The Teacher Retirement System (TRS) Board of Trustees met in November and reviewed the results of the latest actuarial valuation, which was conducted in August. Overall, the system is in good shape, and investments are performing very well. The system’s investments had a return of 15.5 percent during the past year, almost double the projected return of 8 percent. The overall value of the fund increased from $95.7 billion to $107.4 billion, which means the system has enough money to continue paying benefits for another 60 to 70 years based on current contribution levels and assumptions.

The news was not all good, however: According to the system’s comprehensive annual financial report, the number of retirees is increasing, but the number of active members is decreasing. This could cause funding problems in the future. Furthermore, both the TRS-Care health insurance program for retirees and the TRS-ActiveCare health insurance program for active educators are in dire need of funding support. The TRS-Care trust fund will be depleted by 2014 if the Legislature doesn’t take action to address the problem during the next legislative session. Similarly, the TRS-ActiveCare funding level is at a fixed rate even though health care costs continue to rise. This will be a focal point of ATPE’s advocacy efforts during the next session.

Social Security and you

Educators are often surprised to learn that rules exist in federal law that can reduce the amount of Social Security benefits an educator can receive if she collects a government pension such as that provided by TRS. To help dispel the misinformation that commonly surrounds this issue and give educators a chance to prepare accordingly, here is a brief summary of how these rules work.

The Government Pension Offset (GPO) applies to employees who wish to apply for spousal or survivors Social Security benefits. The spouse of an employee covered by Social Security can collect a benefit based on the spouse’s earnings. This is a benefit separate from the spouse’s benefit and is equal to half of the spouse’s benefit if the spouse is alive (spousal benefit) and all of the spouse’s benefit if the spouse has passed away (survivors benefit). The GPO reduces the amount that a person eligible for a government pension, such as a TRS pension, can receive in spousal benefits by two-thirds of the amount of the person’s government pension. For example, a person eligible for $1,200 a month from TRS and $1,000 per month in spousal Social Security benefits would have his spousal Social Security benefits reduced by $800 (two-thirds of $1,200), leaving only $200 in spousal Social Security benefits and $1,200 in TRS benefits. Educators who work the last five years before retirement in a position covered by both TRS and Social Security are exempt from this provision.

The Windfall Elimination Provision (WEP) applies to employees who earn enough Social Security credit to be eligible for their own Social Security benefits. (Many teachers are not eligible for their own Social Security benefits because most Texas school districts do not participate in the Social Security program.) The WEP uses a complicated formula to refigure the benefits of these employees; this formula can result in a reduction of as much as $375 per month. However, the reduction is based on a percentage correlated to the number of years a person has paid into Social Security. The more years a person has paid in, the smaller the reduction. If a person has paid into Social Security for 30 or more years, he is exempt from the WEP.

ATPE has a long-standing position in our legislative program advocating for a full repeal of the GPO and WEP for educators. You can find more information on both of these provisions and ATPE’s efforts to pass legislation to amend them here.

Questions? Contact ATPE Governmental Relations.