is separate from the New York State Teachers pension plan but have similar employer contribution percentages.  For the 2018-19 fiscal year its 11.11%.

 As the existing Tier IV teachers retire and are replaced by Tier VI teachers, who are less likely to be vested or reach full retirement age, the next decade should see lower School District pension percentages needed to cover the cost as these Tier Vi teachers will be paying from 3.5% to 6% in employee contributions to their pensions.

I suspect by the next decade, new teachers will be under a defined contribution plan, where the School Districts will no longer need to worry about legacy costs as teachers will be required to self fund their pension going forward.


mkrstic said...

Tier 4 is supposed to receive 60% of their last three years. Why does it only come out to 54%?

Anonymous said...

It seems like there is such a large actuarial incentive to offer early retirement for Tier IV at 25 years and 50 years of age. Having them retire at 60% instead of 50% and paying an additional 5 years of 120k+ salary and no pension contributions has to be significantly more expensive than replacing them with a new Tier 6 employee.

Anonymous said...

The Tier 6 teachers at my school know they're screwed compared to Tier 4.

Not a single Tier 6 teacher there, and I know most of them, plans to keep teaching more than 5-10 years.

When I ask if they are planning to go to 15 years to get the health benefits, to a teacher they purse their lips and scoff.

The youngin's at my school are getting burnt left and right by Danielson's and mean admins. They are so dispirited. Every single one I talk to is so jaded, even the ones who are just 2-3 year.

It's a shame that control freaks (otherwise known as ed reformers) have ruined a once noble and good profession.

Chaz said...


The 60% is if the teacher has 30 yrs of experience. Most teachers do not reach the 30yr mark.


Wishful thinking.

Anonymous said...

At my school 8:57, the newbie teachers get better ratings than the teachers who have many years and have good results. Newbies are controllable and don’t complain out loud.

Even so, these people, for the most part, won’t last.

Anonymous said...

Chaz, How well funded is the NYC pension system compared to other cities and NYS system?
20 Year Teacher

Chaz said...

The NYS teacher pension plan is 94% funded and I suspect its similar for the NYC teachers pension plan.

Anonymous said...

Two suggestions:

We fight for annual COLA in our pensions.

Those who leave the teaching ranks to become administrators also leave NYSTRS. It is the outsized ($225K +) pensions of a few admins (I am thinking Long Island here) that trick the public into thinking teachers get huge pensions.

Anonymous said...


Anonymous said...

I've got 17 years in. Which tier am I?

Chaz said...

Tier IV.

Unknown said...

As a tier IV recent retiree I was hurt by a law from 1983 where my salary was not the average of the last three years rule. No consultant ever mentioned it in the pension seminars and I attended six of them at least. Can someone please tell me where to read about that city law and if they were affected as week?

Unknown said...

I recently sent several messages. The last one says...error while CTC the server.
Have you received any?