Executive Director Update: Back to School for ATRS Members

“Back to School” season is in full swing. All across our state, tens of thousands of ATRS members are returning to their classrooms, buses, cafeterias, and offices to begin another year of serving our state’s families.

Hundreds more are getting ready to face students for the first time as new teachers and new school employees. They will join the ranks of ATRS members, with the potential to earn their way to a secure retirement. Please join me in welcoming these new members to ATRS and to the world of public education.

I want every one of these new teachers and school employees to understand the tremendous financial value of staying in public education and remaining a member of ATRS. When you see them, I hope that you will tell them about ATRS and the benefits you have gained from our system.

They need to understand that within just a few years, they can earn the right to a lifetime retirement benefit that they cannot lose. Once an ATRS member has at least five years of credited service in the system, they will be “vested” – that means they have earned the right to a pension benefit from ATRS when they retire. The more years of credited service they earn in our system, the greater their benefit will be.

Every new member needs to understand that the ATRS pension benefit brings four key advantages:

Guaranteed for Life: ATRS members never have to worry about outliving their pension benefit. Even when our members reach the age of 100 or older, they continue to receive their monthly benefit from ATRS. And annual cost-of-living adjustments help maintain their purchasing power over time.

Biggest Piece of the Retirement Puzzle: Once an ATRS member completes 28 years of contributory credited service, they are eligible for a monthly pension that is 60% of their final average salary. When you combine that with Social Security benefits, most members can expect monthly income close to what they made when they were working, if not more. And for every additional year that a member continues to work, their monthly benefit will be even larger.

A Safe, Worry-Free Investment: When your retirement is dependent on how your own personal investments perform, market downturns like the one earlier this month can be terrifying. That’s not a worry for ATRS members. Because our system is designed to serve for years to come, the effects of market downturns are spread across generations. And that means our members’ monthly benefits are protected even when the stock market goes down.  

For example: back in 2022, the S&P 500 dropped by nearly 20%, which meant thousands of Americans could no longer afford to retire that year. But for ATRS, the impact of that downturn was spread over many years and had zero impact on our members’ benefits.

Not Just Retirement: As a vested member of ATRS, you are entitled to more than just a monthly benefit in retirement. When an active vested member is unable to work due to a disability, they may be entitled to apply for disability retirement benefits. If an active vested member passes away, their family may be able to receive survivor benefits, as well as a lump-sum death benefit for members with 10 years of actual credited service. And if a member with 28 years of credited service decides to keep working, the T-DROP program allows them to build up a cash nest egg that can be substantial.

If you know someone who is a new teacher or a new school employee, I encourage you to talk to them about ATRS. You can even forward this email to them. And if you are a new employee yourself, please check out our website to learn more about what ATRS offers.

 

Updating Beneficiary Information

Speaking of survivor benefits and the lump-sum death benefit, it is critically important that ATRS members keep their beneficiary information updated. If something happens to you, and we don’t have correct and current information on file about your beneficiaries, it can create a headache and hassle for your family.

If you have an account on our Member Portal on the website, just log in there, select “Member Portal,” and then select “Member Data.” You’ll be able to see what information we have on file for your beneficiaries. And if a change is needed, you can click on “Change Beneficiaries” to submit that change to us.

If you don’t have an account on the Member Portal, you can set one up here, or you can call or send us an email to check on your beneficiary information.

Please make sure that the information we have on your beneficiaries is correct. And if anything changes, please let us know at once so that we can update your information.

 

As always, if you ever have a question about your retirement options or need information or advice, please reach out to our counselors by calling (501) 682-1517 or emailing info@artrs.gov. And if you have any concerns or questions about the System as a whole, please don’t hesitate to contact me.

Mark White
Executive Director, ATRS
MarkW@artrs.gov
Office: (501) 621-8853
Cell: (501) 541-2057

Executive Director Update: 2024 COLA + ATRS and Social Security Benefits

We are now in July, which means hot weather, but it also means a cost-of-living adjustment (COLA) for most ATRS members.

Every year, effective July 1, ATRS provides a 3% cost-of-living adjustment (COLA) for members who have been retired for at least 12 months. The 3% increase is what is known as a “simple” increase, because it is calculated as 3% of your base amount – your original retirement benefit calculation when you first retired.

You will see the increased benefit amount in your check for July, which should go out July 29. After you receive your July payment, if anything appears to be off, please call us at (501) 682-1517 or email us at info@artrs.gov.

