Oklahoma Teacher's Retirement System (OTRS) is the pension program for public education employees in the State of Oklahoma. As of June 30, 2014, the program had nearly 168,000 members. Public education teachers and administrators are required to be OTRS members; support staff can join voluntarily. State law established OTRS in 1943 to manage retirement funds and provide financial security for public education employees. Its first checks to retirees were sent out in 1947. It is administered by a staff and 14-member board of trustees. Its current executive director is Tom Spencer, who started in that position on November 1, 2014.
Organization
The TRS is governed by a 15-member Board of Trustees composed of 10 appointed members, four ex officio members, and one non-voting member. The Governor of Oklahoma appoints six members to the Board and the Speaker of the State House of Representatives and the President Pro Tempore of the State Senate each appoint two members to the Board. The three ex officio members are the State Public Schools Superintendent, the State Treasurer, the Director of the Office of State Finance and the Director of the Career Technology System. All four ex officio members are allowed by state statute to designate a member to the Board in their stead. The non-voting member is appointed by an organization representing retired educators.
Committees
The Board of Trustees has three standing committees, the Investment Committee, the Audit Committee, and the Governance Committee. These panels focus on their respective topics and conduct work on the areas of focus that are more detailed than appropriate for full Board consideration. No actions of the committees are final and binding unless approved by the full Board.
The Board meets 10 times a year, typically on the fourth Wednesday of the month. The Investment Committee usually meets every month on the Tuesday afternoon before the regularly scheduled Board meeting.
Retirement Details
OTRS utilizes a defined benefit retirement plan that pay the retiree a specific benefit for life beginning at his or her retirement.
Retirement eligibility
To be vested in OTRS and subsequently eligible to receive a monthly retirement benefit, a client must accumulate at least five years of eligible service in Oklahoma public schools. A vested client is eligible to begin receiving monthly benefits at age 62, or age 65, depending on which combination they fall under.
There are three thresholds for eligibility to retire with benefits. Those who joined OTRS prior to July 1, 1992, can retire when his or her age and years of creditable service total 80 points, or they have reached 62 years of age. People who joined the system after that date can retire when their age and years of creditable service total 90 points, or they have reached 62 years of age. Anyone joining the system after November 1, 2011, can retire at sixty, as long as they have accumulated 90 points, or at age 65.
Early retirement
Reduced benefits are available for clients who have not reached full retirement eligibility under regular retirement. To meet this criteria, the OTRS member either must complete at least 30 years of state service, but be younger than age 50, or the person in question must have at least five years of vested service, and be between the ages of 55 and 61 under the rule of 80, or rule of 90. It the client falls under rule of 90/65, they will be eligible for reduced benefits between the ages of 60 and 64.
Benefits
OTRS calculates its benefits using the following formula:
2 percent x (service years) x (final average salary [base salary or actual W2 earnings for the year?]) ÷ 12 = monthly benefit.
Depending on the number of service years and the final average salary, a person's retirement benefit can vary, but each person, regardless, will receive 2 percent. Additionally, for service earned prior to June 30, 1995, contributions into the system only paid on either the first $25,000 of $40,000 of annual income. Because the contributions for these years of service were capped, the retirement benefits are also capped. This results in a two-tiered retirement benefit calculation with the first tier being those years on which contributions were capped and the uncapped years in the second tier, which results in a retirement benefit that is smaller than would be expected based solely on the formula above.