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ERIC Number: EJ902750
Record Type: Journal
Publication Date: 2010
Pages: 27
Abstractor: As Provided
Reference Count: N/A
ISSN: ISSN-1557-3060
Teacher Pension Incentives, Retirement Behavior, and Potential for Reform in Arkansas
Costrell, Robert M.; McGee, Josh B.
Education Finance and Policy, v5 n4 p492-518 Fall 2010
The authors analyze the Arkansas teacher pension plan and empirically gauge the behavioral response to incentives embedded in that plan and to possible reforms. The pattern of pension wealth accrual creates sharp incentives to work until eligible for early or normal retirement, often in one's early fifties, and to separate shortly thereafter. We estimate the effect of pension wealth accrual on teacher separation decisions using a new longitudinal data set of Arkansas teachers and find a significant impact. We then simulate the response to eliminating early retirement and raising the service requirement for normal retirement. We also simulate a shift to a constant accrual retirement plan. The response to both reforms is complex, as some would leave earlier and others stay longer. A constant accrual plan smoothes the pattern of retirement behavior as individuals tailor decisions to their own preferences instead of those built into the pension formula.
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Publication Type: Journal Articles; Reports - Evaluative
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Identifiers - Location: Arkansas