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 I
was aware of Tier 2 at the time, as well as the fact that it is
unfair (for teachers, as well as others), but not the specific
details. I decided if I was going to this event to represent the
union of an entire school district, I should probably know what I am
talking about. So I took to Google and began my research. To say
that I was surprised would be an understatement. I knew Tier 2 was
unfair, but not to the extent that it truly is.
I had so many thoughts on the matter that I needed to write them
down. What started off as a brief letter to the legislators that I
would be talking to quickly spiraled into something over 2,000 words
in length. Also, while this is written from the perspective of an
educator on the Teachers’ Retirement System, it can also be applied
to anyone in the State Universities Retirement System and the
Illinois Municipal Retirement Fund, albeit with some tweaks, so long
as they were hired on or after January 1st, 2011.
After it was finished, I printed off some copies and brought it with
me to the lobby day. On that day, I attempted to sit down with both
Representative William Hauter and Senator Sally Turner. I was only
successful in meeting with Representative Hauter, but it was a
productive conversation.
To follow is the document I delivered to Representative Hauter, and
attempted to deliver to Senator Turner.
Undo Tier 2
‘Give me a break.’ ‘All work and no play makes Matthew a dull boy.’
‘Thank God it’s Friday!’ These are all phrases that we as Americans
use to convey the need for time away from work and responsibilities.
Nestlé took the first phrase and made a nationally recognizable
jingle for their candy Kit-Kat. An entire restaurant chain has been
made off the latter phrase. Loverboy even made a song about wanting
time off, the 1981 hit ‘Working for the Weekend.’
Retirement is the ultimate weekend, the end-all and be-all of
breaks. We work during our younger years to get the chance to spend
our twilight years doing the things we want to do. Access to pension
plans is significant in an employee’s plan to retire, as having
access to one could make retirement much easier than it would be
otherwise.
The Teacher Retirement System (TRS) is such a pension system for
teachers in Illinois. If you are reading this, you likely know this
already, so let’s skip to the nitty-gritty, the ugly truth, the need
to make retirement more equitable for Tier 2 educators.
A Tier 2 educator is anyone who was hired as a teacher for the first
time on January 1st, 2011 or after. If you are a young teacher, you
likely have heard about this, but may not be as well informed as you
could be. I know that’s where I was just a year ago, and this is my
seventh year teaching. To say that Tier 1 and Tier 2 educators are
not equal in the eyes of TRS would be an understatement. Tier 2 is
an extremely flawed plan for a large number of reasons.
First, and certainly not least, is the age at which
these two groups are allowed to retire without incurring financial
punishments. For those teachers in Tier 1, they can retire at the
age of 55 with 35 years of teaching service, 60 with only 10 years,
and 62 with only 5 years. Even in the oldest category, Tier 1
educators get an extra half a decade of retirement, time to enjoy
with their families, taking trips, and doing the things they were
not able to do while working as an educator. Educators in Tier 2 are
not allowed to retire until the age of 67, regardless of how many
years of service they have provided the state.
To add insult to injury, TRS does allow Tier 2 educators to retire
as early as 62, but not without a significant cost. For each year a
Tier 2 educator is under the age of 67 when they begin claiming
retirement benefits from TRS, these educators must forfeit 6% of
their retirement benefits per year. This means a Tier 2 educator
could forfeit up to 30% of their retirement benefits for daring to
retire five years earlier than the state of Illinois dictates they
can. Using myself as an example, if I work until the age of 67 as an
educator, that would mean I would have provided the state of
Illinois with 44 years of service.
Another large issue, and one that is particularly insulting
considering some of us will have to spend a few years shy of half a
century teaching, is the way retirement benefits are calculated for
Tier 1 and Tier 2 educators. ‘Wait, they aren’t calculated the same
way?’ I hear you asking. No, not at all! For those in Tier 1, the
amount they receive each month from TRS is the average of the
educator’s “four highest consecutive years” in their last ten years
teaching. For Tier 2 educators, this is “the final average salary of
the 96 highest consecutive months of service out of the last 10
years.” To someone not paying full attention while reading a long
legal document, they may not think anything of this. It should be
noted, however, that 96 months equates to 8 years, not four. This is
significant for the way that the word “average” works in these two
clauses.
We should all know that the average of something is calculated by
adding up the amounts for which one is calculating the average for,
then dividing the sum by the number of amounts that were added. A
smaller pool of larger numbers will always have a higher average
than a larger pool of slightly smaller numbers. For example, the
average of 5, 6, 7, and 8 is 6.5. The average of the numbers 1
through 8, however, is lower, with that average being 4.5. By
sneakily changing the wording of how monthly retirement benefits are
calculated for these two groups, they have guaranteed that, even
though many Tier 2 educators will work more years over their career
than Tier 1, they will receive less retirement benefits for doing
so.
Let’s take a look at some of these numbers in
practice. Many teachers receive a 6% raise in their last four years
teaching once they have put in for retirement, the percentage limit
put in place by TRS before the school district must pay penalties.
Since it has been established that Tier 2 educators’ retirement
benefits are calculated out of their last 8 highest years, let’s
assume the educator starts at $60,000 and gets three percent raises
for three more years. This teacher then puts in for retirement,
getting 6% raises for their last four years.
First, let’s see what that would look like for the educator.
Starting at $60,000, after their first 3% raise, their salary would
be $61,800. After their next 3% raise, it would be $63,654, and then
$65,563.62 with the raise after. At this point, the educator puts in
for retirement. They then receive a 6% raise, bumping their salary
up to $69,497.44. After the next year, they get $73,667.29, then
$78,087.33, and finally $82,772.57 in their final year. All numbers
were rounded up to the next highest penny.
