Getting Ready for Retirement: Navigating the MTRS Thomas F. Campbell Director of Human Resources October 27, 2009 11/5/09
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First Things First The Massachusetts Teacher’s
Retirement System are the experts on retiring! Volunteer to jot down questions I don’t know the answer to, but will find out This presentation has been emailed to you with links embedded I’m happy you are here! 11/5/09
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What We Hope to Accomplish Today Help you better understand the retirement process Eligibility Notice to Needham Public Schools to be eligible for sick
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leave buy back Credible Service and the purchase of past service Retirement options When will I get my first check? Health Insurance Retirement Application Working after retirement
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Thinking About Retirement? At the end of this year, it is expected
that 3500 teachers/administrators will retire At the end of the 2010 school year, nearly 3600 teachers/administrators are expected to retire At the end of the 2011 school year, 3400 teachers/administrators are expected to retire 11/5/09
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You Are in Good Company! The moral of the story is many teachers
will be retiring in the next 5 years Typically, the MTRS retires an average of 2900 teachers/administrators in a given year Start planning early!
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Retirement Forecast Actual and Projected Retirements in Mass. 4500
4226
4000
3500
3823 3507
3543
3500
3600 3400
3300
3257
3200
3000
2500
2000
1500
1000
500
0 2003
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2004
2005
2006
2007
2008
2009
2010
2011
2012
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Your New Best Friend… The Massachusetts Teacher’s Retirement System
(MTRS) The website is http://www.mass.gov/mtrs/ Click on members, then active members. Spend some time at this website. Retiring is a process and there is lots for you to know! MTRS’ phone number is 617-679-6877 Their mailing address is One Charles Park, Cambridge 02142-1206. They are across the street from the Cheesecake Factory at the Cambridgeside Galleria. (Most navigation tools do not recognize One Charles Park. Enter 100 CambridgeSide Place) 11/5/09
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The MTRS are the Experts “Ready for Retirement” program is a great
source of information: – Woburn November 9 – Hyannis November 12 – Foxboro November 17 – Ipswich on November 19 – Auburn November 23 – Weymouth December 3
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Did You Know… Regular Know…Regular Compensation? Compensation The maximum benefit you can earn in retirement from the
MTRS is 80% of the average of your three highest consecutive years of salary Generally speaking, stipends, extra days and longevity are included in the average of your three highest years. The NEA contract will dictate if this money can be included in the calculation. If it is not in the contract, it cannot be included. The amount of money must be listed in the contract as a stipend figure, not hourly rate (except payment for lunch duty) Bonuses, sick leave buy back, expense reimbursement, tuition reimbursement summer school teaching or curriculum work are not included in the calculation
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Am I Eligible to Retire? Understanding “Vested” If you have 20 years of credible service
regardless of age OR You are at least 55 and have at least 10 years of credible service If you are in Retirement Plus, you need to have 30 years of credible service, of which 20 years are teaching service with MTRS or the Boston Retirement System (i.e. direct payroll contribution to MTRS, not purchased service) 11/5/09
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How Much Will I Get? Most MTRS members are interested in
knowing how much they will receive in retirement (can I get to 80%?) MTRS has an estimator on their website The MTRS is a defined benefit plan under Section 401(a) of the Internal Revenue Code 11/5/09
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Notice to Needham: Sick Buy Back Teachers are eligible to purchase sick time if 11/5/09
they have work in Needham for 10 years. Notice must be by November 1 or the year prior to retirement (19 months notice) Up to 200 days at $45 per day ($9,000). Lump sum payment on last day teaching You must retire between June 30 and August 31 Will not count in retirement calculations 12
Enhanced Alternative Longevity Buy Out For teachers with 20 years of service to
Needham, you can elect a longevity payment of $4000 for three years ($12,000) One time option Notice given November 1 prior to the year of retiring (19 months notice) May not count in retirement calculations 11/5/09
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Extended Longevity Buy Out (ELBO) Regulations now eliminates future ELBO plans in
