The Teachers Retirement and Pension Systems have been the subject of newspaper articles, conversations at the State House, and beyond.
Study the terms below so you, too, can contribute to the discussions fully armed with “pension-speak!”
Final Average Salary/Compensation – the average rate of salary for a specific period of time generally preceding retirement; in Maryland it is the three highest consecutive years of salary.
Benefit Formula – a formula for computing the amount of pension benefit payable under a retirement plan, usually based upon salary, length of service, and age.
COLA – cost of living adjustment that helps maintain original purchasing power of the benefit. Members of the Pension System are eligible for up to a 3% compounded COLA each year.
Defined Benefit – Pension benefit is guaranteed for life and determined based on a formula; usually includes death benefit and disability benefit.
Defined Contribution – Pension benefit is based on contributions made by employee over the course of his or her career and is sometimes matched by the employer. Does not usually provide death or disability benefits. No benefit is guaranteed.
Multiplier – number representing a percentage of final average salary used in computing benefit formula that, along with final average salary and years of service, determine pension benefit.
Teachers Pension System – the “new system” – includes everyone hired on or after January 1, 1980. Currently has more than 102,500 active members.
Teachers Retirement System – the “old system” – closed to new members on December 31, 1979. Currently has less than 3,600 active members.
The Board of Trustees of the State Retirement and Pension System of Maryland – charged with the general policy direction and administration of the retirement and pension systems. In Maryland it is made up of 14 members, two of whom are elected by participants in the Teachers’ Systems. Currently the teacher trustees are Bill Brown, middle school teacher from Montgomery County, and Theresa Lochte, a retired educator/SLP from Baltimore County.