Stephen Sawchuk reports in Education Week on a study finding that most teachers will not stay on the job long enough to collect a pension.
He writes:
“The report from Bellwether Education Partners, a Washington-based consulting group, contends that states’ current defined-benefit pension policies, which pay out according to a fixed formula, are not well aligned with a profession that has grown rapidly younger and more mobile. And that could put teachers at serious financial risk later on in their lives.
“For the paper, analysts Chad Aldeman and Andrew Rotherham used “withdrawal” tables—state estimates on teacher-turnover rates—to estimate the percentage of teachers who will earn a pension in every state. They drew on each state’s assumptions for female teachers aged 25 who began teaching after Aug. 1, 2013. (Keep in mind that the state formulas are different for male teachers or those of other ages, and these stats would look different for them.)
“Based on those assumptions, only 45 percent teachers in the median state will qualify for payouts, a process that typically takes 5 years. And only 20 percent will reach the normal retirement age of 58.
“That’s a lot of money left on the table. Many teachers won’t even meet the vesting requirements. And for those that don’t, states typically allow teachers to take only the contributions they made into the pension plan if they leave the profession, or move to another state. ”
Of course, many states are trying to ditch defined benefit pensions altogether.
And it must be noted that one of the implicit goals of the current “reform” movement is to encourage teacher turnover, specifically to reduce future pension costs. That’s not good for the teaching profession or for children or for education, but it helps cut costs.
Diane Ravitch's blog 
This sounds an awful lot like a sub rosa effort to argue for replacing defined-benefit pensions – increasingly out of reach because the so-called reformers have made the public school teaching so toxic – with 401Ks, which are far more desired by Wall Street, since the fee extraction is greater.
Even though I couldn’t access the article due to a paywall, you’re probably right. Bellwether is a pro-corporate consulting group that receives money from the usual reformy suspects.
Yep, gotta make those pension monies “portable” so that the only ones who benefit from them are the money changers/handlers. Just ask those who lost all their “pension” monies in the last crash. Where’d it all go? Yep, to the money handlers.
Yes, I wondered that too.
OTOH, it does go against the basis for the rabid hatred of teachers in my region (and by extension teachers in general), that is based upon this notion that all teachers are living the high life retiring early on fat pensions that they got because they paid for their job by handing their brother-in-law an envelope full of cash. (I live in Northeastern Pennsylvania.)
My wife is a teacher in RI. Some of you may know the pension fiasco that plagues this State. When politicians get involved in pension schemes, expect the worse. They promise the world but usually fail to fund the pension system. Eventually, the system collapses and you get only a portion of your promised pension.
Here’s my advice to novice teachers. Get into a 401K system with low fees. TIAA/CREF comes to mind. Maximize your contributions at an early age. Every time you get a salary increase, put 50% of that increase into your retirement fund. Use the leverage of compounding interest. You’ll never regret planning ahead.
STAY AWAY FROM ANY STATE RETIREMENT SYSTEM THAT ALLOWS POLITICIANS TO MANIPULATE YOUR LIFE SAVINGS.
The following information about TIAA-CREF is on the internet.
– A FINRA fine of $100,000, in 2010.
-The Oakland Institute describes their investment strategy, in the context of the lesser good, at the Institute’s website.
-The TIAA Institute paired with Arnold for research that undermines pensions (Truthout website).
-This summer a judge approved class action status for a lawsuit filed by professors at a private college against the company (Inside Higher Ed).
-The Open Secrets website shows their PAC spending.
-The Center for Political Accountability shows their record on corporate votes for transparency. (Tangentially, ask a public university to disclose the plan administrator fees it receives from professor investments in 403b’s and see if you get an answer. Then, contact the Dept. of Labor to see why an answer might not be forthcoming.)
– Ask the University of Minnesota, what opinion they formed, in 2007, about TIAA-CREF.
-Look at the NCTR site for a letter concerning TIAA-CREF from the California Teachers Association.
-The TIAA-CREF Board of Overseers includes the Chair of the David Koch Theater.
– In the Chronicle of Higher Education, in a 2010 article, TIAA-CREF officials were quoted concerning pensions and “political cover” for retirement plan changes.
Its up to each of us to do our own research and to decide if the companies we do business with are worthy of our trust.
Typically, if not always, Social Security is not available to teachers. Worst scenario: work at Walmart for the rest of your life, after leaving teaching. That could be their plan. That Greedy corporate corruption fisheye lense allows them to see around every sneaky corner. Disgusting!
“Social Security is not available to teachers”
Yep, I’m one of them, even though I paid into it from age 16 to 38 when I started teaching.
Fortunately, I’m in a state, MO, that the politicians can’t touch the teacher retirement funds and so it is in excellent financial shape.
Why is Social Security typically not available to teachers?
The feds (IRS) call it double dipping because of federal funds most school districts accept and because most teachers do not pay into SS because they are paying into a pension plan. For those of us who worked in the private sector long enough to qualify, we are just out of luck.
I suspect this is just another move on the fake reformers part to destroy public education. Sometime in the past, one or more of the billionaire oligarchs put pressure on Congress to take away that one earned perk from teachers while others outside of education still double dip with SS and federal pensions.
Since in Missouri teachers don’t pay into SS for their teaching salary (note that many work other jobs and do pay into SS and still can’t collect) and supposedly it would be “double dipping” to collect off both systems. If so then give me back what I put into SS, not really as I understand the need for all to put in their fair share for SS.
Big win for Arne Duncan and Rick Snyder on Eli Broad’s EAA experiment in Detroit:
“Democratic lawmakers said the bill is an attempt to prop up Snyder’s struggling EAA, which has been dogged by declining enrollment, financial problems and teacher turnover during its two years of running schools formerly operated by Detroit Public Schools.
