Teacher Pension Research Insights & Analysis in California
Explore key findings from multiple research studies on teacher pensions in California, focusing on the economic efficiencies of Defined Benefit (DB) plans versus 401(k) plans. The research highlights the benefits of DB plans in providing similar benefits as DC plans at a lower cost, predicting group longevity accurately, and the importance of professionally managed DB assets. It also addresses opposing views advocating for 401(k) plans and delves into the flaws in those arguments. Overall, the research emphasizes the value of DB plans for California teachers, especially long-career educators.
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Teacher Pension Research Presentation to National Institute on Retirement Security February, 2018
Selected Teacher Pension Research Better Bang for the Buck Economic Efficiencies of DB Plans Beth Almeida & Fornia 2008 Still a Better Bang for the Buck Fornia & Nari Rhee 2014 Are California Teachers Better off with a Pension or 401(k) Rhee & Fornia 2016 How Do California Teachers Fare Under CalSTRS Journal of Retirement Rhee & Fornia 2017 http://www.iinews.com/site/pdfs/iiJPDF/PensiontrustAd/PensionTrusteeAdvJORWint17CaliTeachersFare.pdf PTA Teacher Pension Research NIRS February, 2018 2
Better Bang for The Buck And Still a Better Bang for the Buck Conclusion Can provide about the same amount of benefits from DB as DC for half the cost DB can predict group longevity better than an individual can predict own longevity Professionally managed DB assets earn higher return Individuals must shift to less risk/reward investments as they age PTA Teacher Pension Research NIRS February, 2018 3
Opposing Views Better Pay, Fairer Pensions: Reforming Teacher Compensation Manhattan Institute (McGee & Winters) 2013 Teachers would be better off with 401(k) Many don t stay long enough for DB value to exceed Money could be better spent on compensation PTA Teacher Pension Research NIRS February, 2018 4
California Teacher Pension Research Flaws in Opposing Research Even though some teachers turnover, they are not the ones doing the teaching DB Benefit Value vs. DC needs to reflect findings from Bang for the Buck CalSTRS has particularly strong benefits for early terminators PTA Teacher Pension Research NIRS February, 2018 5
Nari Rhee, PhD UC Berkeley Center for Labor Research and Education NCTR/NIRS Webinar February 9, 2016 EXCERPTS FOR NIRS POLICY CONFERENCE 2018
1) Most classroom teaching in CA is performed by long-career teachers who are well- positioned to benefit from a traditional pension. 3 out of 4 current teachers will retire with at least 20 years of service*. About 1/2 will retire with at least 30 years. Median age at exit: 61, with 29 years of service. * FT and PT treated equally for service year calculation purposes 7
