Mayor Michael R. Bloomberg and United Federation of Teachers President Randi Weingarten today announced a tentative agreement to jointly support legislation to modify pension plans for newly-hired UFT members, while at the same time preserving all health and pension benefits for current UFT members, including the union's age-55 retirement benefit.  The agreement also returns teachers to their traditional start date after Labor Day, while not requiring a loss of school days for students.

"We've been seeking pension reform to reduce the growing burden of a system that is simply no longer affordable," said Mayor Bloomberg.  "From the beginning, we said we could not do it alone and the UFT has stepped up.  The agreement will reduce the City's pension costs by an average of $100 million a year over the next 20 years, while still providing an attractive package that City teachers deserve.  It's a significant agreement that we achieved by working together and I want to thank Randi Weingarten and her team for once again doing their part to contain the City's expenses."

"In every respect, this agreement is a win for everyone," said Weingarten. "We are all very concerned about the heavy losses our pension system has incurred during this economic downturn and the looming cuts for schools. Not only does this deal help shore up the city budget with new savings, which will hopefully be used for schools, but it also maintains the age 55 retirement benefit that will help ensure that we will continue to attract and retain quality people. And it also returns us to the tradition of teachers and students starting school after Labor Day, something that educators, particularly those with families, very much wanted."

Under the agreement, all current UFT benefits and health provisions continue. New hires will continue to be able to retire with an unreduced pension at age 55 with 27 years of service. New employees will make a 4.85 percent pension contribution for 27 years and 1.85 percent thereafter, up from the current 4.85 percent contribution for 10 years and then 1.85 percent through 27 years.

The plan will also establish increased vesting requirements: 15 years of service to obtain retiree health insurance benefits, up from the current 10 year requirement and 10 years of service for pension benefits, up from the current five year requirement. Both measures will reward educators who choose to make teaching a career.

In addition, the agreement sets a 7 percent annual return on fixed Tax-Deferred Annuity accounts for Teachers Retirement System and Board of Education Retirement System members. The additional 1.25 percent rate above the guaranteed 7 percent rate will no longer be available, a modification that will help the City weather a downturn in the financial markets.

Under the terms of the current collective bargaining agreement, teachers now report to work on the Thursday and Friday before Labor Day for professional development days and to prepare for the start of classes with no students present.  Beginning in September 2009, these two days will no longer be required work days.  Savings from modifications in the vesting requirements for retiree health insurance, the reduction in the guaranteed rate in the fixed annuity program and funding to be addressed in the next round of collective bargaining will offset the remaining cost of eliminating these days of work.  The current agreement expires October 31, 2009.

The Mayor thanked Deputy Mayor for Operations Edward Skyler, Schools Chancellor Joel I. Klein and the Department of Education representatives, UFT President Randi Weingarten and her Committee, Labor Commissioner James F. Hanley and First Deputy Commissioner Margaret Connor and their team, and Budget Director Mark Page and his staff for their efforts in reaching this agreement.

The UFT represents approximately 115,000 active members of the Teachers Retirement Systems and Board of Education Retirement Systems.