As an NYC public school teacher, you are automatically enrolled1As a teacher who joined TRS (i.e., started working) after 4/1/12, you hold Tier VI status in TRS, which determines your specific benefits. You may hear about TRS tiers from time to time, so it can’t hurt to know this. in the Teachers’ Retirement System (TRS), which consists of two parts: the Qualified Pension Plan (QPP) and the Tax-Deferred Annuity (TDA) program.
The Qualified Pension Program (QPP)
The QPP is your pension. It’s a mandatory-participation plan that deducts between 3% and 6% of your annual pay and, in return, rewards you at retirement with a pension worth much more than what you put in. Teach in the system for 30 years, for instance, and you’ll get a pension of about $70,000 per year starting at age 63. (You can calculate your own expected pension on your TRS member portal.)
Pensions are increasingly rare outside the public sector; one estimate says that only 15% of private-sector workers have access to one. They’re valued because they are not dependent on the ups and downs of the market. Instead, you get a fixed amount in retirement that isn’t affected by the performance of stocks or bonds.
While you teach, your contributions to the QPP are called Basic Member Contributions (BMCs). These contributions are automatically deducted from your paycheck before taxes are taken out, according to the schedule2For your first three years, TRS uses your projected annual earnings to determine your contribution rates; thereafter, TRS uses your actual wages earned two plan years prior to the current plan year. Teachers currently start at a salary of $71,314.
A word on your salary3There is a set salary scale for NYC public schoolteachers. To get a sense of what your salary might be based on your years of experience and education, the UFT has a handy salary calculator. For 2026-2027, starting teacher salaries are $71,314 (bachelor’s) and $80,166 (master’s), and the maximum possible schoolteacher pay would be $150,236. As a teacher, you can increase your salary via years of teaching experience (“salary steps”) and education credits earned beyond a bachelor’s degree (“salary differentials”). All newly hired teachers must apply for salary steps via the NYCPS Salary Application System after being hired (even if you do not have previous teaching experience). The rules are fairly straightforward; each year you teach, you get a salary step and therefore a pay increase. There are additional “longevity increases” (extra pay bumps) at 5, 10, 13, 15, 18, 20, and 22 years of teaching. Salary differentials are not automatically awarded; you must apply for them through the DOE’s Salary Application System. To ensure you receive your differential from the date you earn the additional credits, you must apply within six months of earning the qualifying credit, or within 6 months of your start date as a new teacher. Salary differentials can be earned via any of these: credit-bearing courses beyond your bachelor’s; completion of a master’s degree; and professional development. (Salary differentials work differently for any teacher at a Career & Technical Education (CTE) school. See here).
| Annual Salary | Contribution Rate |
|---|---|
| $45,000 or less | 3% |
| $45,001 to $55,000 | 3.5% |
| $55,001 to $75,000 | 4.5% |
| $75,001 to $100,000 | 5.75% |
| $100,001 or more | 6% |
These contributions are invested in what’s called the Member Contribution Accumulation Fund (MCAF), where they accrue 5% guaranteed annual interest. The DOE4On top of these amounts, the DOE contributes an additional 37.7% of teacher salary toward the TRS pension fund, — meaning not to your MCAF or ASAF, but to the big pool of money that sustains the pension system. All of this money is managed by the Comptroller of the City of New York. makes additional contributions to teachers who have reached their maximum salary, meaning at least 22 years of teaching. These additional contributions go into what’s called the Annuity Savings Accumulation Fund (ASAF), which also accrues 5% annual interest. (Current ASAF amounts are $550 per year for supervisors and administrators, and $400 per year for other eligible members, like teachers.) You can view your MCAF and ASAF balances at any time on your TRS account.
You need to teach for five years (170+ days of work per year) to be fully vested, meaning you’ll get at least a small annual pension at age 63. As you continue to teach, your eventual pension payout amount gets bigger with each year.
Here’s how that works: Once you’re vested in QPP, your pension is calculated5For even more detail (and complication!) as to how your pension payout is calculated: – For teachers with 20 years or more of service: You take 35% of your FAS for your first 20 years of service credit, then add 2% of your FAS multiplied by each additional year exceeding those 20 years of credited service. Also note that “wages earned during any year used in a FAS calculation cannot exceed the average of the previous two years’ wages by more than 10%; the amount in excess of 10% would be excluded from the computation of FAS.”
– For teachers under 20 years of service: You take 1⅔% of your Final Average Salary (FAS) multiplied by years of service credit (i.e., how many years you’ve taught).
Once you are 62+ and have been retired at least five years, or 55+ and have been retired at least ten years, you get a Cost of Living Adjustment (COLA). This is an added 1% to 3% per year (based on what’s going on in the economy) applied your entire pension or $18,000, whichever amount is smaller.
| Age at Retirement | % of Benefit Allowed |
|---|---|
| 62 | 93.5% |
| 61 | 87.0% |
| 60 | 80.5% |
| 59 | 74.0% |
| 58 | 67.5% |
| 57 | 61.0% |
| 56 | 54.5% |
| 55 | 48.0% |
Try to teach for at least five years8This is of course harder than it sounds! But try to stick with it. The 5-year mark is a huge milestone for your retirement, and a huge reward for having made it that far teaching. One report indicates that 60% of NYC teachers are no longer in the system come year 5. Another flags that nearly 20 percent of all public school teachers with less than five years of experience left the classroom in 2017-18 alone.
