Scan this code with your
Smartphone to access the
Pension Education Toolkit
at NYSTRS.org.
Information for active members of the NYS Teachers’ Retirement System
NYSTRS.ORG
YOUR
SOURCE
Portfolio Posts 18.2% Return
MARCH
2015
Continuing a strong rebound from the 2008-09 global financial crisis, the Retirement
System’s total portfolio returned 18.2% net of fees for the fiscal year ended June 30, 2014. It was
the fourth double-digit return posted since 2009 and far exceeded the actuarially assumed rate of return of 8.0%.
NYSTRS’ five-year average rate of return stood at 13.8%.
System assets totaled $108.2 billion at fiscal year-end 2014, the highest in System history. During the same period, benefits
paid to retirees and beneficiaries rose to approximately $6.3 billion.
“Professionally managed, well-funded defined benefit plans have proven to be the most efficient and cost-effective way of
providing steady, secure income for retirees. NYSTRS is one of the best-funded public defined benefit plans in the U.S.,” said
NYSTRS Board President R. Michael Kraus. “Our Board and staff manage a diversified,
risk-controlled portfolio over the long term. Retired members of our System have
received their benefits in full and without fail throughout our 93-year history.”
Bulletin Board
See Portfolio Posts 18.2% Return, page 2
from NYSTRS is based on data
Two Elected to Board
Paul J. Farfaglia
Jolene T. DiBrango
Your initial benefit payment
reported by your employer and
For the second time in four years, delegates attending the Annual
Meeting of NYSTRS Delegates in Saratoga Springs this past
November had the unusual privilege of electing multiple teacher
members to the System's Retirement Board.
on record at the time you file
Paul J. Farfaglia of the Jordan-Elbridge School District was
re-elected to his third term and Jolene T. DiBrango of the Pittsford
Central School District was elected to the seat vacated by Karen E.
Magee, who resigned from the Board to focus on her duties as
NYSUT president. Both Farfaglia and DiBrango are Tier 4 members.
we will finalize your payments
Teacher members serve staggered three-year terms on the Board.
Traditionally, only one teacher member is elected each year.
process retirements as quickly
First elected in 2008, Farfaglia chairs the Board’s Compensation
and Disability Review committees, and serves on the Investment
Committee. A graduate of LeMoyne College and SUNY Oswego,
frame to finalize a retirement
See Two Elected to Board, page 2
for retirement. Once we have
received and verified your
salary and service information,
— including any retroactive
payments dating back to your
original retirement date.
Although we attempt to
as possible, the average time
is 9-12 months.
Portfolio Posts 18.2% Return, continued from page 1
Other highlights from NYSTRS’ Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2014
include:
• The System’s investments experienced appreciation of $14.6 billion in 2014.
• NYSTRS’ 20-year average rate of return was 9.1% and our 25-year rate of return was 9.2%. Both figures exceed our
actuarially assumed rate of 8.0%.
• Over the past 20 years, NYSTRS paid out $78.1 billion in benefits while collecting $19.3 billion in employee and employer
contributions. During the same period, the System’s net assets grew from $40 billion to $108 billion, with 87% of
NYSTRS’ income generated by investment returns.
• More than 80% of the $6.3 billion in benefits NYSTRS pays out annually is distributed to New York State residents. Retiree
spending creates a ripple effect through the economy.
• The number of retired members and beneficiaries receiving benefits has increased over the past three years. However, the
size of the System’s active membership has declined.
NYSTRS’ annual report can be read in its entirety at NYSTRS.org. Select the Library tab at the top of any page and then the
Annual Report button on the left navigation menu. Printed copies are available from the System’s Public Information Office.
Two Elected to Board, continued from page 1
Farfaglia has taught for over 30 years and is vice president of the local bargaining unit.
DiBrango began her teaching career in 1994 in the Canandaigua City School District and has spent the majority of her
career in Pittsford, where she teaches sixth grade. A graduate of New Hartford High School, SUNY Oswego and Nazareth
College, she holds three teaching certifications and serves as president of the Pittsford District Teachers Association.
