TRS: Vesting 101
L.C. (Buster) Evans, Ed.D, Executive Director, Teachers Retirement System of Georgia
One of the biggest benefits of becoming a public school education professional in the State of Georgia, in addition to shaping the minds of our most important assets, is the pension
system that was created by the General Assembly to provide its members with retirement security in their golden years. Not only does the Teachers Retirement System of Georgia
(TRS) help our members save for their futures, but TRS also provides an incentive to attract and retain teachers in the public school system.
Vesting is a legal term that means to earn a right to a future benefit. Most plans require their members to invest a minimum number of years of service before they are entitled to
receive that benefit. It provides members with an incentive to become a teacher and then perform well and remain in the public school system.
Vesting in TRS occurs when a TRS member has earned 10 years of creditable service. Vesting is an important milestone because: 1) you will be eligible to receive a monthly benefit
upon reaching age 60, even if you do not earn additional creditable service; 2) your primary beneficiary will be eligible to receive a monthly benefit upon your death if you have an
active TRS account; and, 3) you are eligible to apply for disability retirement as an active TRS member.
It is so important to understand the value of vesting with TRS. Over the years, we have witnessed too many members requesting refunds of their contributions and interest after
vesting; not only losing their employer contributions, but forfeiting a monthly benefit at age 60 for the rest of their lives. The TRS retirement plan is a defined benefit plan which
requires contributions from you and your employer, is determined by a formula based on your years of service and/or age and your final average salary (see example below), and
is guaranteed to last for your lifetime.
Eligibility for this benefit makes you an exclusive member of a small population of employees in the country who are fortunate enough to have such a pension plan. According to
Towers Watson, between 1998 and 2015, the percentage of employers still offering a traditional defined benefit plan to most newly-hired employees fell from roughly 50% to 5%
If you are thinking about switching careers, moving out of state, or taking a break from education, it may sound tempting to withdraw your funds and receive a lump-sum payment
of your contributions and interest. We ask that you consider the following before you make that irrevocable decision.
So, if you are vested, before you cash out and give up what could be a substantial piece of your retirement pie, please contact us at TRS to discuss your options. What may sound
like a good idea now, may come back to haunt you when you’re ready to tackle those golden years in retirement.
24 | KNOW • Volume 16 Issue 2