TRS Annuity Savings Payouts Coming Soon

The Teachers' Retirement System of the City of New York (TRS) began operations on Aug. 1, 1917. The statute creating the system mandates that member contributions made to their Annuity Savings accounts shall earn "regular interest" at the rate of 4 percent per annum. Tier 1 Plan A began on Jan. 1, 1970, and Tier 2 Plan C began on July 1, 1973. From Aug. 1, 1917 through June 30, 1977, the participants' Annuity Savings accounts were credited, pursuant to statute, with 4-percent regular interest. Four-percent interest is used to fund the basic annuity portion of the retirement allowance (member's required minimum accumulation). In order to fund an annuity in retirement that would be somewhat greater than the minimum amount required by law, the Legislature has increased the statutory rate of interest (the crediting rate) four times since June 30, 1977, as follows: 5.5 percent from July 1, 1977-June 30, 1980; 7.5 percent from July 1, 1980-June 30, 1982; 8.0 percent from July 1, 1982- June 30, 1988 and 8.25 percent from July 1, 1988-present.

By law, Tier 1 Plan A and Tier 2 Plan C participants do not have to contribute to their Annuity Savings accounts after the completion of their 20th year of service (20th-Year Date). The participant may not, however, begin to receive a retirement allowance prior to the completion of 25 years of service or attainment of age 55, whichever occurs later. So if one is 42 years of age upon completion of 20 years, he/she must wait 13 years, or until age 55 (EPD), before his/her retirement allowance payments may commence. On the other hand, if one is 52 years of age upon completion of 20 years, he/she must wait five years, or until age 57 (EPD), the age when he/she would have completed 25 years of service, to begin his/her retirement allowance payments. The period of time from the attainment of the 20th-Year Date and the completion of the 25th year or age 55, whichever occurs later, is referred to as the GAP Period. Our 42-year-old has a GAP Period of 13 years. Our 52- year-old has a GAP Period of five years.

The TRS is governed by a seven-member Board of Trustees. Three of the seven members must be active participants of the TRS and are referred to as Teacher-Members of the Teachers' Retirement Board (TRB), while the other four are public officials and thus, Public Members of the TRB. In the 1990s, the United Federation of Teachers first realized that during the GAP period (13/5 years in the above examples) the higher statutory or credited interest rate, rather than the lower four percent rate, was being used to fund the participant's required or minimum accumulation. This resulted in the participant funding a larger basic annuity than the law required (mandated). The three Teacher- Members of the TRB spent at least 10 years attempting to change the minds of the four Public-Members. They failed, and the miscalculations continued unabated.

On March 18, 2005, in order to bring the issue to a head, the case of Weingarten, et. al., v. Board of Trustees of the New York City Teachers' Retirement System, et. al. was filed in Supreme Court of the State of New York. Thanks to the lawsuit, the four Public-Members of the TRB have finally relented. They have agreed to settle the case with the establishment of a $160-million fund. This settlement amount will be distributed to about 45,000 participants or their beneficiaries who have been adversely affected by their miscalculations and their arbitrary refusal to negotiate in good faith. If all goes according to the court's schedule, many thousands will receive their proportionate share in time to share it with their families and friends during the upcoming holiday season. I calculate the average lump-sum payment to be about $3,555.

The following chart is to be used to determine the amount you are due. Simply find the year you attained your EPD and then multiply the corresponding dollar amount (Factor A) by the years and months in your GAP Period. For example: Tom attained his EPD in 1998 and completed his 20th Year Date in 1983. His GAP period is, therefore, 15 years. His settlement payment will be $7,125 calculated as follows: Factor A corresponding to 1998 is $475. We multiply $475 x 15, the number of years in Tom's GAP, to arrive at his settlement amount of $7,125.00.

