THE TEACHER RETIREMENT SYSTEM:

 SURVIVING THE WALL STREET COLLAPSE

posted 11/1/2008

What seemingly began as a sub- prime mortgage crisis in the United States has gathered force and now envelopes foreign markets. The failure of some major financial institutions to maintain their financial solvency has driven down stock prices and impacted the day-to-day operation of multinational corporations.

Although economists have not officially proclaimed that the United States is in a recession, conventional wisdom is quite clear in accepting that the country’s economy is in the throes of a recession. In the financial pages of leading newspapers and on television news broadcasts, the d-word, depression, is making an appearance.

A substantial number of people who prepared for retirement by using their 401k plans to invest in the stock market have experienced a forty percent loss in the net worth of their investment. If stocks continue to fall, their losses will continue to climb. Employees confident and secure in their retirement plans last year now face the prospect of working beyond the date they envisioned as the start of their retirement.

Members of the New York State Teachers Retirement System can rest assured that the pension plan is secure and intact. The system’s trustees have always been conservative investors, diversifying their investments and seeking refuge in quality.

Of course, the fund took a hit, losing seven billion dollars between July 1 and the end of September. But the pension system is well funded. At the beginning of July, it had assets of nearly 96 billion.

When will the “financial tsunami” ease up is unclear. What is certain is that the retirement fund remains strong and, most importantly, your defined benefit retirement payments are guaranteed by the state Constitution.

For the 270,000 active members and 133,000 retirees in the teacher pension system, their pension remains a steady lifeboat in today’s troubled waters.