Randi Weingarten, the President of the American Federation of Teachers, used her most recent paid advertisement in The New York Times to dismiss any concerns about teacher pension plans. Weingarten is right to call out state policymakers for their fecklessness about properly funding teacher pension plans, part of the cause of the pension mess today.
But she then attempts to persuade readers not to worry about public sector pensions and instead focus on the retirement savings problems in the private sector. There are problems with private sector retirement savings--which we're worried about too--but that shouldn't prevent us from having a conversation about whether public sector benefits are meeting the needs of the workforce.
It's pretty clear that beyond the fiscal problems pensions are facing in some states, they also have design issues in an era of greater career mobility. Traditional teacher pensions work well for the small minority of teachers who teach in one place for their entire career but not for the majority of teachers who don't. So it's disappointing that Weingarten did not use this opportunity to call for retirement security for all public school teachers, our largest group of college-educated, middle-class workers.
Poorly structured retirement policies are actively hampering the retirement security of teachers:
- States and districts haven't saved enough money to properly fund pensions, and now they owe $390 billion more than they've set aside. Some states are making things even worse by failing to live up to their annual funding obligations, while other states have rapidly increased employee and employer contribution rates that are crowding out other school spending.
- Rather than creating a retirement system suitable for the mobile teaching profession, states have instead made it harder to earn a pension by increasing their "vesting periods." Approximately half of all Americans who begin teaching in public schools won’t qualify for even a minimal pension benefit because it takes so long to earn one--it takes a full decade in 17 states. By reducing the number of teachers eligible for a pension at all, states have trimmed their financial liabilities. That may make sense financially for the state, but it means fewer of Weingarten's members will leave teaching with a secure foothold on retirement saving.
- States have also built in specific barriers to mobility that restrict teachers from accessing employer contributions or interest on their own contributions. These savings penalties can add up to six figures for some teachers.
- Fifteen states prohibit teachers from enrolling in Social Security, forcing them to rely only on the state pension plan for their retirement benefits. Social Security can't replace teacher pensions but it should be one leg of a successful--and portable--retirement stool for teachers.
Rather than cast aspersions and demagogue the issue, teachers need leaders willing to have courageous conversations about how to modernize and improve retirement security for all of our nation's teachers.