For a Tier 1 employee, only the last four highest amounts would be
considered for their average. This means we must add $82,772.57,
$78,087.33, $73,667.29, and $69,497.44, then divide by four. Adding
the numbers gives us $304,024.63. After dividing by four, this would
mean that, as a Tier 1 employee, this individual would receive
$76,006.16 per year, or $6,333.85 per month, for the rest of their
lives.
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For a Tier 2 employee, all 8 of these years would
have to be considered, month by month. The math works out the same
whether we calculate the monthly payment, add all 96 numbers up,
then divide by 96 or if we just add all 8 salaries up and divide by
8. Adding all of the salaries up gives us $555,042.25. This is a
larger number, but we are also dividing by a larger number. This
would mean that, as a Tier 2 employee, this same exact individual
would receive $69,380.29 per year, or $5,781.70 per month for the
rest of their lives. This is the difference of $552.15 per month,
and $6,625.87 per year.
According to the CDC, the average life expectancy
for a man in the United States is 74.8 years. If this individual
were a man and collected benefits until death (let’s assume 75
years) they would collect $608,049.28 over their 8 years of
retirement as a Tier 1 educator, while collecting $555,042.32 as a
Tier 2 educator. This is a difference of $53,006.96. If this person
were a woman, the CDC projects they would live to be 80.2 years old
(let’s assume 80 for this example). The gap here would be even
wider, with the educator collecting $988,080.08 as a Tier 1
educator, and $901,943.77 as a Tier 2 educator, a difference of
$86,136.31. This is also not considering that, as a Tier 1 educator,
this person would have been able to retire anywhere between 5 and 12
years earlier than they would have been as a Tier 2 educator.
Considering that Tier 2 educators are not going to
get the same amount as Tier 1 educators, you might think that TRS
would require these two groups to contribute different amounts of
their paychecks to TRS before retirement. This makes sense, as
everything else relating to money between these two groups has been
different up to now, so why not this too? You would be wrong about
this, as both groups are required to contribute 9% of their gross
earnings to TRS, even though they will not be collecting the same
amounts in retirement.
Up to now, all of my arguments have been regarding
financial inequality, but let’s take a moment to really consider the
difference of time. I have coworkers who have retired in their mid
to late 50’s. These people began teaching when they were in their
early twenties and kept going throughout their lives. So many of
these people have talked about how tired they are, and how much they
need to retire. Whenever I hear these comments, I cannot help but
think that, when I am in their shoes, I will have somewhere in the
ballpark of a decade left to work. What am I going to miss out on,
having to work for so many more years?
My wife and I just had a son at the end of 2023. When I retire, he
will be pushing forty and will likely, if he chooses to, have kids
that are in high school. I will miss so many of those early years
with my grandkids. I will not be able to be there as often for my
son as my parents are for me now. Anyone with parents who help watch
their grandkids know how much of a blessing this can be. I will be
the grandfather who was only around on the holidays, who was always
working.
I want to end on a story and a call to action. First, the story. At
the beginning of the 2023-2024 school year, we had someone come in
to talk to the teachers in my school about TRS. This is when I
really started looking into TRS and the differences between the
tiers and realizing how deeply flawed the current system is. I asked
several questions of the presenter, and he understood that I was
outraged at the lack of equitability. He told me that I could retire
before I turned 67, I just could not start collecting my retirement
benefits before that age without incurring the penalties. I will
never forget that he said to “find something to do in the meantime,”
meaning to find a way to make money between whenever I retire and
the time I turn 67. I refuse to believe that, as a college educated
person, I should have to work most of my career in one position,
only to start an entry level position in my mid-to-late fifties
doing something else until I retire. Why did I even bother going to
college if my only choice was to work until I resent my career for
not valuing me and my service, or having to work some other job for
a decade or more where I may not even use that degree?
Tier 2 needs to be undone. There is no way around it.
It can be reworked, it can be modified, but there is so much wrong
with it, I am not sure that any modifications can truly right all
the wrongs. First, Tier 2 educators need to be allowed to retire
earlier than 67, or 62 with severe penalties. No one is going to
want to get into a job as difficult as teaching if they know this is
where the road will drop them off in retirement. Second, Tier 2
educators must be offered a more equitable monthly retirement
benefit when compared to their Tier 1 counterparts. No one wants to
be told that, after working for as long and as hard as someone else,
that they just are not worth as much. Third, don’t just listen to
me. I’m just some teacher that has done his research, but may have
missed a beat or two. There are thousands of other teacher voices
that need to be listened to when it comes to this matter and what
needs to be fixed. Reach out to the teachers and schools that you
represent. Talk to the people there about what they feel needs to be
changed, and listen when they tell you. This is a touchy subject
that most do not have mild opinions on, so understand if they get
angry, it’s not at you, it’s at the situation. Understand that there
is a need for one of the most underappreciated jobs in this country.
We need a win, and you can help give us a chance at getting that
win. So, once more, I implore you, undo Tier 2.
[Matthew Boutcher]
[Matt Boutcher has been a stringer with Lincoln Daily News since
2023 while also teaching full time at Lincoln Junior High School.
The Tier 2 topic is one that is near and dear to his heart.
Regardless of how the reader may feel about this article, LDN
believes the information presented is timely, accurate and
important. We invite readers to form their own opinions derived from
honest and accurate information.]
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