Tim Southerton of Sayville is the other active teacher on the 10-member Retirement Board. Board Vice President
David P. Keefe of Hempstead is the retired teacher representative.
NYSTRS Board members serve without compensation and represent various constituents, including active and retired
members, school administrators and school boards. They are responsible as fiduciaries to protect the long-term value of the
System’s investment portfolio, providing benefit security for its nearly 426,000 active and retired members.
In addition to the election, delegates were updated on NYSTRS benefits and changes that have occurred during the year,
and a new Benefit Profile Tutorial was unveiled. The meeting also featured the Delegate-Board/Staff Discussion during
which delegates posed questions on a variety of topics to Board members and staff.
Copies of the seminar presentations are available on the Delegates > Annual Delegates Meeting page at NYSTRS.org.
2
Promised Pensions Guaranteed
NYSTRS members often ask if there are any circumstances in which
their pension benefits could be reduced.
Our answer: The New York State Constitution guarantees that promised
public retirement benefits cannot be taken away or reduced. Article 5,
Section 7 of the Constitution states: “After July 1, 1940, membership in
any pension or retirement system of the state or a civil division thereof
shall be a contractual relationship, the benefits of which shall not be
diminished or impaired.”
Under New York’s Constitution, any benefit changes can only be applied
prospectively by creating additional membership tiers for new entrants.
By way of example, the benefit calculation formula and the milestones to
qualify for an unreduced benefit differ between Tier 4 (which took effect
Sept. 1, 1983) and Tier 6 (which took effect April 1, 2012). In general, the
higher the tier, the less generous the benefit.
Were the state constitution to be amended, either through a New York
state constitutional convention (see related article) or by way of a preemptive federal statute, in an attempt to reduce public pension benefits,
lawsuits would likely be filed arguing the contractual agreement stated in
the Constitution cannot be broken. NYSTRS cannot predict the outcome of
such hypothetical litigation, but the System’s strong track record and its
position as one of the best-funded public plans in the nation will make a
strong case for the status quo.
New York’s Constitution and the state’s Education Law also seemingly
protect NYSTRS funds for the exclusive use of paying retirement and
ancillary benefits to New York’s public educators and administrators.
The System was created by Section 502 of the Education Law as a selfsustaining, non-profit public entity. The System enjoys the powers and
privileges of a corporation, but is not a public agency, public authority or
public benefit corporation. We receive no funding from the state’s general
fund; our income comes exclusively from employer contributions, member
contributions and earnings on investments.
The bottom line is NYSTRS retirees have received benefits in full
without fail since 1921. The fact that the System is one of the best-funded
public pension plans in the nation should also be a great source of comfort
for members.
How Likely is a
Constitutional
Convention?
Article 19, Section 2 of New
York's Constitution provides for
a constitutional convention only
if a majority of registered voters
approve a ballot measure calling
for one. This item can appear on
a general election ballot in one of
two ways:
1. By law, the question must
be placed on the ballot once
every 20 years, with 2017
the next scheduled
appearance; or,
2. Two consecutive legislatures
must vote in favor of putting
the question on the ballot.
Voters have not approved a
convention since 1965. The
amended constitution from that
convention was presented to
voters the following year and it
was defeated. In 1997, voters
rejected a possible convention.
Even if a constitutional convention was held and reforms to
the pension laws were proposed,
voters would have to approve the
constitution as a whole.
3
Service and Retirement Considerations
Some people literally want to retire the
first day they are eligible. If this sounds
like you, we urge caution because when
it comes to your pension, cutting things
too close can prove costly.
Let’s say, for example, you’re a
55-year-old Tier 2-4 member. You believe you’ll have 30 years of service on
March 1, so you plan to retire that day.
You know you can retire without an agerelated reduction to your pension as early
as age 55 if you have 30 years of credit.
But what if you miscounted the number of days you worked in your final year
and fall just short of getting the credit
needed to reach the 30-year milestone?
