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ERIC Number: EJ780946
Record Type: Journal
Publication Date: 2008
Pages: 7
Abstractor: ERIC
Reference Count: 0
ISBN: N/A
ISSN: ISSN-1539-9664
Peaks, Cliffs and Valleys: The Peculiar Incentives of Teacher Pensions
Costrell, Robert M.; Podgursky, Michael
Education Next, v8 n1 p22-28 Win 2008
Pensions have long been an important part of compensation for teachers in public schools. However, the incentive structures of teacher pension systems are not widely understood, even though they can have powerful effects on the composition of the teaching force and on public finance. In their research, the authors have found that teacher pension systems have two strong incentives--a pull and a push. Teachers typically earn relatively little in the way of pension benefits until they reach their early fifties, when much larger benefits start to accrue. The system therefore pulls teachers to "put in their time" until then, whether or not they are well suited to the profession. Beyond that point, the pension system quickly begins to punish teachers for staying on the job too long, pushing them out the door at a relatively young age, often in their mid-fifties, even if they are still effective teachers. These "pull-push" incentives are embedded in the patterns of pension wealth accumulation over teachers' careers, patterns that feature dramatic peaks, cliffs, and valleys that can greatly distort work decisions for no compelling public-policy purpose. As teacher retiree benefit costs spiral upward, it is important to begin asking what effect these systems have on recruitment and retention. In this article, the authors analyze the incentives embedded in teacher pension systems by examining the pattern of pension wealth accumulation over a teacher's career. (Contains 1 figure.)
Hoover Institution. Stanford University, Stanford, CA 94305-6010. Tel: 800-935-2882; Fax: 650-723-8626; e-mail: educationnext@hoover.stanford.edu; Web site: http://www.hoover.org/publications/ednext
Publication Type: Journal Articles; Reports - Evaluative
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A