Then Annuity Contribution Chart: Teacher 8.4% vs. Employer 46%
Prepared by Bill Zettler
-
Assumes 6.5% Return Compounded instead of TRS Actuarial Assumption of 8.5%
-
Assumes Starting Salary 34 Years Ago was $12,000 Increasing at 6.5%/yr
(Teacher Retirement System Assumes 6.5%) -
Annual Salaries Years 28 to 34 Are From Il. Dept. Education Electronic
Records -
“Cash Value of Pension At Retirement” = Prepaid Annuity Female, 56, Indexed
for Inflation, Life Only (no Survivor Benefits) -
Beginning Pension = sum of 4 highest Years, divided by 4 ,multiplied by 75%
= 83,775 -
Cash Value of Pension at Retirement = Cost of Prepaid Annuity Providing
$83,775/yr for Life = 1,954,161 -
Cash Value of Pension at Retirement If Teacher Pays 8.4% of Salary, Employer
Pays 46% of Salary = 1,948,438 -
NOTE: Teachers pay 9.4% but 1 % is for survivor benefits which is not
included in the PrePaid Annuity -
NOTE: Teacher Contribution Rate was 7% prior to 1998 so these results are
conservative since they assume 8.4% for all 34 years -
Example From District 300 Teacher Who Retired in 2005
Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this email address. Click here to read more by Mr. Zettler.
