Transcript Retirement Seminar

Getting Ready for Retirement:
Navigating the MTRS
Thomas F. Campbell
Director of Human Resources
October 23, 2008
7/21/2015
1
First Things First
 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, especially if you
are not retiring for a couple of years
7/21/2015
2
What We Hope to Accomplish
Today
 Help you better understand the retirement process
 Eligibility
 Notice to Needham Public Schools to be eligible for sick






7/21/2015
leave buy back OR alternative longevity
Credible Service and the purchase of past service
Retirement options
When will I get my first check?
Health Insurance
Retirement Application
Working after retirement
3
Thinking About Retirement?
 At the end of this year, it is expected
that 3500 teachers/administrators will
retire
 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
7/21/2015
4
You Are in Good Company!
 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!
7/21/2015
5
Retirement Forecast
Actual and Projected Retirements in Mass.
4500
4226
4000
3500
3823
3507
3543
3500
3600
3400
3300
3257
3200
3000
2500
2000
1500
1000
500
0
2003
7/21/2015
2004
2005
2006
2007
2008
2009
2010
2011
2012
6
Your New Best Friend…
 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)
7/21/2015
7
The MTRS are the Experts
 “Ready for Retirement” program is a
great source of information:
– Marlboro November 6
– Hyannis November 13
– Cambridge November 24
– Ipswich on November 20
– Weymouth November 25
7/21/2015
8
Did You Know…Regular
Compensation?
 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
7/21/2015
9
Am I Eligible to Retire?
Understanding “Vested”
 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)
7/21/2015
10
How Much Will I Get?
 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
7/21/2015
11
Notice to Needham: Sick Buy
Back
 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 (20 months notice)
 Up to 200 days at $45 per day ($9,000).
Lump sum payment on last day teaching
 You must retire between June 30 and
August 31
 Will not count in retirement calculations
7/21/2015
12
Enhanced Alternative Longevity
Buy Out
 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 (20 months notice)
 May not count in retirement calculations
7/21/2015
13
Extended Longevity Buy Out
(ELBO)
 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/
7/21/2015
14
What is Credible Service?
 Credible service is time that you have
7/21/2015
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%
15
Purchasing Service
 Types of service you may be able to purchase:
–
–
–
–
–
–
–
–
–
–
7/21/2015
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
16
Purchasing Service
 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!
7/21/2015
17
Purchasing Service
 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...
– 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%
7/21/2015
18
The Three Retirement Options
 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
7/21/2015
19
When Will You Get Your First
Check?
 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)
7/21/2015
20
Taxes
 There will be no State taxes paid on your
7/21/2015
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/22retire
e/22tax.htm
 If you are moving out of state, check with that
states’ DOR as they may have a state tax 21
Health Benefits
 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
7/21/2015
22
The Application
 18 page application on the MTRS
website
http://www.mass.gov/mtrs/2members/20
active/intro.htm
– 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
7/21/2015
23
Working After Retirement
 You have limitations for any Massachusetts public




7/21/2015
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 unless you are earning the
maximum (80%) or age 65 or older
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
24
Working After Retirement
 Example:
– 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
7/21/2015
25
Critical Shortage
 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
7/21/2015
26
FAQ’s






7/21/2015
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 9-11% 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
27
FAQ’s












7/21/2015
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
28
FAQ’s






7/21/2015
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: Both my spouse and I are teachers and therefore part of MRTS.
What option (A, B or C) would be the best for us? How does the option
choice change if one spouse dies?
A: I'm playing phone tag with my rep at MRTS. Rather than hold up the
other 2 questions, I'll send an email as soon as I get information to this
question.
29
Questions?
7/21/2015
30