Among the items under consideration at the August meeting of the Teacher Retirement System were rules implementing new laws passed during the legislative session (including those that will increase the cost of purchasing service credit). In reviewing the proposed rules, TCTA noticed that a provision would prohibit an employee from receiving payment credit toward the cost of purchasing certain types of service credit for any TRS contributions made during the same school year. For example, under the rule governing the purchase of unreported service credit, if a teacher worked 88 days and left after the fall semester, then came back and substituted for two more days in the spring to achieve the 90 days needed to receive service credit for the year, the rule as proposed would have charged the teacher the full actuarial cost even though there were only two days of unreported (substitute) service. The same provision applied to the purchase of developmental leave.

 

After our testimony to the Benefits Committee, TRS staff agreed to revise the proposal to prorate the cost of these types of service credit to give credit for contributions made during the year, potentially saving the employee a significant amount of money. The committee, and later the full board, adopted the changes.

 

During the course of the committee and board meetings, trustees and staff both emphasized the need for TRS members to be very aware of the new legislative changes. The new laws will have an impact not only on members nearing retirement, but those of any age who have unreported service credit or other service they hope to purchase.

 

TRS staff are working to educate members through TRS publications, and we urge our members to pay special attention to TRS bulletins and your annual statement. In general, if you have service credit to purchase, you should try to do so by Aug. 31, 2013, to avoid increased costs. Also, if you have unreported service credit (such as substitute service), you will need to get that service verified by TRS within five years or lose the opportunity to receive the credit. (Note that the deadline for the lower purchase price remains August of 2013.) However, these are very general dates and members should contact TRS as soon as possible to determine the options for your individual circumstances – it may be to your financial advantage to act sooner.

 

Staff expressed the hope that they can get a chart detailing the deadlines on the TRS website in the near future.

 

Although this meeting did not include a full analysis of the TRS financial situation, it was noted that despite the recent downturns of the financial markets the market value of the fund as of mid-August was a relatively healthy $105.4 billion. The next formal valuation of the fund will use the August 31 value to determine the pension system’s fiscal status.

 

Staff also informed the board that although final figures are not available, retirements are currently up by about 25% (around 4,000 retirees) this year. The significant increase in retirements has a negative impact on the retirement fund and especially on TRS-Care (retiree health insurance). The current prediction, if this trend holds true, is that TRS-Care has sufficient funding to last through the end of 2014, providing an opportunity during the 2013 session to make changes in funding levels, benefits, or both to ensure that the insurance program for retirees remains viable.