retirement calculations Grandfather provision: permits completion of most ELBO plans under current contracts; only if the ELBO plan is in the contract on or before 1/25/06 and you elected to be in the plan on or before 1/25/06 and payments to you must have begun prior to the contract expiration For more information visit:
– http://www.mass.gov/perac/ 11/5/09
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What is Credible Service? Service Credible service is time that you have
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worked as a teacher, administrator or other Massachusetts public employee, for which you paid or transferred retirement contributions to the MTRS You may be able to purchase credit for prior substituting, teaching in an out-of-state school, certain non-public school teaching, other Massachusetts public service and active military duty Purchasing past service may help you get to the maximum of 80%
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Purchasing Service Types of service you may be able to purchase:
– – – – – – – – – –
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Regular Massachusetts public teaching service Out-of-State public school teaching service Overseas dependent school teaching service Nonpublic school teaching service Public school substituting, temporary or part-time teaching or tutoring service Peace Corps service Other Massachusetts public service Authorized LOA or sabbatical from MA public school Authorized LOA for military service Active military service in the armed forces
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Purchasing Service You must purchase this service before you
retire. In some cases, you can only purchase the service while an active member of MTRS There are loads of restrictions for the purchase of all services (i.e. the service must have occurred prior to a certain date, if you contributed to another retirement system such as social security, etc.) Completing all of the requirements to purchase service can take a very long time…start early! 11/5/09
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Purchasing Service The cost of purchasing past service is based upon
the percent of contribution that was in effect at the time you performed the service (plus interest) Your contribution rate is... – Before January 1, 1975 - 5% – January 1, 1975 through December 1, 1983 - 7% – January 1, 1984 through June 30, 1996 - 8% – July 1, 1996 through June 30, 2001 - 9% – July 1, 2001 or after (automatically enrolled in RetirementPlus)11% – All RetirementPlus participants - 11%
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The Three Retirement Options Option A - Maximum benefit, no survivor benefit Option B - Approximately 1% less than option A.
Survivor will get lump sum payment of what remains in your annuity savings account Option C - Approximately 9-11% less than option A. Survivor will get two-thirds of your monthly benefits (survivor must be member’s parent, child, sibling, spouse or former spouse who has not remarried) Did you know…your annuity savings account pays approximately 20% of your retirement benefit and the pension fund pays 80%? Your annuity will be depleted in 10-12 years 11/5/09
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When Will You Get Your First Check? Up two months after you retire, but likely
sooner. Some have reported no waiting for their first check. The first check is payable in July You should plan accordingly and have a small amount set aside in case your first check is delayed Cost of living (COLA’s) are given when the legislation votes an increase. The percent is based on $12,000, not your entire retirement amount ($360) 11/5/09
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Taxes There will be no State taxes paid on your
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retirement benefits There will be federal taxes withheld based upon the simplified method. Since January 1988, all money sent to MTRS is pre-tax dollars. Prior to January of 1988, money is after tax dollars Visit the website: http://www.mass.gov/mtrs/2members/22retire e/22tax.htm If you are moving out of state, check with that states’ DOR as they may have a state tax 21
Health Benefits You will continue in your current insurance
program, and the town will continue to make their share of the payments Your portion can be deducted from your retirement check Your coverage could be different as a retiree. Contact Sophie Grintchenko at Town hall (ext. 530) for more information
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The Application 18 page application on the MTRS
website http://www.mass.gov/mtrs/2members/2 0active/intro.htm – Also a handout in your folder You should start early…lots of paper to collect and people to see! The earliest you can submit your application to MRTS is January 1 11/5/09
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Working After Retirement You have limitations for any Massachusetts public
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sector employment. (You have no restrictions on any private sector or Federal employment) Cannot exceed 960 hours in a calendar year (January - December) 60 day waiting period unless you are earning the maximum (80%) or age 65 or older Earnings: You cannot earn more than the difference between what you would have earned if you did not retire, and your retirement earnings You can opt to freeze your retirement and therefore no earnings limitations, but MTRS won’t pay your premium as you won’t have a retirement check 24
