55-27/55-25 SAVES CITY MONEY;
YET TO BE HIRED TEACHERS PAY THE PRICE
Now that 55 years of age and 25 years service in the system retirement buy in is a reality after Governor Elliot Spitzer signed the legislation last week, we would again like to briefly point out who should consider buying in, who should probably not buy in and who wins and loses. Please consult with a qualified financial advisor before making any retirement decision as this blog contains our opinions and not official pension advice.
Anyone who started service betwen the ages of 26 and 36 could benefit from opting in for the new benefit and someone who started service earlier than age 26 but took a break for a restoration of health, maternity or some other leave could also benefit.
Everyone who started service at age 25 or younger and works straight through can only benefit if they want to retire early but not receive any payment until they are 55. It's also interesting to ask this question: If someone is eligible and opts in during the six month opt in period, can they get their additional 1.85% contributions back if they decide later to change their mind and work the entire 30 years one needs to work to receive a full 60% of final average salary pension?
Persons yet to be hired will have to be 55 and work 27 years and pay pension contributions for that entire time unlike current teachers who only are compelled to make pension contributions for ten years. In the Contract, the UFT agreed that it should be 55-25, not 55-27, for "all current and future members of the TRS..." Fiscal experts and the city's Chief Actuary cited in the Chief Leader have confirmed our analysis of the deal in the February 29, 2008 edition: The Chief's in depth article by Merideth Kolodner pretty much backs up what ICE has been saying about 55-25/55-27.
"The United Federation of Teachers' early retirement plan, despite reports of heavy costs to the city, will easily pay for itself and potentially result in hundreds of millions of dollars in savings to the city in the long run, according to fiscal experts."
Here's the part that really caught our eye. "Two fiscal experts who requested anonymity, estimated that the city would save money in the long run, up to $300 million over 25 years. That's because most of the cost of the plan is carried by the unborn, who will eventually pay more into the system than they take out in added benefits. The same was true for the Correction Officers Benevolent Association in 1990 and District Council 37 in 1996 when they got the retirement age reduced for their members."
Selling the unborn? We thought the UFT refused to do that. And in exchange for selling out the unborn on pensions we also agreed to schoolwide merit pay.
We recommend you pick up a copy of the Chief Leader to see the details explained by budget experts and read an explanation from Randi as well as quotes from James Eterno.