From FUBAR to more FUBAR

Senate passes bill to allow teacher pension switch

Senators on Tuesday passed their version of a bill to allow more than 19,000 teachers and school service personnel struck in cash-strapped 401(k)-style retirement plans to switch to a better-funded plan.

The Senate plan (HB4496), designed to encourage large numbers of Teachers' Defined Contribution participants to switch to the Teachers Retirement System, passed the Senate on a 31-2 vote.

That sets the stage for a showdown between the Senate plan - which would cost taxpayers no more than $20 million, and potentially could require no money for the bailout - and a House of Delegates proposal, which carries a $78 million price tag, but would make it possible for more teachers to draw a full TRS pension when they retire.

On Tuesday, senators from both sides of the aisle argued that the state has a moral obligation to help TDC participants - most of whom don't have enough savings to retire.

"Here are 20,000 teachers who didn't do anything wrong. ... I think they should be given the opportunity to get back into the defined benefits plan," said Sen. Frank Deem, R-Wood.

He recalled how the Legislature in 1991, faced with a multibillion-dollar unfunded liability in the TRS, forced all new teachers into the TDC - and then failed to provide them with adequate guidance on how to manage their investments for years.

"Teachers aren't financial experts. They're not expected to be," Deem said. "They got a lot of bad investment advice."

Senate Education Chairman Robert Plymale, D-Wayne, agreed. He said flaws in the TDC and teacher pension systems are not the fault of the participants.

"It was flawed by former governors, and former members here," he said.

Still, Plymale said he favors the Senate plan.

"Our obligation is not $78 million. Our obligation is less than that," he said. "I do not believe a complete bailout is our obligation."

Under the House plan, a teacher nearing retirement age could buy in for a few thousand dollars, as opposed to paying $20,000 to $30,000 or more to pay the full actuarial cost of the buy-in in the Senate version.

That accounts for the bulk of the subsidy in the House plan, compared to the Senate proposal, which could cost as much as $20 million if only 70 percent of TDC participants switch.

At 85 percent participation, the Senate plan is projected to have no cost to taxpayers, since the contributions from younger TDC participants, and from sweeping better-financed accounts, would cover the cost to subsidize participants currently at or near retirement age.

http://www.wvgazette.com/News/200803040686

Well now, isn't that sweet, all the Teachers are crying "poor mouth" now ........ and a few Senators think they can come up with $20,000 to $30,000 or more to "buy in" to the old Plan.

I wonder just how much the Senators think the School Service personnel can come up with ....... when that $20,000 to $30,000 or more ..... is way more than their yearly salary.

Kanawha County teachers worried about their retirement plans met in Cross Lanes Tuesday night to discuss dueling pension merger proposals now in the Legislature.

About a dozen people met at Andrew Jackson Middle School, where West Virginia Education Association Executive Director David Haney ran through the latest options.

Earlier Tuesday, the Senate passed their version of a bill that would allow teachers under a 401(k)-type plan to merge into the older, defined benefit plan. The House of Delegates already passed their bill.

"Neither one of them am I in love with ... but I hate the Senate version," Haney said.

Haney and many teachers argue that the defined contribution (TDC) plan leaves most retirees with a paltry retirement account. More than 19,500 teachers are enrolled, Haney said. The average teacher 401(k)-style account has less than $34,000, he said.

The defined benefit (TRS) plan credits teachers more for their salary and experience. A teacher with 30 years of experience and an average salary of $50,000 will earn $30,000 a year in retirement. The ultimate risk lies with the state, not on the retiree, Haney said.

Principals would notify TDC teachers in May that they can either opt to stay in the plan or move into the defined benefit plan, he said. Teachers are expected to make a decision that month.

Under the House version, about 14,625 teachers - or 75 percent - now in the defined contribution plan must want to move into the other plan. The Senate only demands 70 percent, Haney said.

Some teachers said they were duped into the defined contribution plan with lofty promises and scare tactics.

"It's a failed system," said Doug Stinson, whose wife is a Kanawha County teacher. "It's not a failed teacher decision."

http://www.wvgazette.com/News/200803040774

And just how much does Haney figure the average School Service personnel's 401(k)-style account has in it?

You can bet your bippy that it has one hell of a lot less than $34,000 in it.

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