 

ATRS and Social Security Benefits

Today I want to explain a topic that may be a little obscure. For most of our ATRS members, this discussion will just be informative and it will not have any financial impact on you, your retirement, or your benefits. But if you have ever worked in another state, this issue might be relevant to you. And since this issue pops up in the national news from time to time, I thought it would be helpful to explain this to all of our members.

When the Social Security Act was first passed by Congress in 1935, public school and other government employees were not covered because of legal questions about whether states could be subjected to a payroll tax. But by the 1950s, most states had elected for their public employees to participate. In 1951, our Legislature approved Act 248 which provided that all public-school employees in Arkansas would participate in Social Security.

So, given that long history, you may be surprised to learn that unlike Arkansas, many teachers and school employees in 15 other states do not participate in Social Security. For example, in our neighboring states of Texas, Missouri, and Louisiana, full-time public-school teachers generally do not receive Social Security benefits when they retire. Unless they have savings or other out-of-state or non-school work experience, their only retirement income is their pension.

Last year, the average monthly pension paid by the Teacher Retirement System of Texas was $2,199, which is a little higher than the ATRS average pension of $2,054 per month. A Texas retiree does not receive Social Security benefits for their school work experience, only their pension. The ATRS retiree, however, is eligible for Social Security benefits on top of that $2,054 monthly pension payment. In my opinion, that puts ATRS members in a much better position financially compared to retirees in Texas, Missouri, and Louisiana.

This issue attracts some national attention because of two penalties on Social Security benefits known as the “Windfall Elimination Provision” or WEP, and the “Government Pension Offset” or GPO. The WEP reduces benefits for individuals who have some work history where they paid Social Security taxes, but they also receive a pension from a state where they did not pay those taxes. The GPO is a similar type reduction, but it applies to the survivors and spouses of these individuals. 

There are several national groups that are lobbying for Congress to repeal these provisions. And in the last few months, I’ve seen several national news stories highlighting this issue. These stories feature teachers and school employees in other states who are being penalized and losing most of their Social Security benefits as a result.

So let me be very clear: the WEP and GPO Social Security penalties are not a concern for you if all of your work experience is in Arkansas public schools, or if your other work experience was always in a job where you paid Social Security taxes on your earnings.  ATRS retirees who only worked in Arkansas public schools do not have to worry about their benefits being penalized. 

But, if you receive or will be eligible for a public pension payment from Texas, Missouri, Louisiana, or another state where school employees do not pay Social Security taxes, then your Social Security benefits may be affected by these penalties. If so, you can learn more about WEP and GPO from the Social Security Administration at this link: https://www.ssa.gov/benefits/retirement/planner/gpo-wep.html

You can also read how AARP explains it at this link: https://www.aarp.org/retirement/social-security/questions-answers/do-pensions-reduce-social-security/

Unfortunately, this is not an issue that our ATRS counselors can help our members with. If you have work experience in another state and think you might be affected, my first suggestion is that you call your pension system in the other state with questions. You can also reach out to the Social Security Administration with questions at this link: https://www.ssa.gov/agency/contact/

 

Lawsuit Later This Month

There is a long-running lawsuit that relates to an ATRS investment from several years ago, and it goes to trial later this month. ATRS is not a party to the lawsuit. But because the lawsuit is connected to an ATRS investment, the out-of-state lawyers have made it clear that they want to extract dollars out of ATRS for themselves and their foreign business client. 

I’m not worried about this lawsuit, and I don’t believe there’s any reason for you to be worried or concerned. We have strong attorneys who are working to protect our System’s interests, and I am confident that ATRS will not have to pay out a single dime. The only reason I am mentioning the lawsuit is so you won’t be surprised if the trial generates any media coverage.

Your ATRS Board of Trustees is aware of the lawsuit, and they have refused these out-of-state lawyers’ demands for payment. We will fight to protect you and protect this System from any attempt to extort money from your retirement. Our fiduciary obligation is to you, the members of ATRS, and we will remain faithful and loyal to your best interests, always.

 

As always, if you ever have a question about your retirement options or need information or advice, please reach out to our counselors by calling (501) 682-1517 or e-mailing info@artrs.gov. And if you have any concerns or questions about the System as a whole, please contact me at the email address or phone numbers below.

Mark White
Executive Director, ATRS
MarkW@artrs.gov
Office: (501) 621-8853
Cell: (501) 541-2057