Blog: State Pension Plans

Asking "what's the average pension in my state?" is a common question, but it's the wrong one to ask. "Averages" hide a lot of nuance.

New Jersey Governor Chris Christie certainly doesn’t beat around the bush. In an interview with Jake Tapper, New Jersey Governor said he prefers to deal with bullies with a “punch in the face.” Who deserves this? The teachers’ unions, according to Christie.

While this sort of brash talk may attract attention, it isn’t good for negotiating reform. Ironically, Christie actually has a good reform proposal. Christie’s pension committee calls for a cash balance plan, a type of defined benefit plan that accrues benefits evenly rather than the bumpy accrual of the current backloaded plan. The cash balance plan would provide better benefits for early and mid-career teachers who get shortchanged by the current plan and better fiscal housekeeping for the system.  

But Christie’s politics are preventing this reform from moving forward. The teachers’ unions are still fuming over the Governor’s decision to go back on his promise and shortchange the pension fund.

As Christie continues to play with fire, however, he may stymie the state’s chance for genuine reform of its pension systems.    

California's massive pension debt is now over $198 billion, impacting new and future workers.
Not all teachers can receive a full refund plus interest on their contribution. And for many, participating in the state system comes with other trade-offs.
New Jersey teachers are still angry with Governor Chris Christie for shorting the pension fund and are now suing for $4 billion total in damages.
Nationally, pension costs have more than doubled in the last decade, from about $500 per pupil in 2004 to over $1,000 today.
Illinois Governor Rauner's recent pension proposal tinkers around the edges but leave more fundamental problems in place.
For all the media attention over the pension cash crunch in Chicago, there been no mention about the benefits themselves, despite their severe inadequacy.
Colorado charter schools experience higher turnover, impacting their teachers retirement benefits.
Get your pension questions answered in this blog resource.