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10 Feb 2011
0

TRTA Inside Line: Higher Federal Tax Withholdings

by in TRS, Update

“Why Has My TRS Check Decreased?”
 
TRS Retirees Feeling a Federal Tax Squeeze
 
Many TRTA members are asking why their monthly annuity has suddenly decreased. Retirees are reporting a decrease that ranges between $30 per month to as much as $50 per month. The answer is that the federal government is taking a bigger bite out of your monthly income through higher tax withholdings.
 
One of the first questions I have been asked is “if the Bush-era tax cuts were extended, why am I paying more?” Part of the answer is that President Obama and the previous Congress extended the reduced tax bracket amounts that have been in force since President George Bush’s term. The tax brackets, however, were expanded to include more people at the higher taxable amounts. While the tax rates did not change, a person may fall into a new tax bracket with a higher tax rate due to this expansion.
 
In addition, President Obama and the previous Congress enacted the Payroll Tax Holiday. This is a separate issue entirely and it reduces a different item in the taxing structure. The Payroll Tax Holiday reduces the Social Security tax withholding, or the FICA-OASDI tax amount. TRS retirees do not benefit from this Tax Holiday, because TRS does not deduct FICA-OASDI taxes from a retiree’s annuity check.
 
In 2009 and 2010 there was a “Making Work Pay” credit in effect as part of the American Recovery and Reinvestment Act.  This expired on 12/31/2010, meaning that many people will notice an increase in the amount of Federal Withholding deducted.
 
The combination of the change in the federal withholdings and the expiration of the “Making Work Pay” tax credit are taking a significant bite out of many retirees’ pay checks.
 
What can be done?
 
TRTA members can contact their Congressional members and let them know that these tax increases are making a bad situation worse in Texas. Congressional members need to know that TRS retirees have not had a pension increase in 10 years and have already lost as much as 30 percent of their buying power! Any additional reduction has a real and detrimental impact on retirees’ fixed incomes.
 
Additionally, Congress should find a way to eliminate the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) which impact so many TRTA members.
 
Thank You
 
We know that TRTA members are already engaged in this very hard state legislative budgeting process. Texas legislators have received more than 15,000 emails from TRTA members! You are doing an excellent job in promoting TRTA’s major budget initiatives: the restoration of funding for the TRS-Care health insurance program and the TRS pension trust fund. We need to protect our health care premiums and find a way to provide retirees with a real benefit increase.
 
TRTA members are doing a lot to help advance our legislative priorities. The level of activity is increasing all over the state and legislators are responding. Many have contacted TRTA to arrange meetings on the issues important to you. This is great news and we appreciate all you do to make legislators aware that our issues should not be moved to the back burner.
 
Thank you for your efforts and for your support of the Texas Retired Teachers Association!
 
 

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07 Feb 2011
0

TRS Hires New Director

by in TRS, Update

Current Deputy Director will take Lead Role September 1


The Teacher Retirement System of Texas (TRS) met today to interview candidates and hire a new system Executive Director. Mr. Brian White of the San Diego Employees Retirement Association and Mr. Brian Guthrie, currently serving as the TRS Deputy Director, were interviewed for the position. The TRS Board of Trustees voted to hire Brian Guthrie effective September 1, 2011.

 

The TRS Executive Director search began last year when current director, Mr. Ronnie Jung, announced plans to retire. The TRS Board named a search committee and hired an executive search firm to field qualified candidates.

 

The search firm reviewed more than 100 candidates and narrowed the results down to three recommendations. One of the top three candidates withdrew from consideration, leaving Mr. White and Mr. Guthrie as the top two choices for consideration by the TRS Board of Trustees.

 

While Mr. White’s experience in the private sector and with the San Diego Employees Retirement Association is impressive, the Trustees selected the internal TRS candidate to head the system. TRTA has worked with Mr. Guthrie since he joined TRS in 2008. Brian has worked diligently in his capacity as the TRS Deputy Director and is a regular speaker for TRTA local units around the state. We look forward to working with Brian as he transitions into this new role.

 

Ronnie Jung, TRS Executive Director, will remain in his position through August 31, 2011. The TRS Board voted to retain Mr. Jung as an executive liaison, where he will assist Mr. Guthrie and the trustees during a transition period through Jan. 31, 2012.

 

TRTA commends the TRS Board on an open search process for this critical position. Mr. Linus Wright, TRS Annuitant Trustee, served as Chairman of the Executive Search Committee. Mr. Wright’s work is greatly appreciated. Hiring an Executive Director is a very daunting task, but the work invested by the TRS Trustees, their commitment to an open process, and the many opportunities that were provided for public input have made this a smooth process. TRTA will continue to represent you in EVERY TRS Board meeting, and we will work with these critical state leaders to ensure that your fund is managed effectively.

 

Additional Information

TRTA State Legislative Committee members begin a month-long advocacy effort to promote our TRTA legislative agenda. We will follow up with legislators on your email advocacy campaign to restore funding to the TRS pension trust fund and the TRS-Care health insurance program. Over 14,000 emails have been sent to legislators since last week asking for these cuts to be restored.

 

We will update you on these meetings and all important legislative activities as the week progresses.

 

Thank you for your support on these vital issues. We appreciate your service on behalf of the TRTA.

