A few things to remember about your pension.

It's school budget time of year and griping about pensions earned by teachers is in the air. Here are a few things to remember about your pension:

1) There are states and municipalities which are having great financial difficulties paying for the pensions they promised their retirees. In virtually all of these situations, the problem is that the governmental unit granted the pension benefits but did not also begin to set funds aside to pay for those benefits. In the case of states such as New Jersey, Illinois, Rhode Island, California, etc. several years worth of funding were skipped in order to keep taxes low. Is this the fault of the retirees? No way! Thankfully, New York is not in this situation. Every contribution needed to fund our pensions has been made in a timely manner.

2) When I began my teaching career in 1967, schools were required to contribute about 23% of salary to the NYS retirement system. By the early 2000's that figure had dropped to less than 1%. Then came the financial collapse of 2008. The NYSTRS assumes--and has produced over 25 years-a return on its investments of 8%. When the stock market tanked, that return disappeared and schools needed to increase their contributions. Next year, the employer contribution rate will be around 14%. While that is almost half the rate from the 1960's, it represents a big jump from the less than 1% a few years ago, allowing the anti-teacher forces to yell that "pension costs have increased by over 1400% and are unsustainable." The employer contribution rate is based on a rolling 5-year average investment return.The stock market has performed well in the last few years and the losses of 2008-2009 will soon drop out of that 5-year average.

3) The average NYS teacher's pension is $39,000/year. Certainly not a huge amount. In fact, 76% of NYSTRS pensions are less than $30,000/year.

4) Unlike private-sector 401(k) plans, teacher contributions to their pension system are taxed.

5) Although public employee pensions are exempt from NY income tax, no one--private or public--is taxed on their Social Security benefits. In addition, private pension benefits are exempt from NY taxes for the first $20,000. This means that a couple with two private-sector pensions has a $40,000 exemption from NY income tax.

6) We often hear that politicians "buy" the votes of teachers and other public employees by "sweetening" pension benefits. From the 1960's through today we have seen our pensions modified from Tier 1 through today's Tier 6. Each modification has seen a decrease in benefits. Some "sweetening!"

7) Yes, we do have a COLA. But, you must be at least 62 and have been retired for 5 years before you can begin receiving a cost-of-living adjustment. In addition, the COLA--which applies to only the first $18,000 in pension benefits--is 1% or half the increase in the consumer price index, whichever is LESS. No matter how high the CPI spikes, the COLA cannot be larger than 3% of the first $18,000 of pension benefits. Hardly a kingly amount!

8) "I don't have a pension, why should teachers have something that I don't?" Private-sector employers saw the 401(k) as a way to drop their defined-benefit pension plans and lower their pension costs. The problem is that it costs twice as many dollars to produce the same retirement benefit in a defined-contribution (401k) plan compared with a traditional (defined benefit) pension. If employers are saving money, that can only mean that the expected benefit at retirement has to be reduced. As time goes on, people have been discovering that they have been hoodwinked by this switch. Could private-sector employers afford traditional pensions? You may recall that they are sitting on almost $2 trillion at the moment. Corporate profits are at record high levels. What do you think? Or we could all join hands and race to the bottom! (For a full discussion of the problems with 401(k) plans, see "What's so bad about 401(k)-type plans?")