Working After Retirement Example:
– Robin Smith retired from a teaching position that paid her $75,000 – Robin would be earning $78,750 if she did not retire – Robin’s annual MTRS pension is $60,000 – Robin’s allowable earnings is $18,750 If Robin chose option C, she would be able to earn more as her pension would be less
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Critical Shortage You can return to teaching in a critical
shortage approved by DESE without financial or other restrictions. The district hiring you must apply for the waiver Retirement Plus folks cannot work for 2 years under a critical shortage. You can come back earlier than 2 years, but subject to the 960 hours and financial limit
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FAQ’s
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Q: Can I purchase time that I was on a leave of absence for maternity leave? A: You can, but with the following restrictions: The years on maternity leave must be prior to December 31, 1974 and you must have applied and paid for that time before December 31, 2001 Q: I elect Option C, which allows my survivor to collect two-thirds of my pension if I die. If I choose Option C, my benefits, while I'm living, will be reduced 9-11% as compared to Option A which has no survivor benefit. If I die, will my survivor collect two-thirds of entire pension, or two-thirds of my 9-11% reduced pension? A: The survivor will get the same amount the member was getting (two-thirds of the 9-11% reduction). By the way, the MRTS told me that the 9-11% reduction for Option C is if you choose a person who is similar in age as the member. If the member chooses a survivor who is considerably younger (i.e. the member's child), then the 9-11% reduction will be more like a 20% deduction Q: If you are not currently taking health benefits from the Town of Needham, can you elect to do so? A: Yes, you can elect our health insurance before or after you retire, as long as you have 10 years working in Needham and Needham was your last job before retiring 27
FAQ’s 11/5/09
Q: What happens to my portion of paying health insurance premiums if my pension check will be delayed 2-4 months? A: If you retire in June, your summer checks will pay September's premium. The Town will inform MRTS that they need to double your health insurance deduction if the checks are delayed beyond September (which they are likely to be) Q: When I turn 65, who pays for supplementary benefits? A: If you elect to purchase Medigap, you are responsible for the premiums. Remember that Medicaid will pay for 80% of your bills, so Medigap may be a good option for you Q: If you have a family plan for health insurance and your spouse reaches age 65 before your do, what happens? A: Your spouse can stay on your insurance until you reach age 65 Q: If my retirement check is delayed 2-4 months, how do I pay for the health insurance premiums? A: You will write a check to the Town until your retirement check comes Q: Can I switch from my spouses insurance to Needham’s insurance during open enrollment, even after I retire? A: You can join Needham's plan, even after retirement. If your husband lost his insurance, you can get Needham's insurance at any time. Otherwise, you can switch during open enrollment in the spring Q: How do I learn more about Medigap? A: The Town's website has some information on Medigap at http://www.needhamma.gov/index.asp?nid=345
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FAQ’s Q: If I elected the Enhanced Longevity Buy Out option (ELBO)
but decide to wait a year or two to retire after I've received the last payment, will I be eligible for the regular longevity for those additional year(s) that I work? A: No. The contract specifically states that if you elect the ELBO you no longer are eligible for regular longevity or the sick leave buy back option Q: If I have never paid payroll taxes to Medicare. Am I eligible for Medicare when I turn age 65? A: If you have never paid into Medicare and you are single, you can remain (or join) the regular insurance programs offered by the Town. If you have been married for over 10 years, you are eligible for Medicare under your spouse. This applies even if you are divorced from your spouse. As long as you have 10 years of marriage, you are eligible through your (ex) spouse 11/5/09
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Pension Reform There is much happening in the way of pension reform, and you
need to keep posted by checking for guidance on the MTRS website A special committee has been appointed by the Governor to make recommendations for reform Several recommendations will affect educators: – Remove critical shortage waiver – Prohibit annuities from retirement – More recommendations as on the way!
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Questions?
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