Some have asked what testimony that ATRS will give the Task Force on Tuesday about combining ATRS and APERS. A news organization asked ATRS that same statement. Here is the ATRS response to the media inquiry about what ATRS sees as the issues with trying to merge the two retirement plans: ATRS will respond that merger would be extremely complex from a benefit and tax compliance standpoint. The benefit structures of the two systems are very different due to benefit structures designed to address different memberships and goals. ATRS is fine tuned to recruit, retain and encourage a teaching career of 30 to 40 years. A change could shorten the average career significantly. ATRS has an average benefit over $1,800 dollars per month due to the benefit structure that encourages longer service. At the same time often teachers need to retire before age 65 due to the stress of teaching. ATRS recognizes that and allows retirement at age 60 although APERS uses age 65. ATRS has a lot of STEM educators and the 10 year T-DROP has been beneficial to keep teacher shortage areas filled. ATRS has a fast disability process (often it takes less than 30 days) to help educators with health issues exit faster to ensure schools have teachers delivering the educational curriculum effectively. APERS uses the Social Security Disability as a qualifier that may not provide the best result for learning in the classroom due to the time required for approval. Many retirees from one system have gone to work at the other and a merger may cause an IRS prohibited in service distribution since the member would be earning service in and at the same time be receiving a retirement benefit from the same system. A big issue is that ATRS has over 13,000 members who can submit a retirement application tomorrow and be an October 1st, 2014 retiree. A large number of extra retirements could cost ATRS hundreds of millions of dollars in added unfunded liabilities so a new structure can add costs due to the additional retirements caused by confusion, fear, frustration, or anger. That number of retirements could also cause a problem with having classrooms filled with qualified teachers in hard to fill positions. ATRS had a net $47 million dollar gain last year to to fewer retirements than assumed by the actuaries. That result could be reversed by several hundred million dollars or more by a merger that is not positively accepted by so many currently eligible to retire. Both systems are operating effectively now and a merger would be a divisive and complex with the likelihood of unintended costs and outcomes.
Posted on: Thu, 21 Aug 2014 02:24:54 +0000
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