Year of EPD Factor A
1977 . . . . . . . . . . . . . . . . . . .20
1978 . . . . . . . . . . . . . . . . . . .30
1979 . . . . . . . . . . . . . . . . . . .40
1980 . . . . . . . . . . . . . . . . . . .50
1981 . . . . . . . . . . . . . . . . . . .60
1982 . . . . . . . . . . . . . . . . . . .81
1983 . . . . . . . . . . . . . . . . . .103
1984 . . . . . . . . . . . . . . . . . .126
1985 . . . . . . . . . . . . . . . . . .150
1986 . . . . . . . . . . . . . . . . . .175
1987 . . . . . . . . . . . . . . . . . .200
1988 . . . . . . . . . . . . . . . . . .225
1989 . . . . . . . . . . . . . . . . . .250
1990 . . . . . . . . . . . . . . . . . .275
1991 . . . . . . . . . . . . . . . . . .300
1992 . . . . . . . . . . . . . . . . . .325
1993 . . . . . . . . . . . . . . . . . .350
1994 . . . . . . . . . . . . . . . . . .375
1995 . . . . . . . . . . . . . . . . . .400
1996 . . . . . . . . . . . . . . . . . .425
1997 . . . . . . . . . . . . . . . . . .450

1998 . . . . . . . . . . . . . . . . . .475
1999 . . . . . . . . . . . . . . . . . .500
2000 . . . . . . . . . . . . . . . . . .500
2001 . . . . . . . . . . . . . . . . . .500
2002 . . . . . . . . . . . . . . . . . .500
2003 . . . . . . . . . . . . . . . . . .500
2004 . . . . . . . . . . . . . . . . . .500
2005 . . . . . . . . . . . . . . . . . .500
2006 . . . . . . . . . . . . . . . . . .500
2007 . . . . . . . . . . . . . . . . . .500
2008 . . . . . . . . . . . . . . . . . .500
2009 . . . . . . . . . . . . . . . . . .500
2010 . . . . . . . . . . . . . . . . . .462
2011 . . . . . . . . . . . . . . . . . .427
2012 . . . . . . . . . . . . . . . . . .394
2013 . . . . . . . . . . . . . . . . . .364
2014 . . . . . . . . . . . . . . . . . .336
2015 . . . . . . . . . . . . . . . . . .310
2016 . . . . . . . . . . . . . . . . . .286
2017 . . . . . . . . . . . . . . . . . .264
2018 . . . . . . . . . . . . . . . . . .244
2019 . . . . . . . . . . . . . . . . . .225
2020 . . . . . . . . . . . . . . . . . .208
2021 . . . . . . . . . . . . . . . . . .192
2022 . . . . . . . . . . . . . . . . . .177
2023 . . . . . . . . . . . . . . . . . .164
2024 . . . . . . . . . . . . . . . . . .152
2025 . . . . . . . . . . . . . . . . . .140
2026 . . . . . . . . . . . . . . . . . .129
2027 . . . . . . . . . . . . . . . . . .119
2028 . . . . . . . . . . . . . . . . . .110
2029 . . . . . . . . . . . . . . . . . .102
2030 . . . . . . . . . . . . . . . . . . .94
2031 . . . . . . . . . . . . . . . . . . .87
2032 . . . . . . . . . . . . . . . . . . .80

For an active or inactive participant, the amount owed will be made as a one-time payment credited to your Increase-Take-Home-Pay account. Retirees will receive their checks directly from the TRS, unless they elect to receive their amount in the form of a direct rollover distribution to another pre-tax retirement savings plan (i.e. New York City Employee IRA administered by the Deferred Compensation Plan of the City of New York). For more detailed information that should be read and understood by members of the Class, I direct you to: www.20yearpensionsettlement.net. As always, I am here to address your questions and concerns.

I have a question for the Plaintiff, Randi Weingarten: Why did you agree to have these amounts invested in the TRS Stable Value Fund with a return of 3.8 percent rather than the TRS Fixed Return Fund with a return of 8.25 percent?

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by telephone at (732) 536-9472, or via e-mail at rollover@optonline.net