Transcript Retirement Seminar - Needham Public Schools

Getting Ready for
Retirement:
Navigating the
MTRS
Thomas F. Campbell
Director of Human Resources
October 19, 2010
7/17/2015
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First Things First
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The Massachusetts Teacher’s Retirement
System are the experts on retiring!
Volunteer to jot down questions I don’t
know the answer to, but will find out
This presentation has been emailed to you
with links embedded
I’m happy you are here!
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What We Hope to Accomplish
Today
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Help you better understand the retirement process
Eligibility
Notice to Needham Public Schools to be eligible for sick
leave buy back
Credible Service and the purchase of past service
Retirement options
When will I get my first check?
Health Insurance
Retirement Application
Working after retirement
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Thinking About Retirement?
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At the end of the 2010 school year, nearly
3600 teachers/administrators are expected
to retire
At the end of the 2011 school year, 3400
teachers/administrators are expected to
retire
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You Are in Good Company!
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The moral of the story is many teachers
will be retiring in the next 5 years
Typically, the MTRS retires an average of
2900 teachers/administrators in a given
year
Start planning early!
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Retirement Forecast
Actual and Projected Retirements in Mass.
4500
4226
4000
3500
3823
3507
3543
3600
3480
3400
3257
3200
3022
3000
2500
2000
1500
1000
500
0
2003
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2004
2005
2006
2007
2008
2009
2010
2011
2012
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Your New Best Friend…
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The Massachusetts Teacher’s Retirement System
(MTRS)
The website is http://www.mass.gov/mtrs/ Click on
members, then active members. Spend some time at
this website. Retiring is a process and there is lots for
you to know!
MTRS’ phone number is 617-679-6877
Their mailing address is One Charles Park, Cambridge
02142-1206. They are across the street from the
Cheesecake Factory at the Cambridgeside Galleria.
(Most navigation tools do not recognize One Charles
Park. Enter 100 CambridgeSide Place)
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The MTRS are the Experts
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“Ready for Retirement” program is a great
source of information:
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Auburn November 4
Weymouth November 4
Woburn November 9
Holyoke November 16
Hyannis November 18
Ipswich on November 22
Cambridge November 30 and December 2
Foxboro December 7
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Did You Know…Regular
Compensation?
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The maximum benefit you can earn in retirement from the MTRS is
80% of the average of your three highest consecutive years of
salary
Generally speaking, stipends, extra days and longevity are included
in the average of your three highest years. The NEA contract will
dictate if this money can be included in the calculation. If it is not in
the contract, it cannot be included. The amount of money must be
listed in the contract as a stipend figure, not hourly rate (except
payment for lunch duty)
Bonuses, sick leave buy back, expense reimbursement, tuition
reimbursement summer school teaching or curriculum work are not
included in the calculation
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Am I Eligible to Retire?
Understanding “Vested”
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If you have 20 years of credible service
regardless of age OR
You are at least 55 and have at least 10
years of credible service
If you are in Retirement Plus, you need to
have 30 years of credible service, of which
20 years are teaching service with MTRS or
the Boston Retirement System (i.e. direct
payroll contribution to MTRS, not purchased
service)
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How Much Will I Get?
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Most MTRS members are interested in
knowing how much they will receive in
retirement (can I get to 80%?)
MTRS has an estimator on their
website
The MTRS is a defined benefit plan
under Section 401(a) of the Internal
Revenue Code
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Notice to Needham: Sick Buy
Back
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Teachers are eligible to purchase sick time if
they have work in Needham for 10 years.
Notice must be by November 1 or the year prior
to retirement (19 months notice)
Up to 200 days at $40 per day ($8,000). Lump
sum payment on last day teaching
You must retire between June 30 and August
31
Will not count in retirement calculations
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Enhanced Alternative
Longevity Buy Out
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For teachers with 20 years of service to
Needham, you can elect a longevity
payment of $4000 for three years
($12,000)
One time option
Notice given November 1 prior to the year
of retiring (19 months notice)
May not count in retirement calculations
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Extended Longevity Buy Out
(ELBO)
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Regulations now eliminates future ELBO plans
in retirement calculations
Grandfather provision: permits completion of
most ELBO plans under current contracts; only if
the ELBO plan is in the contract on or before
1/25/06 and you elected to be in the plan on or
before 1/25/06 and payments to you must have
begun prior to the contract expiration
For more information visit:
 http://www.mass.gov/perac/
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What is Credible Service?
