Thursday, May 8, 2014

UPDATED: Retirement Disincentive, Part II?

UPDATED 5/15

It took some digging, but I finally found  a definitive answer about whether those who retire AFTER June 30, 2014 will receive a pension based on the 4+4 that is not being paid out in full to in service members until 2020:

Pending ratification, the contract provides that members who retire on or before June 30, 2014, will receive payment in full for the retroactive raises in one lump sum. Members who retire on or after July 1, 2014, will be paid the retroactive money on the same schedule as in-service members: beginning Oct. 1, 2015, and ending Oct. 1, 2020. In both cases, the pension calculation at the time of retirement will include the entire 8 percent rate increase arising from 2009 and 2010 and any other pay increases that occurred during a member’s employment.

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Something just struck me about the way the proposed UFT contract deals with retirement. I hope I am wrong--if anyone knows, please reply in the comments.

Yesterday, I posted how someone like myself, or anyone else set to retire in the next few years, will have to wait for retro pay as if we were in service, thus creating a disincentive to retire. The more I thought about it, the worse it became. You see, pension is based on your FAS, or Final Average Salary, which is generally the average of your salary for the final three years you worked. Here's what the union's FAQ says about that:

You will receive your full retroactive pay in a lump sum only if you retire on or before June 30, 2014. If you retire after that date, you will receive your retroactive pay on the same schedule as in-service employees. Retroactive raises would be included in the calculation of final average salary.

OK...that's fine if you've already retired. But what if, like me, you're eligible to retire AFTER June 30? What exactly does this line mean: Retroactive raises would be included in the calculation of final average salary.?

So if you retire before June 30 and your FAS is 100K (which is likely, since that's the highest salary), then your retirement benefits will be increased to reflect the retro money, i.e., your FAS will be 108K. This will increase one's pension about 4K a year (50% of the 8K). That's great.

But if you retire AFTER June 30? That part is unclear. Yes, you will receive the retro money over time like everyone else. But how will your pension be calculated? Will your FAS be 100K or 108K?

It's not a small question. That 4K difference would add up to a LOT of money over time. A person enjoying a 25 year retirement would enjoy it a whole lot less, because they would lose 100K over that time period.

So, does anyone know the answer? For those of us who must retire after June 30, will the retro be figured into the FAS? Or will we be screwed out of the money?

8 comments:

Michael Fiorillo said...

Though I don't know exactly how it would be done, our chapter was told by a UFT rep that the wage increases would be included in your FAS.

Fwiw.

Mr. Talk said...

Michael, I believe you are right, but the language is troubling because it is so vague. While the FAQ states that retro raises will be included in the FAS, what does that mean? Retro raises aren't being paid out until 2015 thru 2020. Must one work those years to get them added to the FAS?

Pissed Off said...

When I retired I was told it was better to do so as of July 1. Does this have any impact on people retiring this year?

Michael Fiorillo said...

Mr. Talk,

I share your uncertainty and skepticism. Our chapter was explicitly told that if you were teaching in that period, then the raises will be factored into our FAS, whenever you happen to retire. Yet, our salaries will not reflect these raises until much later, so questions are justified.

As a general rule, overly complex, hard-to-explain deals should be looked upon with skepticism, and this one is no different.

Yet another reason to Vote No.

Anonymous said...

I have a related concern. As an ATR there is supposed to be a buyout. However, the period to tender a resignation is 30 to 60 days after ratification, which means that if ratification is early June, the timeframe to apply for the buyout begins after I would have already retired.

It appears that you can'f retire and get the buyout. See the Iceuftblog.

Am I wrong?

Another screwing for the ATRs.

Anonymous said...

I also hope to retire within the next 5 years and I also wondered if the retroactive pay would be included in my FAS even though I'm not actually seeing it in my paycheck. I was told by a UFT rep today that it will be, but he also said that I should attend a pension clinic which will be scheduled at all the UFT borough offices in the very near future.

If he's correct I'm leaning towards a yes vote, if not, I'm definitely voting no.

Anonymous said...

Today at our Chapter Leader Meeting we were told the same thing many of you have been told. That even though the retroactive increases may not appear in our paychecks, if we retire in the next few years our FAS will include the higher salary (4% for 2009-10 and another 4% for 2010-2011). We were also told that there are a number of pension clinics being held at schools and we would be getting a list with dates very soon.

Mary

Anonymous said...

FAS top salary will be $108,000 retiring before or after June 30, 2014. Before July 1, you get retro one lump. After you get increments through 2020.Questions answered at UFT meeting yesterday 5/16. IF A MEMBER IN SERVICE DIES OR IF A MEMBER RETIRES AFTER JUNE 30 DIES, AS THE CONTRACT STANDS RIGHT NOW, THE RETRO IS BURIED WITH THE MEMBER. Retro after death was asked and reps said the union is "working on this".