Alternatives to existing teacher pensions have been the subject of debate and discussion and legislation – as well as jurisprudence – for years now. But a recent study found that the arrangements already in place are preferable.
In a recent study, the University of California, Berkeley, and the National Institute on Retirement Security found that current teacher pensions offer more to teachers than a cost-equivalent 401(k)-style plan, says Berkeley News.
The study, which looked at pensions and career patterns of public school teachers in Colorado, Connecticut, Georgia, Kentucky, Missouri and Texas, found that most teachers’ retirement security would be sharply lower if an account-based retirement plan such as a 401(k) replaced their current pension plans.
The report authors argue that traditional pensions serve teachers best. “They generate higher retirement income than 401(k)s for most teachers, and they incentivize experienced teachers to stay in the classroom, reducing turnover,” said lead report author and Retirement Security Program at UC Berkeley’s Labor Center Director Nari Rhee. Co-author Segal Consulting actuary Leon Joyner added that the report found that changing them to a 401(k) would make things worse, not better, for 80% of teachers.
Rather than replacing current programs, a better approach would be to modify them, argues Joyner.
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