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28 Jan 2011
0

TRTA Legislative Update: Keep TRS a Defined Benefit Plan

by in Pensions, TRS, Update

TRTA Week in Review

 

Public Pension Funds Still Under Attack

“Texas Pension funds are in better shape than anywhere else….” This is a recurring sentiment that we are hearing about your TRS pension trust fund as the legislative process revs up. What is also revving up is the attitude that a defined benefit traditional pension plan (like TRS retirees currently have), as well as the health insurance program that TRS retirees need, is too much of a fiscal burden on the state and now is the time to eliminate these programs.

TRTA members need to know that there are interest groups that are promoting the demise of the defined benefit program. On Thursday, a public pension fund briefing was conducted by Senator Robert Duncan (R-Lubbock) and Representative Vicki Truitt (R-Southlake). During that briefing, Talmadge Heflin, Director of the Texas Public Policy Foundation’s Center for Fiscal Policy, called on the Texas Legislature to adopt a proposal that moves all current and future public employees (including education employees) into a defined contribution plan. He also advocated for the termination of health insurance programs for public pension retirees and the creation of high-deductible health insurance programs.

For school district employees, the Texas Public Policy Foundation recommendations are even more radical. About 95 percent of all Texas school district employees do not pay into Social Security. Mr. Heflin and the Texas Public Policy Foundation suggest that the best alternative for current and future educators is to keep them out of TRS, to keep them out of the Social Security program, and provide a floor-level of retirement benefits based in government bonds.

No employee in the American workforce today is as ill equipped for retirement as what the TPPF is suggesting for our Texas public education employees. The fact is that the combination of TRS management efficiencies, low taxpayer cost, low employee cost, and high level of retirement benefit is a winning formula that has worked in Texas for over 70 years.

Legislators Need to Know

Texas legislators are talking about your pension trust fund and are asking the question if now isthe right time to transition the fund to a defined contribution plan. While the proponents of a defined contribution plan will try and reassure retirees that it will not impact their benefit, TRTA members know better. Moving the current and future working population away from the current defined benefit pension plan eliminates the much needed pension fund contributions that are invested to the betterment of the entire trust and all beneficiaries. It is the investment earnings that have driven cost of living increases and benefit enhancements for past and present pensioners, and eliminating contributions does nothing for the system except create a definite end date for the plan.

Now is the time to shore up pension fund contributions and to do all that is required to preserve and grow this healthy retirement system.

Legislators need to know the facts:

  • Less than 2% of the Texas budget goes to pay for pension benefits;
  • Texas taxpayer contributions to TRS total $2.3 billion;
  • TRS pays out $6.6 billion in pension benefits per year;
  • TRS retirees spent those dollars in Texas and in their local communities generating $900 million in state and local taxes;
  • This economic engine generates about 91,500 Texas jobs;
  • The true net cost to Texas taxpayers is $1.4 billion;
  • If Texas educators participated in Social Security as opposed to TRS, the cost to the taxpayer would be $1.5 billion;
  • The TRS pension trust fund enjoys a funded ratio of 82.9 percent with more than $105 billion in total pension fund assets;
  • There are over 1,000,000 active and retired members in the TRS system. This means that one out of every 20 Texans is a member of the TRS pension trust fund!

TRTA is committed to protecting your pension and health care benefits. There are numerous Texas legislators that are considering the idea of transitioning away from the TRS defined benefit pension plan. While this does not mean that current retirees would lose their defined benefit plan, it does mean that current and future active employees would be disadvantaged significantly when it comes to their retirement security. If Texas legislators are serious about helping retirees receive a pension increase, recruiting and retaining the best educators possible, and keeping Texas pension dollars and the jobs those dollars create here instead of exporting these valuable resources to Washington, they must spend more time creating ways to preserve the TRS defined benefit plan instead of killing it off.

Senate Finance Committee Members Named

Lieutenant Governor David Dewhurst has named the following Senators to the Senate Finance Committee:

  • Steve Ogden (R-Bryan), Chairman;
  • Juan “Chuy” Hinojosa (D-McAllen), Vice Chairman;
  • Bob Deuell, (R-Greenville);
  • Robert Duncan, (R-Lubbock);
  • Kevin Eltife, (R-Tyler);
  • Craig Estes, (R-Wichita Falls);
  • Eddie Lucio Jr., (D-Brownsville);
  • Jane Nelson, (R-Flower Mound);
  • Dan Patrick, (R-Houston);
  • Kel Seliger, (R-Amarillo);
  • Florence Shapiro, (R-Plano);
  • Royce West, (D-Dallas);
  • John Whitmire, (D-Houston);
  • Tommy Williams, (R-The Woodlands); and
  • Judith Zaffirini, (D-Laredo).

Senate Finance Committee meetings begin on Monday, January 31. TRS will appear before the committee on February 16.

Final Thoughts

TRTA members are doing a great job communicating with their elected officials. In less than a week, over 9,000 emails have been sent to Texas legislators. In addition, every Texas legislator has received contact from TRTA members! Your advocacy efforts are making a significant impact. I have received many great reports about legislators engaging directly with their constituents as a part of this email advocacy campaign. Your work is making legislators aware of our issues and the need to make TRS retirees a priority this session.

It is not too late to get involved. If you have not sent an email to your legislators, now is the time to take action. Click here to send an email to your legislators.

The budgeting process is just now getting underway. Our active participation can and will make a difference for all TRS retirees! We appreciate your support and your membership with TRTA.

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