Teachers Retiring In Record Numbers

JANUARY 2006
- RetirementPlus Boosts Pensions - Massachusetts' public school teachers have been retiring in record
numbers. According to the latest actuarial data provided by the Public
Employee Retirement Administration Commission (PERAC), there were
32,631 retired teachers on January 1, 2001, compared to 42,164 on
January 1, 2005 - an increase of 29.21%.

Also,
during the same four-year period, the average pension of a retired
teacher increased from $21,012 to $29,182 - a leap of 38.88%.

What's
different between the number of retirements over the past four years
compared to 1990s when the average was 1,840 per year? Clearly, it is
the alternative retirement plan for teachers which was enacted in 2000
(Ch. 114), and became effective for those who retired after July 1,
2001.

Coined RetirementPlus
by the Mass. Teachers' Retirement Board (MTRB), the new law allowed
teachers the option of receiving an extra two percent toward their
pension for each year of creditable service from 25 to 30 years, or, in
other words, an additional 12% for those 6 years. In order to be
eligible, a teacher must contribute 11% toward their pension for at
least 5 years and work a minimum of 30 years in public service, with 20
years in teaching.

RetirementPlus
is mandatory for all teachers who were hired after July 1, 2001.
Teachers who were employed before July 1, 2001 were given the option of
joining the plan. The deadline for making that decision was the same
July 1.

Those, who had reached 30
or more years of service in 2001, were allowed to retroactively pay an
amount equal to a full five years' contribution of 11% and retire after
that July 1 with the extra 12%. If a teacher elected into RetirementPlus, they could not revoke it later.

A number of teachers, retiring during that four-year period, did not enroll in RetirementPlus.
Many had over 30 years service and chose to reach their maximum pension
without paying for the extra benefit. Others retired with less than 30
years service and, therefore, were not eligible. But approximately 60%
of those pensioned during that period were RetirementPlus retirees and the number appears to be increasing.

The
PERAC January 1, 2005 report did not include teachers who retired since
that date. In its fall publication, the Teachers' Retirement Board said
that 3,532 teachers retired in the past school year. Most of these
would have been June 2005 retirees. Over 60% of these teachers were RetirementPlus retirees.

Another
key provision of Chapter 114 was the ability of teachers to buyback and
receive creditable service for maternity leave. Only leave taken prior
to 1975 can be purchased. In order to qualify for the buyback a teacher
must have been a member of the retirement system prior to 1975 and be
vested. Previously, only teachers vested after 1975 were allowed this
benefit.

Catherine Penn, retired Revere teacher, was among the first to take advantage of RetirementPlus. She was age 62, with 27 years of service, and a "prime candidate" for the new option.

"I
had taken time off earlier in my career when I became a mother. In
2001, I was facing several more years of teaching in order to reach the
80% maximum pension," she explained.

"I was a prime candidate for RetirementPlus.
I could buy four years maternity leave credit at the same time,
bringing me to 31 years, which is more than I needed (30) to receive
the extra 12% under the plan. It cost about $16,000, but it brought me
to 80%.

"It was a perfect fit for me. I don't know of anyone who bought into RetirementPlus and retired who didn't think it was well worth the price."

While, cost wise, RetirementPlus
was a good fit for recent retirees, there have been complaints from
newly hired teachers that feel an 11% contribution is a bit high.

Bob
Cole, a retired Whitman Hanson High School teacher, agrees that 11% is
a "pretty steep hit" on the paychecks of new teachers.

"Teachers
coming into the profession today are better prepared professionally
than in earlier times. A lot more is expected of them," Cole said.
"Their paychecks starting out are very small to begin with. When taxes
and insurance are withheld, another 11% on top is a pretty steep hit
for a new teacher."

The Teachers'
Board also noted that many more retiring educators chose Option B and C
because, effective July 1, 2004, the Governor and Legislature approved
changing the factors used in the determination of those benefits,
making them much more favorable to the retiree.

State Retirements Also Increase

State
retirees have also seen their numbers increase over a four-year period.
In January 1991 there were 44,027 retirees collecting pensions. In
January 2005 the number was 50,907, an increase of 13.5%.

During
that same period the average pension increased by 24.7%. In January
2001 it was $15,445, and in January 2005, it was $20,513.

The
increase in the number of retirees and survivors can be partly
explained by two five-year early retirement incentive offers to
eligible employees in 2002 and 2003 when a total of 8,000 workers said
goodbye. Deaths of older retirees and survivors explains the actual
four-year growth in the average amount of pension.

Employee Salaries

Over
the same four years, the number of active teachers was 88,027 on
January 1, 2005, up from 86,798 in January 2001, an increase of 1.4%.
Meanwhile, the average salary was $52,743 in January compared to
$46,914 four years previous, an increase of 12,4%.

The
number of state employees actually declined over that period - 87,682
in '01 compared to 81,682 - a drop of 7.3%. Average salaries jumped
from $42,476 to $48,767 - an increase of 14.8%.

On
an annualized basis, the increase in teachers' salaries are about on
average, while state employees' salary increases are below average.

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