Blog: State Pension Plans

In a new report, we studied Illinois’ educator salary and tenure data, and found that women typically earn salaries that are $5,500 lower than their male colleagues. This pay gap continues into retirement, leaving women with lower annual benefits even if they worked the same number of years.
A new study of the Massachusetts Teachers’ Retirement System (MTRS), Robert Costrell and Dillon Fuchsman from the University of Arkansas finds that 74 percent of educators are pension “losers.”
Desperate times call for desperate measures, or so the saying goes. Staring down a financial crisis, Illinois is considering a fiscal Hail Mary: a massive fire sale on public debt. While Illinois’s finances certainly are in real trouble, issuing the largest public bond in history may do more harm than good. Here are 5 issues to consider.
People may assume that an "expensive" retirement must obviously translate into one that's also "generous" for workers. But that's not the way teacher pension plans work.
2017 was a busy year for teacher pension reform. Here is a handful of our most popular and significant work from the past year.

WalletHub recently released its new rankings of the best states for teachers. This year, there is a new best and worst state. New York grades as the best state overall, while Arizona came in last.

WalletHub graded states based on their opportunity and completion, which included salaries, pensions, growth, and even tenure. They then also took into account the state’s academic and work environment, which among other things, was based on student-teacher ratios, turnover, and union strength. Altogether, this ranking is based on a breadth of variables.  

WalletHub made at least one key improvement from its rankings last year: They amended how they evaluate teacher pensions. Previously, they rated states solely on the average pension paid out to retirees. As I wrote last year, it is a big problem to evaluate a state pension system this way, because average pensions don’t tell the whole story of a state’s pension system. Less than half of teachers even qualify for a pension. Take New York, WalletHub’s highest rated state. It has an average pension of around $44,000 but only 40 percent of teachers stay long enough to qualify for one in the first place.

To their credit, WalletHub responded to this criticism and upgraded how they assess the quality of state pensions. They now also include the percent of teachers whose pension doesn’t break even. In other words, teachers whose pension benefits are less valuable than their own contributions to the pension fund. This is a good decision by WalletHub that improves how they evaluate teacher pensions across the country.

We have our own 50-state ranking of state pension systems. Check out how your state measures up.

Not-so-breaking news: A pension advocacy group thinks pensions are the best retirement option for all workers.
Pension reform would likely benefit South Carolina's teachers and students.
Spending on teacher pensions is often overlooked in analyzing school finance equity. Here are three reasons why that is a mistake.
All teachers deserve a secure retirement. But under today’s current teacher retirement savings plans, more than half of all new educators won’t qualify for even a minimal pension benefit. We took a state-by-state look at public teacher retirement plans, and the findings were dismal.