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Credible service is time that you have
worked as a teacher, administrator or other
Massachusetts public employee, for which
you paid or transferred retirement
contributions to the MTRS
You may be able to purchase credit for prior
substituting, teaching in an out-of-state
school, certain non-public school teaching,
other Massachusetts public service and
active military duty
Purchasing past service may help you get to
the maximum of 80%
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Purchasing Service
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Types of service you may be able to purchase:
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Regular Massachusetts public teaching service
Out-of-State public school teaching service
Overseas dependent school teaching service
Nonpublic school teaching service
Public school substituting, temporary or part-time teaching
or tutoring service
Peace Corps service
Other Massachusetts public service
Authorized LOA or sabbatical from MA public school
Authorized LOA for military service
Active military service in the armed forces
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Purchasing Service
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You must purchase this service before you
retire. In some cases, you can only purchase
the service while an active member of MTRS
There are loads of restrictions for the purchase
of all services (i.e. the service must have
occurred prior to a certain date, if you
contributed to another retirement system such
as social security, etc.)
Completing all of the requirements to purchase
service can take a very long time…start early!
You can purchase service with a rollover ot
trust-to-trust transfer from a 403(b) or IRA
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Purchasing Service
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The cost of purchasing past service is based upon
the percent of contribution that was in effect at the
time you performed the service (plus interest)
Your contribution rate is...
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Before January 1, 1975 - 5%
January 1, 1975 through December 1, 1983 - 7%
January 1, 1984 through June 30, 1996 - 8%
July 1, 1996 through June 30, 2001 - 9%
July 1, 2001 or after (automatically enrolled in
RetirementPlus)11%
All RetirementPlus participants - 11%
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The Three Retirement Options
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Option A - Maximum benefit, no survivor benefit
Option B - Approximately 1% less than option A.
Survivor will get lump sum payment of what remains in
your annuity savings account
Option C - Approximately 9-11% less than option A.
Survivor will get two-thirds of your monthly benefits
(survivor must be member’s parent, child, sibling, spouse
or former spouse who has not remarried)
Did you know…your annuity savings account pays
approximately 20% of your retirement benefit and the
pension fund pays 80%? Your annuity will be depleted in
10-12 years
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When Will You Get Your First
Check?
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Up two months after you retire, but likely sooner.
Some have reported no waiting for their first
check. The first check is payable in July
You should plan accordingly and have a small
amount set aside in case your first check is
delayed
Cost of living (COLA’s) are given when the
legislation votes an increase. The percent is
based on $12,000, not your entire retirement
amount ($360)
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Taxes
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There will be no State taxes paid on your
retirement benefits
There will be federal taxes withheld based upon
the simplified method. Since January 1988, all
money sent to MTRS is pre-tax dollars. Prior to
January of 1988, money is after tax dollars
Visit the website:
http://www.mass.gov/mtrs/2members/22retiree/2
2tax.htm
If you are moving out of state, check with that
states’ DOR as they may have a state tax
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Health Benefits
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You will continue in your current insurance
program, and the town will continue to
make their share of the payments
Your portion can be deducted from your
retirement check
Your coverage could be different as a
retiree. Contact Sophie Grintchenko at
Town hall (ext. 530) for more information
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The Application
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18 page application on the MTRS website
http://www.mass.gov/mtrs/2members/20ac
tive/intro.htm
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Also a handout in your folder
You should start early…lots of paper to
collect and people to see!
The earliest you can submit your
application to MRTS is January 1
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Working After Retirement
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You have limitations for any Massachusetts public sector
employment. (You have no restrictions on any private
sector or Federal employment)
Cannot exceed 960 hours in a calendar year (January December)
60 day waiting period for the same employer unless you
are earning the maximum (80%) or age 65 or older for the
same employer. No waiting period for a new employer
Earnings: You cannot earn more than the difference
between what you would have earned if you did not retire,
and your retirement earnings
You can opt to freeze your retirement and therefore no
earnings limitations, but MTRS won’t pay your premium as
you won’t have a retirement check
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Working After Retirement
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Example:
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Robin Smith retired from a teaching position that
paid her $75,000
Robin would be earning $78,750 if she did not
retire
Robin’s annual MTRS pension is $60,000
Robin’s allowable earnings is $18,750
If Robin chose option C, she would be able
to earn more as her pension would be less
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Critical Shortage
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You can return to teaching in a critical
shortage approved by DESE without
financial or other restrictions. The district
hiring you must apply for the waiver
Retirement Plus folks cannot work for 2
years under a critical shortage. You can
come back earlier than 2 years, but
subject to the 960 hours and financial limit
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FAQ’s
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Q: Can I purchase time that I was on a leave of absence for maternity leave?
A: You can, but with the following restrictions: The years on maternity leave must be
prior to December 31, 1974 and you must have applied and paid for that time before
December 31, 2001
Q: I elect Option C, which allows my survivor to collect two-thirds of my
pension if I die. If I choose Option C, my benefits, while I'm living, will be
reduced 9-11% as compared to Option A which has no survivor benefit. If I die,
will my survivor collect two-thirds of entire pension, or two-thirds of my 9-11%
reduced pension?
A: The survivor will get the same amount the member was getting (two-thirds of the
9-11% reduction). By the way, the MRTS told me that the 9-11% reduction for Option
C is if you choose a person who is similar in age as the member. If the member
chooses a survivor who is considerably younger (i.e. the member's child), then the 911% reduction will be more like a 20% deduction
Q: If you are not currently taking health benefits from the Town of Needham,
can you elect to do so?
A: Yes, you can elect our health insurance before or after you retire, as long as you
have 10 years working in Needham and Needham was your last job before retiring
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FAQ’s
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Q: What happens to my portion of paying health insurance premiums if my
pension check will be delayed 2-4 months?
A: If you retire in June, your summer checks will pay September's premium. The
Town will inform MRTS that they need to double your health insurance deduction if
the checks are delayed beyond September (which they are likely to be)
Q: When I turn 65, who pays for supplementary benefits?
A: If you elect to purchase Medigap, you are responsible for the premiums.
Remember that Medicaid will pay for 80% of your bills, so Medigap may be a good
option for you
Q: If you have a family plan for health insurance and your spouse reaches age
65 before your do, what happens?
A: Your spouse can stay on your insurance until you reach age 65
Q: If my retirement check is delayed 2-4 months, how do I pay for the health
insurance premiums?
A: You will write a check to the Town until your retirement check comes
Q: Can I switch from my spouses insurance to Needham’s insurance during
open enrollment, even after I retire?
A: You can join Needham's plan, even after retirement. If your husband lost his
insurance, you can get Needham's insurance at any time. Otherwise, you can switch
during open enrollment in the spring
Q: How do I learn more about Medigap?
A: The Town's website has some information on Medigap at
http://www.needhamma.gov/index.asp?nid=345
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FAQ’s
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Q: If I elected the Enhanced Longevity Buy Out option (ELBO) but decide
to wait a year or two to retire after I've received the last payment, will I be
eligible for the regular longevity for those additional year(s) that I work?
A: No. The contract specifically states that if you elect the ELBO you no longer
are eligible for regular longevity or the sick leave buy back option
Q: If I have never paid payroll taxes to Medicare. Am I eligible for Medicare
when I turn age 65?
A: If you have never paid into Medicare and you are single, you can remain (or
join) the regular insurance programs offered by the Town. If you have been
married for over 10 years, you are eligible for Medicare under your spouse. This
applies even if you are divorced from your spouse. As long as you have 10
years of marriage, you are eligible through your (ex) spouse
Q: If the cost of health insurance premiums increases when I'm retired,
am I subject to pay the increase just as I did when I was working for
Needham?
A: Yes. If there are increases in the premiums after you retire, you will pay more
just as you did when you were working
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FAQ’s
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Q: As a retiree, do we start paying social security?
A: No!
Q: Will the dental plan be available after we retire?
A: Yes
Q: Does the Town pay any portion of a supplemental insurance plan
when we switch to Medicare?
A: Yes. The Town's portion varies depending on the plan that you
choose.
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Pension Reform
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There is much happening in the way of pension reform,
and you need to keep posted by checking for guidance
on the MTRS website
A special committee has been appointed by the
Governor to make recommendations for reform
Several recommendations will affect educators:
 Remove critical shortage waiver
 Prohibit annuities from retirement
 More recommendations as on the way!
A copy of the Governor’s Bill
Follow the progress of the Bill
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Questions?
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