A defined-benefit pension has long been a staple of the teaching profession. But lately it is coming under fire as responsible for huge deficits in state budgets (“Pensions Under Pressure,” Education Next, Spring 2018).
Rather than rehash the failure of state legislatures to uphold their end of the bargain or argue for slashing pensions, I’d like to suggest another solution. Teacher pensions at present are heavily back-loaded. Salaries in the early years are kept low. It’s only when teachers stay for 25 or 30 years do they get a payoff. In other words, pensions plans are designed to favor the minority who teach in a single system for a working lifetime, while penalizing those who leave before then. For example, the Pennsylvania Public School Retirement System estimates that about 80 percent of teachers will leave before their pension benefit is worth a single dollar.
There are talented college graduates who would like to teach if beginning salaries were higher. Why not offer all new teachers the choice of bigger increases in the early years in exchange for a reduced pension at the end? Personally, I prefer the traditional plan, even though I recognize its shortcomings. But there are other teachers who for one reason or another would like to have a choice. They might also favor a defined-contribution pension.
Finally, it’s time to consider making pensions portable. Teachers are reluctant to leave their state’s plan if it means forfeiting what they’ve accrued. No one wants to leave money on the table. It’s here that charter schools are worth studying. Some 68 percent of charter schools opt out of state plans, offering a portable, defined-contribution plan. That might appeal to young teachers fresh out of college who wish to teach for a few years before moving on to another career. With looming teacher shortages in science, math and special education already a concern, anything that can help alleviate the problem is worthwhile studying.
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