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Published: May 07, 2008 08:29 pm
Our Readers Speak, Wednesday, May 8, 2008
Teachers: Which plan is best for you?
Between now and May 12, education employees in the Teachers Defined Contribution Plan (more commonly referred to as the “new plan”) have an opportunity to transfer their funds from the “new plan” over to the “old plan,” the Teachers Retirement System. However, for this to occur, at least 65 percent (12,343) of those in the “new plan” will have to elect to transfer.
I would like to urge all my colleagues who are in the “new plan” to take a hard look at their retirement portfolio. Consider whether you will have enough money to retire. I am asking that you make the decision based on the information and facts available and not your emotions. This will be, in all likelihood, our last opportunity to move from a retirement system that I believe is fatally flawed.
To retire with full benefits under the “old plan,” an active employee must have at least 30 years of service and be 55. Alternatively, they can be 60 with a minimum of five years of service.
Therefore, a school service employee in the “old plan” with a final average salary at retirement of $26,000, 30 years of service, and at least age 55 will receive an annual benefit for life of $15,600.
A similarly situated employee in the “new plan” will need $224,700 in their account in order to receive the same level of benefits. A teacher in the “old plan” with a final average salary of $50,000, will receive an annual benefit for life of $30,000. A similarly situated teacher in the “new plan” will need over $430,000 in their account, at retirement, in order to receive the equivalent benefit. Given that the average account balance for “new plan” participants is less than $40,000 and growing at a rate at less than 5 percent, the choice, for most, should be clear-cut.
Education employees have the opportunity to transfer from the “new plan” to the “old plan” and receive a guaranteed benefit for life. In other words, regardless of the performance of the stock market and the value of our annuity in the “new plan,” we are guaranteed to receive a monthly benefit (based on a fixed formula — years of service times 2 percent times our average final salary) for as long as we live.
In addition, we are guaranteed to receive no less than the amount of funds we transfer from the “new” to the “old” plan. Equally important, we will have the added option (at the time of retirement) of being able to convert our unused sick leave to purchase additional service time to increase our retirement benefit. The option to purchase health insurance, at retirement, remains unchanged.
I urge you to attend the workshops offered in your counties and visit these Web sites to learn more about the important decision you will be making; www.aftwv.org and www.wvretirement.com Consider your options carefully and make an informed and educated decision, one based on facts, not emotion.
Ask yourself the most basic question; which plan will serve you and your loved ones best when you are ready to retire?
Debra Elmore
Fayetteville
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