Or what if some work you thought might
be counted as regular salary was not actually eligible for crediting? If NYSTRS’
review of your records finds you have
only 29 years and 8 months of service,
NYSTRS must apply an age factor,
which at 55 will pay you a benefit 27%
lower than you would have received with
a full 30 years of credit.
When you retire on the cusp of a key
milestone, any difference in pensionable
lation looks at all the service and salary
we have reported and posted at the time
we received your application. The later
you file the more posted service you’ll
likely have and the larger your prelimiThe bottom line: Don’t cut it too close nary pension calculation will be.
On average, you will receive 9-12
when picking a retirement date. Work
longer than you think necessary if you’re monthly retirement payments based on
that preliminary calculation. When we
close to a threshold and discuss your
unique situation with a System represen- finalize your benefit, you will receive a
retroactive adjustment that reflects the
tative before filing for retirement.
service and salary verified since your
When to File
initial payment was calculated.
Another item to consider when you
If you’re likely to reach a key service
expect to reach a key service milestone
milestone in those last months before
close to your retirement date is when to
retirement (e.g., 20 years for Tiers 1-4, or
file retirement papers with NYSTRS.
30 years for Tiers 2-4), it may be better
The law allows you to file your
to file your application in mid-June rather
Application for Retirement (RET-54)
than April. If your district has provided
anywhere between 0 and 90 days before its monthly reporting on a timely basis,
your effective retirement date. So, if you you may have enough service reported to
plan to retire July 1, NYSTRS can remeet the applicable milestone when the
ceive your application anytime between preliminary calculation is run.
April 2 and July 1.
You can use your online MyNYSTRS
When we receive the application, a
account before you file for retirement to
pension calculation is run so we can add see what service has already been posted.
you to our retirement payroll. That calcuservice could negatively impact your
benefit – for life. Since each situation is
unique, there’s no formula for determining how much longer you should work to
provide an adequate milestone cushion.
Your Pension a Good Bang for the Buck
Pension plans like the one administered by NYSTRS are far more cost efficient at providing retirement income compared to
individual defined contribution accounts, according to a study conducted by the National Institute on Retirement Security (NIRS).
The December 2014 report, Still a Better Bang for the Buck: An Update on the Economic Efficiencies of Pension Plans, factors
in recent retirement benefit developments with regard to fees, investment strategies and annuities. Like a 2008 NIRS study of the
topic, the new report compares defined benefit (DB) and defined contribution (DC) plans. NYSTRS’ plan is DB.
The analysis finds there are three unique qualities to DB plans that allow them to deliver the same retirement income at a 48%
lower cost than 401(k)-style DC accounts. They are:
1. Pooled longevity risk. Because DB plans save for the average life expectancy of a large number of individuals, these
plans are able to provide Americans with stable income that won’t run out in retirement. Individuals, on the other hand, must save
enough on their own should they be among the half of retirees who will live longer than the average life expectancy. Statistics
show DB pension longevity risk pooling generates a 10% cost savings.
2. Optimally balanced investment portfolios. DB pensions are “ageless” and therefore can perpetually maintain an
optimally balanced investment portfolio. In contrast, a typical individual investor must downshift investments over time to a
lower- risk portfolio of cash and bonds, sacrificing higher investment returns generated from stocks. The DB pension balanced
portfolio feature generates an 11% cost savings.
3. Lower fees. DB pensions achieve higher investment returns as compared to individual investors because they have lower
fees and are managed by investment professionals. The lower fees and higher returns of DB pensions generate a 27% cost savings.
4
Has Your Retirement
Countdown Begun?
If you’re contemplating retirement when the school year ends, be
sure to review the NYSTRS publication Countdown to Retirement,
which you’ll find under Active Member Publications in the Library
at NYSTRS.org. Topics covered include:
•
•
•
•
•
•
How to get the best information;
When to file your retirement application;
What to do when legislation that may impact you is pending;
What to consider if you have a beneficiary;
When to expect your first benefit payment; and,
The deadline for withdrawing your application, changing
your retirement date or changing your option.
