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ERIC Number: ED553813
Record Type: Non-Journal
Publication Date: 2014
Pages: 31
Abstractor: ERIC
Friends without Benefits: How States Systematically Shortchange Teachers' Retirement and Threaten Their Retirement Security
Aldeman, Chad; Rotherham, Andrew J.
Bellwether Education Partners
To shore up the $46 billion pension debt the state has accrued over the past several decades, Illinois has been using its teachers as a piggy bank. New legislation adopted in December 2013 will raise the retirement age for mid-career workers and limit the amount retiree pensions can increase with inflation over time. State and national union leaders have called these changes "pension theft" and threatened to sue. The current uproar has focused mainly on relatively senior workers, but Illinois legislators enacted even stiffer penalties for new teachers in 2010. The 2010 bill had similar elements as the 2013 version--it raised the age at which new teachers could retire and reduced the amount their pensions could adjust for inflation--but it also placed a cap on the amount of retirement benefits they could earn. Most important, the 2010 law made it much harder for new teachers to earn a pension at all by lengthening the time they would be required to work before qualifying for a pension, from five years to ten. The changes will collectively save the state billions of dollars over the next thirty-five years, but the "savings" will come out of the pockets of teachers entering classrooms in the coming years. If a teacher leaves before ten years, Illinois will refund his or her contributions, but it won't pay any interest, and it won't contribute anything on its own. The state estimates that 62 percent of its new teachers won't make it to ten years, meaning Illinois will be forcibly taking no-interest loans from the majority of new teachers. This paper provides an analysis of the current approach to teacher pensions in the context of the broader picture of retirement issues. The paper also reveals the fiscal problems brought on by poor decisions made by state policymakers and a corresponding lack of fiscal discipline. It also presents questions about the design of pension plans for the changing teacher workforce of the future as well as the impact they have on America's largest group of B.A. workers.
Bellwether Education Partners. e-mail:; Web site:
Publication Type: Reports - Evaluative
Education Level: N/A
Audience: N/A
Language: English
Sponsor: Joyce Foundation
Authoring Institution: Bellwether Education Partners;
Identifiers - Location: Illinois