Dennis Leone responds to teacher facing decision on when to retire

From Dennis Leone, February 5, 2012

A couple of reactions from this ex-STRS board member that you may share with [xxx]:

1. The vote on Issue 2 really has nothing to do with STRS.

2. Proposed House Bill 69, which is the pension solvency legislation, will not be considered further until lawmakers examine a consultant’s report about the assumptions (pertaining to projected stock market returns and projected active member dollars received yearly at STRS) that the STRS Board used in developing the proposal that the House Committee on Aging currently has. The proposed legislation eliminates the current 35-year/88% benefit beginning in 2015, taking it back to a 77% benefit (as it was prior to 2000).

3. I think it is safe to assume that a if a teacher currently has 36 years vested, he/she likely can work 3 more years and receive a pension based on current rules. I do not see the Legislature implementing a new law that will cause an instantaneous change for teachers who are currently in the system – except for the fact that current teachers will see their annual contribution rate rise.

4. Hopefully, our lawmakers will act soon enough so active member contributions will rise beginning August 1, 2012. The longer the final decision is postponed, the worse it will be on the long-term solvency of our pension fund.

5. It also deserves noting that the final plan adopted by the Legislature likely will be different from the plan recommended by the STRS Board. It is best for current active teachers to keep on an eye on what the final version is so they know how it might affect them.

Dennis Leone