Also be sure to discuss your options with a NYSTRS Information
Representative. Schedule a benefits consultation online using your
MyNYSTRS account. After logging into your account, select the
My Tools tab and then Schedule Appointments. And, at any time in
the planning process as questions arise, be sure to call us at (800)
348-7298, Ext. 6250.
6
1
2
3
4
5
6
Did You Know...
Retiring from your employer does not automatically trigger your NYSTRS retirement benefit?
You also need to file for retirement with NYSTRS.
Before you file for your NYSTRS retirement,
be sure to review your contract with your
employer so you’ll know when to notify your
employer you intend to retire. You don’t want to
jeopardize any contractual benefits that may have
service-related requirements or time-sensitive
deadlines. For example, contracts often contain
qualification requirements for incentives, accrual
payments or enhanced insurance coverage.
Remember, you’re doing two things when you
retire: you’re resigning from your employer, and
you’re retiring from NYSTRS. Your NYSTRS
retirement cannot begin any earlier than the day
after your last contracted day of work.
Steps to Collecting Your Retirement Benefit
For Those Planning to Retire Soon
Attend a PREP Seminar.
These free seminars, offered year-round and open to all, cover NYSTRS benefits, financial planning, Social
Security, estate planning and more. MyNYSTRS account holders can make reservations online. All others call
(800) 348-7298, Ext. 6180.
Schedule a Consultation.
Meet with a NYSTRS representative, in person or by live video, to discuss your retirement questions. Run
estimates for different retirement dates and discuss the various payment options available to you. Book an
appointment through MyNYSTRS or call (800) 348-7298, Ext. 6100.
Understand Your Payment Options Before Choosing.
Members who select the wrong payment option often face difficult financial and emotional challenges later.
Avoid this mistake at all costs! Read our pamphlet Maximum or an Option: Choosing a Benefit Payment Right
for You, available in the Library at NYSTRS.org.
Apply for Retirement With NYSTRS.
Retiring from your employer does NOT automatically trigger retirement benefit payments. You must also
file an Application for Retirement (RET-54) with the Retirement System in order to receive your monthly
pension payment.
Know When to File Your Retirement Application.
File too early (more than 90 days before your official date of retirement) and the application will not be valid.
File on your date of retirement if you wish, but make sure your date of retirement is at least one day after your
contract with your employer expires. File before June 12 if you want to receive your first payment in July.
Remember: You Have a Limited Window for Withdrawing or Changing the Terms of
Your Retirement.
From your date of retirement you have 14 days to withdraw your retirement application and 30 days to
change your benefit payment option. NYSTRS must receive the paperwork no later than day
14 or 30. State law does not allow for exceptions.
5
Delegate Election
Period Open
Did you know the three teacher members on the
10-member NYSTRS Board are elected by teachers
like you? They serve staggered three-year terms and are
elected by delegates representing districts across New
York State at the System’s Annual Meeting held
each fall.
Delegates are active NYSTRS members elected
in their districts by their co-workers. You will be represented at this year’s meeting only if an election initiated by your chief school administrator (CSA) is held
between March 1 and June 1 and results are reported to
NYSTRS by July 1.
Only active, full-time per annum NYSTRS members
are eligible to be elected as delegates or alternates.
If you have not been notified of an election, contact
your CSA. See Election Responsibilities on the
Employers page at NYSTRS.org for further information.
The 2015 Annual Meeting is scheduled for Sunday,
Nov. 1 and Monday, Nov. 2 at the Saratoga Springs City
Center. Meeting details and other pertinent information
will be emailed to delegates and alternates in the fall.
Meeting details will also be available on the Delegates
page of the Retirement System’s website.
Delegate Defined
Delegates are active, full-time per annum NYSTRS members who represent
the System’s participating employers. They have two main functions:
• To elect a teacher member to the Retirement Board at the Annual
Delegates Meeting; and,
• To serve as a liaison between NYSTRS and the delegate’s co-workers.
