Last Updated on March 2, 2023 by George
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Teachers in Oklahoma are covered under the Oklahoma Teachers’ Retirement System. The most extensive public retirement system in the state, it was founded in 1943.
The Teachers’ Retirement System only gathers and keeps personally identifiable information to the amount necessary to carry out its legal obligations.
The fundamental design of Oklahoma’s defined benefit (DB) teacher pension is comparable to those of other states. The value of the annuity at retirement is not based on a teacher’s payments or those paid on their behalf by the state or school district, unlike other retirement plans.
A teacher’s pension wealth is derived from something different than the returns on those investments, even if they are frequently managed by private equity and hedge funds and invested in the market. As an alternative, it is calculated using a formula based on the employee’s years of experience and final wage.
Lastly, most states, including Oklahoma, had implemented different benefit categories for teachers based on when they were hired. The benefit tiers for Oklahoma are listed here
How are Teacher Pensions Calculated in Oklahoma?
A formula determines the value of pensions. A teacher pension calculation in Oklahoma is shown in the graph below. The state, however, bases its assessment of an educator’s ultimate pay on the average of their five highest consecutive wages, which is a crucial point to remember. For instance, a teacher with a final average income of $70,000 who works for 25 years would be qualified for a pension benefit worth 50% of their last pay per year.
Calculating Teacher Pension Wealth in Oklahoma
2% Multiplier X Avg. highest 5 consecutive years of salary X Years of service
Who Qualifies for a Teacher Pension in Oklahoma?
Like most states, teachers must work for a certain number of years before being eligible for a pension. It takes seven years for Oklahoma to vest. Educators who have worked for seven years are qualified for assistance. However, the annuity may be worth little. The state retirement age must be reached before educators can start collecting it.
Depending on their age and number of years of experience, the state specifies separate windows during which teachers can retire with benefits. In Oklahoma, newly hired teachers who have accumulated at least seven years of service can retire with full benefits at age 65 or 60 if their age and years of service add up to at least 90. They can also retire at age 60 with full benefits if they have at least five years of experience.
Furthermore, Oklahoma permits instructors to retire early after completing at least seven years of service and turning 60. However, based on their years of service and how early they are retiring, instructors who elect that option will see a reduction in their benefits
How Much Does Oklahoma’s Teacher Pension Plan Cost?
Teachers must make contributions to the plan while their employers employ them. The state legislature established these contribution rates, which are subject to change annually. While the state made a 17 percent contribution, teachers made a 7 percent pension contribution in 2018. The Oklahoma teacher pension fund received 24 percent of teacher salaries. But not all of that investment yields rewards. Individual teachers contribute 7% of their wages toward benefits, whereas the state only contributes 3.347%. The pension fund’s debt will be reduced with the remaining 13.66 percent of the state payment.
Finally, unlike most other states, teacher pensions are not transferable in Oklahoma. This means that even if they continue to work as teachers, teachers who quit Oklahoma’s TRS system will forfeit their benefits. Therefore, even if a person who leaves teaching or moves across state lines may have two pensions, the total value of those pensions is probably lower than it would be if they had stayed in one system throughout their whole career. In other words, the absence of benefit portability will harm any educator’s long-term retirement funds if they decide to stop teaching or move across state lines to work in another.
Like most state pension funds, Oklahoma’s teacher retirement program gives teachers who remain the longest the best benefits while offering insufficient benefits to everyone else. Given this, both new and experienced teachers in Oklahoma should carefully consider their professional goals and how they will interact with the state’s retirement plan.
Glossary of Financial Terms
Vesting period
The minimum number of years a teacher must work to be qualified for a pension. Although vesting periods vary by state, they typically last five years. Every state allows teachers who quit their positions before they are vested to withdraw their contributions, sometimes with interest. However, just a few jurisdictions permit these workers to receive any employer contributions made on their behalf.
Employee contribution
The proportion of a teacher’s annual income paid to the pension fund.
Employer contribution
The proportion of a teacher’s annual income that the state, a school district, or both contribute to the pension fund.
Average cost
The annual retirement benefit expense is expressed as a proportion of teacher pay, and these costs do not include debt.
Amortization cost
A pension fund’s annual payment toward any unfunded liabilities. This may also be considered the pension fund’s debt service expense
Frequently Asked Questions
How do I change my beneficiary with TRS?
Your beneficiary designation should always be current. Through the MyTRS Member Portal, both Active and Retired members can amend their beneficiary details. An alternative is for Active Members to send TRS a Beneficiary Designation Form 2A to amend their beneficiary information. Retired Members may update their beneficiary information by sending TRS a completed Beneficiary Designation Form 2R. Forms are only considered to be legitimate once TRS receives them. Please consult the Member Handbook for further details on survivor benefits.
Can I get an estimate of benefits with all plan options from this website?
Through the MyTRS Member Portal, members can use these instructions to build retirement forecasts. You will receive a retirement projection if you submit a Pre-Retirement Information Verification Form 3 to TRS as an alternative.
How do I apply for retirement or withdrawal?
To obtain a lifetime, monthly benefit as a vested member, log into your MyTRS account and complete a Pre-retirement information verification to start retirement. You will receive a letter with an application for retirement and an estimate of benefits. The deadline for completing and submitting the necessary paperwork to TRS is the first of February before your RBD.
Pros and Cons
Pros                    
- Offers retirement security with a defined benefit pension plan.
- Provides generous health insurance plans for retired teachers and their families.
- Allows members to supplement their pensions with additional savings through the Optional Retirement Plans administered by the state.
- Features an easy-to-use online portal for viewing account information and making changes.
Cons                    
- Fails to provide flexibility in accessing your funds (must wait until age 60 or later).
- Accessing funds before retirement may require surrendering some of the plan’s benefits.
- Tax implications may reduce the amount you end up receiving after retirement.
- Investment options are limited, and fees may be higher than other plans.
Final Thought – Oklahoma Teachers Retirement
The Oklahoma Teachers Retirement System is a valuable resource for educators looking for financial security in their retirement. While it has some drawbacks, the plan offers a range of benefits that could benefit those planning for their future. Ultimately, each individual must assess their situation to decide if the OTRS is the right option for them.
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