Let’s look at a few pension scenarios9Fun fact: According to Empire Center, the average pension of an NYC TRS retiree with 30 years of service is $72,619 per year.
to illustrate all this.
Let’s say you have to leave before five years. Fortunately, you can maintain your TRS membership rights for up to seven school years11After those seven years, assuming you have not started any other DOE job, your TRS membership expires and your QPP funds (meaning, all MCAF funds and, if you have them, any ASAF funds) must be withdrawn. beyond your separation date. So if you’re considering returning to teaching, leave your QPP alone and let it continue to earn that 5% interest per year. If you come back to the DOE, you can resume logging service years until you’re fully vested.
If you don’t plan to return, withdraw12To withdraw, whether to roll over (yes, do this!) or cash out (try not to!), you fill out the “Application for Withdrawal of QPP Accumulations” form. your MCAF balance and any ASAF money you have (You will not get any employer contributions.) When you do this,make sure to roll over this QPP moneyinto an individual retirement account (IRA) or a 401(k) or 403(b) at your new job. Don’t cash it out, because you’ll have to pay taxes13How this works: If you cash out your QPP, the TRS automatically withholds 20% and gives this to the IRS as credit toward your federal taxes for the year of distribution. You will have to pay any additional tax you owe (for example, if you’re in a higher tax bracket than 20%). on that money if you do. (Plus, investing in one of these tax-favored accounts means your money can grow tax free for when you really need it later.) Finally, when you withdraw your QPP funds, you must also withdraw your TDA funds at the same time. (More on TDA to come.) Ideally, you would also roll over your TDA into the same new retirement account as your QPP funds.
TRS recommends that you check your pension status on the member portal at the end of each school year. There, you can find your service credits and reported salaries (the basis of your FAS). You can also see projections for your pension payout based on three scenarios: leaving the DOE now and collecting your pension at age 63; retiring and choosing to collect your pension at 55; or retiring and choosing to collect your pension at 63. Note that as long as you live in New York state, pension payouts are not subject to state or local tax, but are subject to federal tax (like any income). To manage the federal tax, file the “Withholding Election and Certificate” form to set a standard withholding percentage on your payouts. If you move to another state, your pension payout may become subject to state tax. (See here for state-by-state rules.)
The Tax-Deferred Annuity (TDA) Program
The Tax-Deferred Annuity(TDA) program offers you a second way to save. And even though you already have a pension, it’s smart to take advantage of this retirement savings account. (Retirement is expensive!) It’s amazing how small sums can grow over time: If you put $2,000 a year in your TDA and it earns an average of 7%, after 35 years you’ll end up with $275,000.
You can set aside14At current, active teachers contribute an average of 13% of their salaries to their TDAs, and retired teachers withdraw an average of $22,000 annually. Per here: www.trsnyc.org
You should carefully select how your money is invested. You can invest your TDA in a limited number of options (the city calls these Passport Funds), all of which are managed by the New York City Comptroller. These funds are:
There’s also a very attractive option called the Fixed Return Fund, which offers a lifetime guaranteed return of 7% for active teachers and has no expense ratio. (Like your pension, this is an incredibly rare benefit.) If you’re nearing retirement, consider moving any TDA savings you have to this fund, so you’re protected if the stock market plummets.
Starting in 2026, you also have to choose if you want tocontribute on a pretax basis (into the traditional TDA) or an after-tax basis (the new Roth TDA option). The choice of Roth investment funds will be the same as the above. If you choose the Roth, you will be contributing money you’ve already paid income taxes16This means federal tax, state tax, and, if you live in NYC in retirement, city tax. on, so this investment will not only grow tax-free but can be withdrawn tax-free in your retirement. (In a traditional TDA, your money grows tax-free, but you pay income tax on withdrawals in retirement.)
The Roth option carries two distinct advantages:
To decide if Roth or traditional is better for you, the question often comes down to whether you anticipate being in a higher or lower tax bracket when you retire compared to now.
Final Notes for Both
Both the QPP and the traditional TDA allow for loans (QPP and TDA loan info here), though neither is recommended since these loans work against your retirement planning (and in the case of QPP, can reduce your pension payout if your loan is still unpaid when you retire). Note that interest on a QPP loan, currently at 6%, is paid to the city, making it a particularly bad deal. While interest on a TDA loan, currently at 7%, is paid back to your account.)
Finally, for both your QPP and TDA, it is important to choose your beneficiaries (see the TRS FAQ page here), the person/people to whom your money will transfer upon your death. You do this in your TRS account portal.