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ERIC Number: EJ1112171
Record Type: Journal
Publication Date: 2016
Pages: 11
Abstractor: As Provided
ISSN: ISSN-0013-189X
Benefit or Burden? On the Intergenerational Inequity of Teacher Pension Plans
Backes, Ben; Goldhaber, Dan; Grout, Cyrus; Koedel, Cory; Ni, Shawn; Podgursky, Michael; Xiang, P. Brett; Xu, Zeyu
Educational Researcher, v45 n6 p367-377 Aug-Sep 2016
Most public school teachers in the United States are enrolled in defined benefit (DB) pension plans. Using administrative microdata from four states, combined with national pension funding data, we show these plans have accumulated substantial unfunded liabilities--effectively debt--owing to previous plan operations. On average across 49 state plans, an amount that exceeds 10% of current teachers' earnings is being set aside to pay for previously accrued pension liabilities. To the extent that the costs of the unfunded liabilities drag on teacher compensation, they may exacerbate problems of teacher recruitment and retention. We briefly discuss three policy changes that could end or reduce the accumulation of unfunded liabilities in educator pension plans: (1) transition teachers to defined-contribution retirement plans, (2) transition teachers to cash-balance retirement plans, and (3) tighten the link between funding and benefit formulas within the current defined-benefit structure.
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Publication Type: Journal Articles; Reports - Research
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: National Center for Analysis of Longitudinal Data in Education Research (CALDER) at American Institutes for Research
Authoring Institution: N/A
Identifiers - Location: Missouri; North Carolina; Tennessee; Washington
Grant or Contract Numbers: N/A