Imagine not getting any retirement benefits from your employer after working for almost a decade. Or having to wait 25 years before your retirement savings are finally worth at least your own contributions plus interest.
Yes, it’s April Fools’ Day. But no, this isn’t a gag. This actually happens to teachers across the country.
Current pension plans disadvantage early- and mid-career teachers. In most states, this includes all teachers who stay less than 25 or 30 years in a single system. Over half of new teachers won’t meet the minimum vesting or service requirements to qualify for any pension, according to state pension plans’ own assumptions. Even for mid-career teachers who remain in the classroom for longer, but don't retire right away, the median state requires teachers to work for 24 years before receiving a positive return or come out ahead on the value of their employee contributions and interest. To make matters worse, in 15 states, teachers don’t qualify for Social Security for their time in the classroom, further exacerbating their retirement uncertainty.
In response to the 2007-9 recession, states are now placing even more obstacles before teachers. Twelve states increased their minimum service requirements, making it more difficult for new teachers to qualify for a minimum benefit. Employee contribution rates and the normal retirement age are rising, making it less likely that a new teacher will get a pension worth more than her own contributions plus interest.
Unfortunately, states and local plans have played these tricks on too many teachers for too long. It’s time for states to stop fooling around with teacher retirement security and provide adequate benefits for all 3 million of them.
Taxonomy: