Reforming Teacher Pensions for a Changing Work Force

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New Education Sector report examines teacher pensions and details the problems facing current state pension programs


After one of the worst decades in stock market history, the Great Recession has left nearly every state pension plan in a precarious position. Forty-seven states have unfunded pension liabilities, and collectively the gap between what states owe to current and future retirees and what they have saved totals almost $500 billion.

But, according to a new report from Education Sector, the problems with teacher pensions are not just financial, and they do not just affect individual teachers and retirees. The way pension plans are structured can negatively influence the teaching work force as a whole. At a time when improving the quality of classroom instruction is a national priority, key structural elements in teacher retirement plans impair the ability of schools to recruit, hire, retain, and compensate high-quality teachers and principals.

Better Benefits: Reforming Teacher Pensions for a Changing Work Force, written by Chad Aldeman and Andrew J. Rotherham, examines teacher pensions and details the problems facing current state pension programs-both the fiscal problems, which are severe, and the educational consequences of these retirement plans. It also offers a specific set of policy recommendations designed to improve the fiscal solvency of state pension plans while also making the new plans more attractive to teachers.

Current pension systems compel teachers to stay in the classroom, regardless of burnout or a desire to pursue another career, until they reach a certain career milestone. In a 2008 Education Sector survey of teachers, four out of five agreed that "too many veteran teachers who are burned out stay because they do not want to walk away from the benefits and service time they have accrued."

"Lasting pension reform is most likely to come in the form of changes to the way plans are structured," Aldeman and Rotherham argue. "As a long-term solution, structural changes would solve much of the budgeting and underfunding problems states and localities currently face. Such a move would also do a great deal to solve the human capital and portability issues."

The report concludes with a series of specific legal, political, technical, and structural policy recommendations states can pursue to better meet the needs of a modern teaching work force.