NYC Teacher Pensions -- the straight poop

If you've been thinking about becoming a teacher in the NYC public school system -- whether via the NYC Teaching Fellows, Teach for America, or otherwise -- you've given some thought to the NYC teachers' pension system. And if you haven't, you should. I'll try to lay out, as clearly as possible, how pensions work for new NYC public school teachers.

PLEASE NOTE: Do not leave any comments that are political complaints about the teachers' contract, or the UFT, or Mayor Bloomberg. This is not a post about how things should be. It is about how they are.

OK, now that we have that out of the way, let's talk PENSIONS.

Assuming you teach in the NYC schools, teach for at least 5 years, and then retire, you will get a pension -- a monthly check. This is above and beyond Social Security (if it's still around) or any other retirement savings you might have. The size of your monthly teacher pension is, roughly speaking, based on 4 things:

1. What pension tier you're in
2. How many years you put in
3. Your age at retirement
4. Your FAS (final average salary)

Let's explain these one at a time.

1 - Your Tier
Your "tier" is based on when you were hired. This is an artifact of the complex way in which pensions are usually administered. I won't go into the details, but just know that the NYC teacher pension system currently has FOUR tiers: I, II, III, and IV. Different tiers calculate their pensions differently. If you are a new teacher (actually, anyone hired after Sept. 1, 1983) , you will be in tier IV. You should know this. It affects many of your benefits.

2 - How many years you put in
This is easy. How many years have you been teaching? OK, it can be a little more complicated. If you take time off, or if you have prior service teaching, or if you've served in a war, etc. But really, this is just how many years of service you have teaching. Your pension payments get calculated differently depending on whether you've put in less than 20 years, between 20 and 30 years, or more than 30 years.

3 - Your age at retirement.
As a Tier IV person, you can only receive a pension if you are 55 or older and have taught for at least 5 years. If you retire before age 62 AND have put in less than 30 years, you get pegged with a slight penalty. For example, if you retire at age 55 and have less than 30 years in, your monthly pension checks would be 73% of what it normally would calculate out to.

4 - Your FAS (Final Average Salary)
This is the average of the highest 3 consecutive years' salaries. While this can get complex, usually this ends up basically being your last 3 years of work.

So, now that we have these 4 factors, we can calculate your pension:

Because you're a new teacher, you're Tier IV -- this simply dictates how to calculate your pension.

Step 1: from years in calculate "pension factor"

• less than 20 years: multiply # of years by 1-2/3%
  
• 20 to 30 years: multiple # of years by 2%
• more than 30 years: 60% + 1-1/2% for every year over 30

Step 2: If retire before age 62 and put in less than 30 years

• Age 55: multiply pension factor by 73%
• Age 56: by 76%
• Age 57: by 79%
• Age 58: by 82%
• Age 59: by 85%
• Age 60: by 88%
• Age 61: by 94%
• Age 62 or above: no pentaly

Step 3: Multiply Final Average Salary by pension factor
... and there you have it. You're monthly payment.

Anyway, just thought people should know what the heck was going on with teacher pensions. And, there is a nifty calculator for figuring out what your annual pension in retirement would be here.