Issue link: http://educator.cta.org/i/72908
to think about retirement. That's when it means something. I hope the positive out of this so-called crisis is that everyone will become aware of their retirement throughout their career, what their ben- efits are, and will become active in man- aging their retirement benefits. HOW DO OUR PENSIONS BENEFIT THE STATE AND THE PROFESSION? Having a secure retirement system helps recruit better people to the profes- sion. I worry about teaching becoming a revolving door where people just do it for three or five years and get out. A revolv- ing door means you don't get the quality of teachers we want for our students. The state gets the economic activity of our retirees. With a DB plan, teachers are guaranteed a regular income, which means every month retirees are spend- ing money in their local economy. That trickles down to local businesses that hire people and sell their products. Last year, because of CalSTRS, $10 WHY DO ATTACKS ON PENSIONS CONTINUE? CalSTRS has a strong corporate govern- ment program and policy — that makes it a target because it expects corpora- tions and boards to do the right thing, to have transparency and report to their shareholders. When they don't, CalSTRS steps in. CalSTRS uses its proxy shares to vote on compensation for CEOs and has often voted no when it's not in the best interest of shareholders. There's a check there, and I don't think Wall Street likes to be checked. Remember, there are a lot of good businesses. CalSTRS does a good job of engaging them, and a lot of busi- nesses have chosen on their own, or with a little bit of prodding, to be more trans- parent. But the transparency says a lot about CalSTRS and who they invest with. They have a high standard, and it's good for our economy. billion circulated through the state. That's a lot of money! It drives the entire economy in many areas, especially in our little tiny towns where teachers retire and stay. Imagine if that disappeared. Too, CalSTRS invests in businesses and infrastructure projects in the state. I think of it as a partnership with the state in terms of the economy. Public pensions are less than 4 percent of the state budget, and yet the state gets back $10 billion in return. ANYTHING ELSE MEMBERS SHOULD KNOW ABOUT CALSTRS? Oh yes. CalSTRS has a lot of services and staff who will come out and conduct presentations to answer your questions and help you understand your retirement benefits. It's a fabulous way of educating our members. Sessions will share infor- mation you need to know wherever you are in the profession. Also, CTA members should beware of vendors who are out there hawking their goods. CalSTRS will never come to your house and will never buy you a piece of pizza (unlike those selling defined-con- tribution plans) for your business. Know that some are passing themselves off as CalSTRS. If that happens, let us know. Be vigilant! We don't want you to be taken advantage of. By Dina Martin EDITOR'S NOTE: At press time, the Legis- lature was poised to approve a pension reform package, which the Educator will more thoroughly cover in the fall. What is a defined- benefit (DB) plan? A DEFINED-BENEFIT RETIREMENT PLAN is one under which a retiree has a guaranteed benefit set by a for- mula. Contributions to the plan while working are set by the plan and funds are pooled and managed as a group. The participant's retire- ment benefit is guaranteed regard- less of the portfolio performance. Under a defined-benefit plan, par- ticipants are protected from the ups and downs of the market. What is a defined- contribution (DC) plan? A DEFINED-CONTRIBUTION RETIREMENT PLAN is one under which the retire- ment benefit is determined by how much was invested or contributed (the participant's defined contribu- tion) and how well those invest- ments paid off. Such contributions may come from the employer only, the employee only, or some com- bination — it depends on the plan. There is no guaranteed retirement benefit in a defined-contribution plan. Under a defined-contribution plan, a participant's benefit is subject to the ups and downs of the market. Maggie Ellis, president of the Elk Grove Education Association and chair of CTA's State Council Retirement Committee, explains why CTA must counter attacks on CalSTRS. Photos by Scott Buschman June/July 2012 www.cta.org 35