Alaska’s 2005 teacher pension system reform legislation provides a unique opportunity to examine what happens when a state closes its teacher pension plan. We’ve collected pre and post reform data to examine teacher workforce impact in the wake of retirement plan changes. While it is important to note that these trends should not be interpreted as causal, we feel there are meaningful takeaways all the same.
On teacher pensions, there’s a chasm between what’s promised and the outcomes for the overwhelming majority of teachers. The commonly held notion of a teacher working 30-35 years and retiring with a gold plated pension is largely fiction.
Teachers in the Oakland Unified School District may go on strike soon. While they are primarily concerned with stagnant base salaries and class sizes, teachers in Oakland should also be concerned with rising benefit costs.
Roughly 90 percent of all teachers are enrolled in a pension fund. However, each fund has its own rules and set of conditions that determine the overall value of a retired teacher's annual benefit. Interested in data on the average teacher pension in your state? See the chart below for the latest data, updating an earlier post!
The first column shows the “average pension” for newly retired teachers from the past ten years in each state. In the majority of states that don’t list the average benefit for newly retired members outright, these data are retrieved from states’ observations about retirees and beneficiaries added to the retirement plan’s rolls and about new benefit payments added to the rolls. These data are based on 2016 figures unless otherwise noted. Keep in mind that this method is not completely precise– these numbers also include beneficiaries added to the rolls because their spouses passed away, as well as potential increases in benefit payments due to inflation adjustments.
The next column shows, among all newly retired teachers, what the median retiree earns. The third column shows the average pension for all current retirees and beneficiaries. Finally, the last column show the estimated percentage of new teachers who will actually receive a pension. The data come from each state's annual comprehensive financial report.
In Maryland, for example, the “average pension” for new teachers is $24,409. But the median pension for new retirees is just $16,404, meaning half of all new retirees earn less than that amount. Moreover, 57 percent of new Maryland teachers are expected to leave the system before qualifying for a pension.
Average Teacher Pension by State
Average Benefit for New Retirees
Median Benefit for New Retirees
Percentage of New Teachers Who QUALIFY FOR a Pension
Teacher pension plans are inarguably complicated, so it's really no surprise that the most high traffic pieces published in 2018 were ones that shed light on a complex issue. Check them out below, plus one extra post highlighting our most asked question of all time.
There’s a common misconception that teachers’ retirement plans are gold-plated, extremely generous options. And for a very small pool, they do provide a secure retirement. But that’s not the case for the majority of teachers. To illustrate this, we dug into a sampling of states to see how they measure up, and ran the numbers to see if an alternative plan design might serve more of their workforce.