What are the duties of a delegate?
Delegates attend a two-day annual meeting held each fall at which a teacher
member is elected to the NYSTRS Board. They also are invited to attend
informational seminars conducted by NYSTRS staff.
Each delegate is eligible to have an alternate who may serve in his/her place
if necessary. Delegates and alternates are elected as a ticket and cannot
be split.
How long of a term does the delegate serve?
Delegates are elected to a two-year term. Delegates elected this year will
serve a term ending July 31, 2017.
When is a delegate election held?
Regular elections are held between March 1 and June 1 of odd-numbered
years, with results to be submitted to NYSTRS by July 1.
Who runs the election?
It is the CSA’s (i.e., a school superintendent or college/university president)
responsibility to hold the election or designate someone to do so. Many have
the election run by their local bargaining unit.
What procedure is used for running a delegate election?
The Education Law does not mandate an election process, and NYSTRS
has no authority to mandate how elections are run. It is left to the discretion
of each school district/college to establish appropriate procedures.
Scenes From the 2014 Delegates Meeting
6
Board Highlights, continued from back page
October 30, 2014 Cont.
• Renewed the agreement with Dimensional Fund Advisors to manage a portion of
the System’s assets as an active emerging markets manager benchmarked to the
MSCI Emerging Markets Index, for one year, effective Feb. 19, 2015.
• Renewed the agreement with LaSalle Investment Management (Securities) LP to
manage a portion of the System’s portfolio in an international ex-U.S. real estate
investment strategy, for one year, effective Dec. 1, 2014.
• Renewed the agreement with Loomis Sayles & Co. to manage a portion of the
System’s assets as an active global bond manager benchmarked to the Barclay’s
Capital Global Aggregate Float Adjusted Bond Index, for one year, effective
Nov. 8, 2014.
• Renewed the agreement with Marathon Asset Management LLP to manage a
portion of the System’s assets as an active EAFE international equity manager, for
one year, effective Jan. 24, 2015.
• Renewed the agreement with RREEF America LLC to manage a portion of the
System’s portfolio in an international ex-U.S. real estate securities investment
strategy, for one year, effective Dec. 1, 2014.
• Renewed the agreement with State Street Global Advisors to manage a portion of
the System’s assets as a passive ACWI ex-U.S. international equity manager, for
one year, effective Feb. 18, 2015.
• Renewed the agreement with Callan Associates Inc. to act as a real estate
consultant, for one year, effective Feb. 1, 2015.
• Renewed the agreement with Hewitt EnnisKnupp, an Aon Company, to act as
a general investment consultant, for one year, effective Feb. 1, 2015.
• Reappointed Howard J. Bicker, Robert G. Wade Jr. and Geoffrey Gerber to threeyear terms on the Investment Advisory Committee, effective Jan. 1, 2015.
• Appointed Jill S. Hatton (effective Nov. 1, 2014) and reappointed Paul J. Dolinoy
and Blake Eagle (effective Jan. 1, 2015) to three-year terms on the Real Estate
Advisory Committee.
• Accepted the report of KPMG LLP on the financial statements of the Retirement
System as of June 30, 2014, and for the plan year ended on that date.
• Accepted updates to the Investment Policy Manual, which includes the adoption of
NYSTRS’ Internal Asset Management Code of Conduct.
YOUR
OURCE
S
NYS Teachers’ Retirement System
10 Corporate Woods Drive
Albany, NY 12211-2395
NYSTRS.org
OFFICE HOURS
Monday - Friday: 8:30 a.m. - 4:15 p.m.
Summer Hours:
Monday - Thursday: 8 a.m. - 4:15 p.m.
Friday: 8 a.m. - 12:30 p.m.
TELEPHONE
(800) 348-7298
Albany-Area Calls: (518) 447-2900
Beneficiary Information
Benefits Consultations
Direct Deposit
Disability
Earnings After Retirement
General Information
In-Service Death Benefit Info.
