12
eration is essential. We deal with,
about 1200 separate employers. We do
not select the persons who handle our
business with these employers; neither
can we train them or replace them
if they fail to function properly. To
many of them, especially clerks of
small school districts, our accounting
procedures seem complicated. They
are not and cannot be expected to be
expert accountants. A ll of them try
hard, and do their best to cooperate.
Nevertheless, delays and errors, with
resultant confusion and impaired
service, do occur and mistakes are
costly. Legislation or requests which
would tend to make the operation
more complicated than at present
should be avoided.
The members should be discouraged
from asking information which can
serve no useful purpose. Two ex
amples will suffice.
Recently- a teacher, 43 years old,
wrote and requested estimates of the
amount of pension she might expect
at age 50, 53, 56, 60 and 65. To
answer her question required some
research and some fairly complicated
calculations, to say nothing of the as
sumption as to future salary, interest
earnings, etc. However, she received
our answer and immediately wrote to
say that she wanted no approximate
estimates, but wanted some guaran
teed figures. The explanation as to
why our figures could be no more
than estimates required some time,
too. The expense of answering this
one inquiry was about $15.00, or as
much as the member will contribute
to the expense account for perhaps
seven years. If every member did the
same thing, expenses would be so in
creased as to materially reduce the
amount of pension we will be able to
pay. At age 43, this party could only
have been motivated through curiosity.
She might not even live to age 50,
the earliest age for which she re
quested information. Her request was
unnecessary, useless and expensive.
Pension Formula Given
When a member is at or near re
tirement age, either voluntary or com
pulsory, and a decision as to the mem
ber’s future course of action is indi
cated, then he needs and should be
furnished as accurate an estimate as
possible in order to assist him in his
decision. Generally speaking, the pure
ly curious should be satisfied with the
formula reflecting the potential pen
sion at age 65, namely: $2.50 per month
for each year of prior service credit,
$3.33 per month for each year of cur
rent service between July 1, 1946, and
July 1, 1949, and $4.16 per month for
each year of current service after July
1, 1949.
Expense of Individual Statements
The other example to be cited is the
request that an annual individual state
ment be furnished to each member.
This statement to show the member’s
balance at the beginning of the year,
his contributions during the year, the
interest added and the expense de
ducted and his balance at the end of
the year. Certainly, this could be done
but the very substantial expense in
volved cannot be justified from any
standpoint whatsoever. Any reason
ably systematic person could keep his
own record were he so inclined. Each
employer submits only one detailed
report per year to the retirement of
fice. By the time these reports are
audited, adjusted and posted, several
months will have inevitably elapsed,
so that the member’s balance, if fur
nished him, will reflect his balance
at the end of the preceding fiscal year
and cannot coincide with his actual
balance because of continuing contri
butions made subsequent to the em
ployer’s annual report.
Vital Information Avaliable
There are only three situations
which require an accurate up-to-date
computation of a member’s balance;
namely, death, retirement, or termina
tion of membership. When one of these
occurs, the employer furnishes a sup
plemental report enabling the retire
ment board to compute the amount
due a beneficiary, the amount of the
member’s pension, or his withdrawal
benefit as the case may be. Here
again, when the information is vital
and serves a purpose, it is and must
be readily available. An annual indi
vidual statement serves no purpose,
tells no story which the member could
not -tell himself, and would create an
unwarranted, unjustified expense.