RetirementPlus: A Look Back And Forward

JULY 2005 - Teacher Retirements Way Up Since Inception - Five years ago, an alternative retirement plan for teachers, known as RetirementPlus, was created (Chapter 114, Acts of 2000). Under RetirementPlus, career teachers who have at least 30 years of service - 20 in teaching - can receive an extra 12% added to their pensions.

When the plan was established in 2000, teachers had until July 1, 2001 to join it. Any teacher, who was newly hired after that date, automatically participates and contributes 11% of their salary towards their pension.

Teachers, who decided to participate before July 1, 2001, also had to contribute 11% toward their pension for at least 5 years. They could satisfy this requirement by buying back the difference between their actual contributions during their last 5 years of teaching and a hypothetical 5 year contribution, based upon their last 12 months of salary.

If a teacher qualifies, here's how it works. The percentage of their average salary will be calculated using the standard formula (years of service x age factor) and then that percentage is increased in the following way. For each year of service after the 24th and up to their 30th year of service, the retiree receives an additional 2%, or a total of 12% for those 6 years.

For example, a teacher, who is age 59 with 32 years of service, would be entitled to 60.8% using the standard formula. But, since they are eligible for RetirementPlus, they will receive the extra 12% or a total of 72.8%.

"RetirementPlus allows teachers to retire more comfortably - and earlier - than if they just used the standard formula," comments Legislative Chairman Bill Hill. "Even though it comes at an added cost, it's apparent that since the plan's first year (2001), more and more teachers have retired."

Over the past 10 years, 1995 - 2004, a total of 22,928 teachers have retired. During the most recent four years, 13,473 teachers retired, as compared to 9,455 retirements over the previous six years.