Legislation
Loans
Member Service Credit
Membership Withdrawals
Military Service
MyNYSTRS
PREP Seminars
Prior Service
Reinst./Retro. Membership
Retirement Estimates
Transfer-In
Transfer-Out
Ext. 6130
Ext. 6100
Ext. 6230
Ext. 6010
Ext. 6150
Ext. 6250
Ext. 6110
Ext. 6200
Ext. 6080
Ext. 6075
Ext. 6090
Ext. 6060
Ext. 6085
Ext. 6180
Ext. 6030
Ext. 6070
Ext. 6020
Ext. 6040
Ext. 6050
HOTLINE
(800) 782-0289
Form and Publication Requests
Latest News 24/7
RETIREMENT BOARD
R. Michael Kraus, President
David P. Keefe, Vice President
Jolene T. DiBrango
Paul J. Farfaglia
Dr. Phyllis S. Harrington
Daniel J. Hogarty Jr.
Michael J. Masse
Dr. L. Oliver Robinson
Nicholas Smirensky
Timothy M. Southerton
Thomas K. Lee
Executive Director & Chief Investment Officer
7
MARCH 2015
WHAT’S INSIDE:
PRESRT STD
U.S. POSTAGE
PAID
PERMIT NO. 702
ALBANY, N.Y.
New York State Teachers’ Retirement System
10 Corporate Woods Drive
Albany, NY 12211-2395
Portfolio Posts
18.2% Return
Your Pension a Good
Bang for the Buck
PAGE 1
PAGE 4
Has Your Retirement
Countdown Begun?
Delegate Election
Period Open
PAGE 5
PAGE 6
NYSTRS Board Meeting Highlights
January 29, 2015 & October 30, 2014
January 29, 2015
• Re-elected R. Michael Kraus as president and David P. Keefe as
vice president of the Board.
examination of the System’s financial statements for the year
ending June 30, 2015.
• Authorized a commitment of up to an additional $125 million in
growth capital to Donahue Schriber Realty Group for deployment,
redevelopment and asset acquisition over a five-year period.
• Approved amendments to the charter of the System’s Audit
Committee.
• Renewed the agreement with Black Rock Financial Management, Inc.
to manage a portion of the System’s assets in Commercial Mortgage
Backed Securities (CMBS), for one year, effective April 3, 2015.
• Approved resolutions acknowledging Karen Magee (former Board
member) and James Coxon (retired Senior Investment Advisor) for
their years of service to NYSTRS.
• Renewed the agreement with FIS Group, Inc. to manage a
portion of the System’s assets as a manager of international
equity managers benchmarked to the ACWI ex-U.S. Index, for
one year, effective April 25, 2015.
October 30, 2014
• Renewed the agreement with Iridian Asset Management LLC to
manage a portion of the System’s portfolio as an active domestic midcapitalization equity manager, for one year, effective April 1, 2015.
• Renewed the agreement with Torchlight Investors LLC to manage
a portion of the System’s assets in Commercial Mortgage Backed
Securities (CMBS), for one year, effective March 30, 2015.
• Authorized the Executive Director and Chief Investment Officer
to renew the agreement with TorreyCove Capital Partners to serve
as the System’s private equity consultant, for one year, effective
May 1, 2015.
• Authorized the Executive Director and Chief Investment Officer
to contract with KPMG LLP for audit services, including an
• Approved NYSTRS’ 2015 legislative program.
• Renewed the agreement with Aberdeen Asset Management to
manage a portion of the System’s assets as an active ACWI ex-U.S.
international equity manager, for one year, effective Dec. 15, 2014.
• Renewed the agreement with AQR Capital Management LLC to
manage a portion of the System’s assets as an active MSCI ACWI
ex-U.S. international equity manager, for one year, effective
Jan. 6, 2015.
• Renewed the agreement with BlackRock Institutional Trust Co.
N.A. to manage a portion of the System’s assets as a passive
ACWI ex-U.S. international equity manager, for one year, effective
Dec. 12, 2014.
See Board Highlights, page 7