What is to be done about Tier 6?

If you’re in Tier 6, you’ve probably heard that your pension is much worse than your peers in Tier 4, Tier 2, and Tier 1. But—just how much worse is it? What are the chances that it will be ‘fixed’ before you retire or hit various pension milestones? Can we rely on the usual methods—like a single UFT Lobby Day in Albany—to do the fixing?

New Action’s Tier 6 Working Group has sought to answer these questions and is closing in on a date for a webinar where we will go over the answers with rank-and-file members.

In the meantime, some of the math we’ve done bends our minds.

Did you know: 

• New York ranks 15th Nationwide for new teacher retirement benefits according to equable.org, ranking behind South Carolina, Tennessee, Florida, and North Dakota.

• Tier 4 members contribute 3% of their salary for 10 years, and nothing thereafter. Tier 6 members contribute 6% of our salary for up to 40 years. The difference between Tier 6 and Tier 4, for this reason alone, adds up to $1.4 million. That’s nearly a million and a half dollars that Tier 6 members won’t have when they retire because of an arbitrary start date.
• Tier 4 members can retire with full benefits at age 55 and 30 years of service (25 years if paid into the 55/25 plan). Tier 6 members cannot retire with full benefits until age 63, despite contributing far more money into the pension plan over the course of their careers.
• All TRS members except UFT members receive a fixed 8.25% return on their TDA. This includes all NYC administrators, CUNY employees, and Hunter High School teachers. UFT members only get 7.00%. What’s the difference between 7% and 8.25% compounded over 40 years? Hundreds of thousands of dollars. This is a problem that affects both Tier 6 and Tier 4 members – something that needs to be fixed for both of us.

Tier 4 vs Tier 6	Teachers     Tier    4	Teachers Tier 6	Police and Sanitation
Contribution Rate	3% for 10 years	6% for up to 40 years*	3% for up to 25 years
Retirement age for full pension	55	63	Retire at any age with 22 years of service
Required Years of Service	25** or 30	Up to 40	22

*Members pay 5.75% until salary reaches $100,000

**Many Tier 4 members can retire with 25 years of service if they pay additional 1.85% per year

The result? Compared with Tier 4 members, Tier 6 members contribute the equivalent of up to $1.4 million more, must retire at 63 instead of 55, and must work up to 40 years instead of 25 (15 additional years) to collect a full pension. Does that sound like a good deal to you?

Tier 6 UFT members contribute to their Pensions as long as they are in service with rates as high as 6 % and cannot retiree with a full pension until the age of 63. This is in contrast to other City Unions. For example, the Sanitation Union members are in Tier 4 with contribution rates of 3 % and can retire with 22 years of service regardless of age. Police officers are in Tier 3 and also can retire with 22 years of service regardless of age and also have contribution rates of 3 %. Police officers also receive a second pension called The Variable Supplement of 12,000 dollars on top of their regular Pension. They get this because their Union won this benefit for them. The money comes from the excess in their pension fund.

Recently, UFT President Michael Mulgrew stated that change to our pension system will be slow in coming. Can UFTer’s in Tier 6 really wait much longer – this is unacceptable!

Making Tier 6 Viable

New Action /UFT calls for:

• No pension contributions after 10 years of service
• Full pension benefits after age 55 with 25 years of service
• Option to pay into an early retirement plan and retire with full benefits at 55 with only 20 years of service
• Final Average Salary calculated based on best single year (instead of best 9 consecutive years)
• Return to 8.25% fixed TDA received by other city teachers and administrators in New York.

Let’s make Tier 6 better than Tier 4 and allow Tier 4 members to retire into Tier 6 (similar to the improvements made to Tier 4 that now allow Tier 3 members to retire into Tier 4). Anything else is unacceptable.