The Connecticut Teachers' Retirement Board Pension (TRB) provides retirement benefits for teachers that meet the state qualifications for a pension. However, there are many unique details about how and when you qualify, as well as which payout option you choose.
This blog post will touch upon the differences between Plan N, C, and D. Note that your decision of which plan you take should consider your income needs, your other resources—including invested assets—and Social Security benefits. You also need to consider your spouse’s assets, resources, and income needs, should you predecease them.
Each plan pays the teacher for as long as they live. The key differences in the plans are what happens to your payments when you pass away.
Plan N is the highest payment to the teacher; however, when the teacher passes, monthly payments stop. There may be a lump-sum payment to a beneficiary if the retired teacher hasn’t yet exhausted their membership balance.
Plan C is what’s called a period certain payment. The retiring teacher elects a 5-, 10-, 15-, 20-, or 25-year period certain when they retire. The benefit will pay the teacher for as long as they live; however, if they pass away within the elected timeframe, monthly payments continue to the beneficiary until the end of the elected period. For example, if a teacher elects Plan C 10 years and passes away 8 years after they retire, the TRB will continue their monthly payment to their beneficiary through the 10th year, then payments stop. Note that by electing Plan C, the TRB is taking on the liability of more than just your life, so the amount you will receive each month is reduced. The reduction depends on how long your period-certain election is (the longer the election, the greater the reduction).
Lastly, Plan D pays the teacher for as long as they live; however, should they predecease their beneficiary, the TRB will continue to pay a percentage of the deceased teacher’s monthly pension to the beneficiary until they die. If a teacher elects to take Plan D, they will likely get a lower amount than Plan N because, just like with Plan C, the TRB is taking on the liability of two lives. The amount of the reduction depends on the teacher’s and beneficiary’s ages and how much of a survivorship the teacher elects to provide. The younger the beneficiary and the greater the survivorship, the less the teacher will receive each month.
Note that there are many additional details that may impact the teacher’s decision and the amount they will be paid. This includes whether the teacher retires under Early, Proratable, Vested-Deferred, or Normal retirement. Death and divorce can revert a benefit from Plan D to Plan N. Your election for your base pension will follow to your additional annuity if you elect that benefit from the TRB.
At Reed Financial Planning Services, we have been focusing on working with Connecticut public school teachers and their families for over 20 years. We understand the intricacies of the TRB, the unique retiree health insurance options teachers have, and how the Social Security Fairness Act has changed the landscape for teachers’ Social Security benefits. If you meet our firm’s minimums and have questions or are ready to develop a retirement income plan, we’re here to help! The first step is to schedule your phone consultation. Click on the link below where you can view our availability and schedule your consult.
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*The firm's asset minimum for new clients is $1,000,000 of investable household assets. Please feel free to read about why we have minimums here.