Thursday, November 21, 2019

Comparing Tier VI To Tier IV Pension

New Action, a UFT caucus has started a petition to improve Tier VI and I hope they succeed. Here is my post comparing Tier IV to Tier VI pensions.

Pity The Tier VI Teacher.

A new school year has started in September and approximately 5,000 "newbie" teachers will be under the Tier VI pension plan.   These newbies are replacing retiring Tier IV teachers, with their more generous pension plan.  The question is how long will these newbies  last?  With Charlotte Dainelson, inept administration, and lax student discipline rules, many of these "newbies" will end up quitting.  At best, maybe 50% of the "newbies" will be still in the classroom.  Moreover, 80% will no longer be teaching in the school they started in.  Finally, only 33% will make it to vesting for a pension and less to receive retiree health benefits.

Below summarizes the comparison between the two tiers.

Tier IV.
Vesting for a pension, between 5 to 10 years.
Teacher contribution 3% first 10 years , then 0% beyond ten years.
Highest three consecutive years for determining the pension.
Five to ten years to receive retiree health benefits.
Multiplier, 1.67% per year for less than 20 years,  2% between 20 to 30 years.
1.5% per year for years beyond 30 years of service.
Age Reduction Factor, 0.73 to 0.94 from 55 to 61.

Tier VI.
Vesting for a pension, ten years.
Teacher contribution 4.5% to 6%, depending on salary. 
Highest five consecutive years for determining pension.
Fifteen years to receive retiree health benefits.
Multiplier, 1.67% per year for the first 20 years. 2% for 20 years or more.
Age reduction factor, 0.48 to 0.94% from 55 to 62.  

To show how unlikely these Tier VI teachers will make it to full retirement, please play my Tier VI retirement game Here


Anonymous said...

How does tier 1 compare to tier 4? I remember when tier 4 members used to say tier 1 was the best. Do you have that info?

chris said...

Chaz , how many tier 6 teachers are teaching currently in NYCDOE? a GUESS?

Prehistoric pedagogue said...

Tiers 1&2 far superior to 4. Benefits much higher
Mostly because of extra annuity feature called ASF

Anonymous said...

Every Tier 4 teacher in my school is planning to get out between 20-25 years.
I have conversations with everyone and we all have similar plans.
Not a single person I know is planning to go past 25 years.

The kids are more out of control than ever. The 1970s were bad I hear, but add in cell phones and music streaming and social media and you have a hard bunch on your hands.

All the Tier 6 teachers here say, as one, that they have no long term plans to teach in NYC.

Anonymous said...

I am tier 4 and I have more than 25 years. I will have 30 something years when I retire. I will not allow anyone to scare me off so I will not have a wonderful retired life. Screw them.

Anonymous said...

The view was to make teaching a short term goal. "Bloomberg Era"

NYC will have to make changes if they want to attract more people into the profession.

Making changes to the tier 6 is a start!

Why did they get rid of tier 3? It used to be tier3/4.

Throw out tier 6 and open up teaching as a long term career choice for people!

Anonymous said...

@2:22 that is EXACTLY what the city wants!!!

Anonymous said...

Maybe they will target you if you have a lot of exoerience.

Anonymous said...

I am a Tier 6 member. I asked our UFT President about Tier 6 and he told me that despite what seems obvious, he is not able to negotiate for our pension. While I am cognizant that pensions are expensive for the state, but I feel as though it is completely inequitable to have people working on the same staff that 1) Got observed and tenured under Danielson 2) Came in with a masters 3) Doesn't get the same salary bump after 10 years once I stop paying into my pension.

Anonymous said...

Chaz, you are forgetting there are really two tier IVs. Those who began teaching before 2009 and those who started between 2009-2011. The second group still pays 3% of their pension for 27 years, not ten.

Anonymous said...

2:22 - Be sure to remind them they cannot collect until they are 55.

Anonymous said...

A lot of them will be pushed out before they are 55. They will target them before.

Anonymous said...

(4:03 and 2:22) Yes. Tier IV folks cannot collect till age 55 so it is highly unlikely any who are in range of that magic number will retire prior to that (even if they qualify for 50% with 25 years they still have to wait till age 55 to collect anything at all).

From the brief blurb posted here by Chaz it looks like Tier IV folks get only 1.5% multiplier per year for each year over 30 (Tier I stayed at 2% for each year over 30) while Tier VI folks stay at 2% per year for each year over 30...that would seem like a slight advantage for Tier VI (although it does not balance out all the other bad aspects of Tier VI).

retired teacher said...

to 4:04 AM - Tier one pensions were based on final years actual salary. Retirement age was 55. Teachers planning to retire often would take an extra class to make their final salary higher.

Once per session became pensionable retiring teachers would work as much per session as possible to increase the final year's salary. With per session and coverages the final year salary would get a nice bump up. Per session only became pensionable in the late ninties.

Tier II was almost the same except retirement age was moved to 62. An interesting feature of Tier I was the thirty year demand pension. If you were tier I and had thirty years service you could retire. So if you started teaching when you were 21 you could retire at age 51 and not wait until 55. There were of course financial decisions affected by this since the pension was based on you being 55 at retirement.

Tier I was phased out in 1973 due mostly to the City's financial crisis.

Mr. Rose said...

Chaz, do you know for the 25/55 tier 4ers....Say, someone who is in the 25/55 but retired before hitting both benchmarks. Would they revert to the regular tier 4 info in your post?


Anonymous said...

@5:46 If that teacher retired before hitting either bench mark they are subject to the 27% pension reduction for the years of service, and cannot collect till age 55= double whammy.

Anonymous said...

Chaz, I just love your Tier VI retirement game. Teachers in my school just love playing it.

mkrstic said...

The DOE does not want long term teachers. They want a rotating parade of newbies that leave after 5 years. That way they do not have to pay the pension and the newbies do whatever they say. Teaching is no longer a long term career. Tier 4 will be the last of the long term teachers.