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    Friday
    Dec062013

    Retirement

    THE TRUTH ABOUT TEACHERS' RETIREMENT

    CTA believes all public employees and education employees in particular deserve secure retirement benefits with defined and equitable benefits. Both the California State Teachers’ Retirement System (CalSTRS) and the Public Employees’ Retirement System (CalPERS) should remain autonomous contributory systems providing a single tier of benefits to all employees.

    Two Distinct Public Employee Retirement Systems

    California must maintain and keep strong its two defined benefit systems, the California State Teachers Retirement System (CalSTRS) and the California Public Employees’ Retirement System (CalPERS) for employees from pre-kindergarten through higher education. Both systems should offer equal benefit structures and equal costs.  All future members of CalSTRS and CalPERS are entitled to the same basic benefit structure provided for current members.

    Defined Benefit Systems

    Defined benefit retirement plans offer a moderate but secure retirement based upon a formula that will last for the members’ lifetime.  Efforts to eliminate defined benefit retirement plans in favor of 401(k) style retirement plans should strongly be resisted.

    Benefit Improvements

    Benefit improvements must be applied on an equitable basis to all members and beneficiaries of CalSTRS/CalPERS.  Ad hoc benefit increases, which aid one group of members to the disadvantage of another group of members, should be resisted.

    Contributory Retirement Systems

    The two public retirement systems must be contributory systems with costs shared by the employer, employees and the state.  The Retirement Fund must be an inviolate trust fund solely for the benefit of members, retirees or survivors, without special consideration for any person or agency, including the state.  The actuarial integrity of the CalSTRS/CalPERS Defined Benefit Program must be retained with full benefits maintained in any proposals to modify or create an alternate retirement system.

    Retirement, Disability and Family Benefit Allowances

    Retirement, Disability and Family Benefit Allowances must include adequate protection against inflation, either indexed to the California Consumer Price Index (CCPI) or realistic replacement value of the original allowance.

    The Independence of CalSTRS

    The California State Teachers Retirement System should be an independent state agency headed by an independent teacher-majority board and administered by an executive officer not subject to political control.

     

    Sustaining Retirement Security for Future Generations: Funding the California State Teachers’ Retirement System

    Teachers and public employees are being scapegoated for problems caused by Wall Street, and pensions are being used as a wedge issue to divide working class Americans. Why the attack on public employee pensions? Who really benefits by their elimination? The answer is Wall Street. The elimination of public pension systems would be a huge boon for financial planners and companies that stand to invest that money while making profit off of the fees they can charge each individual. And politicians are using pensions to attack collective bargaining and weaken unions. That public employees are being portrayed in the media as "the haves" is simply ludicrous. It’s time to set the record straight.

     Teachers contribute to their retirement.

     Teachers do not retire into a life of luxury. The average monthly benefit is $3,300.

     The California Teachers Retirement System is aggressively against pension "spiking".

     CalSTRS members do not contribute to or receive Social Security.

    All Californians should have a safe and secure retirement. The real problem is not that teachers, firefighters and other public servants have pensions ("defined benefit plans"), the problem is that private sector workers do not. That’s because the private sector systemically eliminated defined benefit pension plans in favor of risky 401(k) plans - reducing costs to corporate America at the expense of the American worker. Instead of attacking teachers over the retirement benefits that they have earned, we should be having discussions about how to create better retirement options for everyone. Read more

    • New Legislation Stabilizes CalSTRS Funding

      Educators may notice a little extra going out of their paychecks into to the California State Retirement System (CalSTRS) beginning this month, but that’s a good thing since the money will not only come back to them at retirement, it will stabilize the retirement system into the future. 

      Governor Brown’s signing of Assembly Bill 1469, enacted as part of the 2014-15 budget, concludes a decade-long effort, supported by CTA, to bridge CalSTRS’ nearly $74 billion funding gap.

      "This plan will help our schools attract and retain our highly qualified educators by shoring up CalSTRS and keeping the promise made to our dedicated school staff that they will have a secure retirement after a lifetime of devoted service to our students,” said CTA President Dean Vogel.

      arrow Read more
      arrow Read the CalSTRS press release
      arrow Learn more about CalSTRS 2014 Funding Plan

      Tiered Changes to CalSTRS

      AB 340 significantly alters the retirement structure and benefits to public pensions in California, including the California State Teachers Retirement System. Some important changes for newly hired educators in California schools:

        1.  Almost all changes apply solely to NEW CalSTRS members – those hired after January 1, 2013.

        2.  All new CalSTRS members would be required to pay half of the normal cost of their retirement. The language is very unclear on the impact this would have for local school districts and school funding under Proposition 98.

        3.  The proposal changes the formula for determining retirement benefits from 2% at age 60 to 2% at age 62, and from 2.4% at age 63 to 2.4% at age 65.

        4.  It eliminates the ability of teachers with more than 25 years of service to use their single highest year salary when calculating retirement benefits. All future teachers would be required to use their three highest years of salary. 

      arrow Read CalSTRS Summary of Pension Changes and Funding Resolution
      arrow Analysis: The impact of AB 340


      More News...

       

    • MYTH: Our state would be better off financially without having to contribute to teachers’ retirement benefits. 

      FACT: The state benefits economically from teachers’ retirement benefits. In fact, $4.5 billion in value is added to the state’s economy each year from generated business activity from retirement benefits. Entire counties depend on that retirement income. Read the CalSTRS Economic Impact Study.

      MYTH: The retirement fund is a taxpayer giveaway.

      FACT: Over the life of their careers, teachers contribute 8% of their monthly pay to their retirement. Employers kick in another 8.25% of monthly pay, the state contributes just over 2% (which previously was 4.6% but was reduced a decade ago), and the returns garnered by CalSTRS investments do the rest.

      MYTH: Teachers engage in pension 'spiking'

      FACT: CalSTRS is vigilant in preventing spiking. All extra compensation for teachers over and above their normal salary gets put into a separate account that cannot be used towards their final retirement salary. Learn about CalSTRS Pension Abuse Hotline to help combat spiking.

      MYTH: Teachers retire too early and into a life of luxury.

      FACT: The average benefit payment is $3,300 per month while the number of years a teacher works for those benefits averages 27.

      MYTH: The CalSTRS system is headed toward insolvency.

      FACT: While it is true that CalSTRS has a $70 billion shortfall, this is not an amount that is paid overnight. Just like a mortgage, this is an amount that will need to be closed over 30 years, not in the first month’s payment. Even under current economic conditions, CalSTRS has sufficient assets and projected contributions to pay benefits until 2044.

      MYTH: CalSTRS suffers from a lack of accountability and oversight.

      FACT: CalSTRS has received national recognition for its ethical standards. The system has a long history of accountability and transarency. In fact, the ethical standards of CalSTRS has become a national model for board accountability.

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