Your Union Reaches Tentative Deal on Retirement
Good news! Feb. 10 update on enhanced benefits for teachers nearing retirement
Your Association last month reached a tentative agreement with lawmakers and the treasurer on changes to your retirement system, changes that will improve benefits, strengthen the system’s stability, and help cut the state’s budget deficit by 10 percent without shifting the system’s costs to local school districts.
But as Vermont-NEA, lawmakers and the treasurer began hammering out the details, one issue arose that would have required folks within five years of normal retirement age (age 62 or any age after 30 years of service) to contribute more but not be eligible to earn a benefit greater than 50 percent of their average final compensation (AFC).
We are happy to report that your union and the treasurer’s office were able to work out a way in which members close to retirement (again, 30 years of service at any age or 62, whichever comes first) will still be required to pay more and work a little longer, but will now be eligible to earn up to 53.34 percent of AFC. These teachers continue to be exempt from the proposed Rule of 90/Age 65 change and are still eligible to earn a spousal health care benefit.
To get to 53.34 percent of AFC, members in that situation would have to work two years more than it would have taken them to reach the current-law benefit maximum of 50 percent. By making this change, members who would retire with a $60,000 AFC, for example, would see their annual benefit rise by more than $2,000. Over the course of a 25-year retirement, that’s $50,000 more in earnings.
All of the other benefits and contribution levels we’ve told you about remain available for members who currently aren’t within five years of retirement, and we plan to put together a comprehensive collection of information to answer all of your questions on the website soon. We also plan to hold seminars around the state to explain what this proposal will mean to you.
Thanks for all that you do, and thank you for your patience as we work out the final details of this agreement that will improve your pension, save taxpayers money, and ensure the continued long-term viability of your defined benefit system.
On February 23rd We Need You At the Statehouse
Even though your union has reached a tentative agreement on how to preserve your pension and eliminate 10 percent of the state’s budget deficit, we still must make sure it gets passed into law.
We have set aside February 23 as a legislative lobby day at the Statehouse. Join colleagues from around the state who will meet face-to-face with their legislators on this very important issue.
MEET US AT 9 A.M. AT VERMONT-NEA HEADQUARTERS FOR COFFEE AND INSTRUCTIONS. MORE DETAILS WILL BE POSTED AT vtnea.org.
(Important update on 'normal' retirement age here)
(Read media coverage of deal here)
(For a quick summary, click here)
A message from President Martha Allen:
Today and tomorrow you may hear in the news that an agreement between legislative leaders, the state treasurer and Vermont-NEA has been reached on how best to address the issues surrounding your pension. The good news is that the hundreds of you who have contacted your lawmakers nearly 5,000 times since this fall have made a difference.
In short, while the agreement does require some additional contribution on your part, it brings with it significant gains: the maintenance of your defined benefit plan, the creation of a spousal health benefit, and the ability of most teachers to earn a benefit equal to 60 percent of their average final compensation, a 20 percent increase over the current level.
In addition, the agreement locks in statute your right to a health care benefit; keeps the pension vesting period at 5 years; and maintains an early retirement age of 55.
The agreement also allows for the continued fiscal integrity and sustainability of the retirement system over the next 30 years, saving taxpayers millions of dollars and halting the shift of retirement costs to local property taxpayers and the Education Fund.
In return, however, you will be asked for a little more. Your contribution will rise to 5 percent of your salary. Without this agreement, the treasurer’s commission was recommending a boost in contributions of nearly 5.5 percent, with the potential for a rise in that level every year.
The tentative agreement also calls for the institution of the so-called Rule of 90: Your normal retirement age will be 65 or any combination of service and your age that equals 90, whichever comes first. This provision does not affect anyone within five years of retirement now (those now 62-years-old or with 30 years of service at any age).
The tentative agreement does make some changes to your retiree health care benefit; for teachers with at least 10 years of service, you will remain vested in the benefits that exist now, with the potential to earn a spousal benefit as well. For those with fewer than 10 years of service, health benefits would phase in, up to 80 percent of a two-person policy after 25 years of service.
This tentative agreement carries with it a lot of details, and I’m sure you will have a lot of questions. Look for more details via e-mail and on vtnea.org over the next several days.
As always, thank you for all that you do for your students, your profession and your state.