“This isn’t about helping schoolchildren. This is about a politically and ideologically driven agenda to destroy public education as we know it,” said House Minority Leader Tim Greimel, D-Auburn Hills.”
The EAA isn’t financially viable unless they keep packing in more kids. Now that they have 50 more Michigan (formerly) public schools, and the capacity to take over really as many as they want, they should be able to keep this failed experiment going for a while.
Now it’s too big to fail, which of course was the point of expanding it.
http://www.detroitnews.com/article/20140320/POLITICS02/303200131/Michigan-House-narrowly-passes-EAA-expansion-bill
Here’s Michelle Rhee at a meeting of lobbyists and pundits and politicians in MI, stumping for the EAA. No one had any idea whether it would benefit anyone when she was campaigning for it, but it doesn’t matter. A wholehearted endorsement:
“Michigan has become a leader in education reform, she said, ranging from a recent bill that would base teacher salaries on performance, to turning failing schools over to a state-run Education Achievement Authority.
“As we look across the nation, Michigan has been one of the most aggressive states on education reform,” Rhee said. “These are some of the innovations and initiatives that are going to lead the country in the next few years.”
“. . . one of the most aggressive states. . . ”
The Rheeject certainly loves her “agressiveness” doesn’t she?
Just a thought. Most teacher compensation looks like a logarithmic curve, and pension payouts are the worst offender.
I think the profession would benefit from a flatter pay scale, paying early teachers more and providing a more linear progression of increases.
Might help more people stay in the profession since they don’t have to commit to 20 years to make it worthwhile.
I think you mean exponential which isn’t true. But I do think it is in fact logarithmic with the percent increases leveling off the more years on the job. I would include the negative range in the first year (or longer if you include student loans)! In our area at least, the increases are tiered in such a way veteran teachers’ compensation does level off. That would in fact make the absolute dollars more linear, though for many districts, that is now a strongly negative trend.
Also pension payouts are not 100% of salary and reduced. I do agree, however, that teachers need better starting salaries. Clearing $22,000 a year is not much for a young family. Compensation is a tricky thing. There are many necessary but not sufficient conditions. Money is necessary, but control and a belief in making a difference motivates most people as well. You can’t solve poverty by putting teachers in it.
401ks are the biggest fraud imposed on the American worker in the history of our great country. It is divide and conquer with a major power shift to Wall Street. Before, pensions held considerable sway as stockholders and built worker communities. Now, coupled with a decline in unions, workers have no voice in our economy or government. The constant churn of 401k fund offerings and high fees are eroding gains. The stock market itself is a charade with more investment being moved to the shadow market (estimated in trillions).
Math Vale,
What? You can’t fix poverty by putting teachers in it?
Appeared to be part of the Master Plan!
Whenever teachers view the median income of a poor community they teach in, their salaries are often within that range. Nothing new, but it may still be too much $ for the EdReformers.
Sitting at corners with cup in hand is their goal?
Yes, having a backloaded compensation system is a recipe to jack people before they get to the back.
In some ways, it would be better to eliminate pensions entirely and increase teacher salaries by the net present value of the pension benefits they’re entitled to. It would be more transparent, and it would eliminate the problem of underfunding.
On the downside, we couldn’t afford to do this without severe cutbacks in public services or significant increases in borrowing or taxes.
FLERP, be careful what you wish for. States will eliminate pensions and not increase teachers salaries.
The simplest and most just solution would be to “vest” teachers in their pension plans from the day they are hired and to make it so that each year worked contributes the same percentage towards an eventual pension.
The reason that won’t happen without a struggle is because it’s the right thing to do for the employees as opposed to the 1% of 1% who collect golden or rubidium parachutes, stock options and so on.
I would also advise teachers to invest in 503B tax deferred annuities , and TIAA-CRREF apparently has lower fees than most.
See comment above at March 21, 8:46, about TIAA-CREF.
Inside Higher Ed. has an article about the proposed settlement in which TIAA-CREF recently agreed to pay $19,000,000 to professors at private colleges because of alleged company wrongdoing.
“The simplest and most just solution would be to ‘vest’ teachers in their pension plans from the day they are hired and to make it so that each year worked contributes the same percentage towards an eventual pension.”
That’s exactly how it has worked in California for more than 100 years. I can’t speak for the other states.
From the first day that I worked full time under a contract, 8% of my monthly pay was automatically contributed to CalSTRS and that continued until I retired in 2005. The district contributed about 8.25% of my gross monthly pay each month—slightly more than a matching contribution.
Unlike Social Security , California’s teachers contributions end up managed by CalSTRS headquarters in Sacramento, California and that money can’t be spent by the government to fund building roads or fighting wars. CalSTS invests that money to grow it. Instead of an IOU, like Social Security (because Congress has always spent SS money as it came in), CalSTRS actually has the money.
The board that administers CalSTRS is appointed by the governor with the legislatures approval. CalSTRS money is not part of the general fund as SS $ is in DC.
This link leads to the Comprehensive Annual Financial Report—-as you can see everything is transparent—-something that will not happen if the public schools are taken over by the private sector while the taxpayer keeps paying.
http://www.calstrs.com/comprehensive-annual-financial-report
This may be out of date but in the CA Community College system, 60+% of the teachers were “Adjuncts” who worked part-time (many were teaching only to get benefits!). The law (never really enforced) was that the “full-time” faculty were supposed to teach 60+% of the classes. People teaching a real estate class or a night class for personal reasons probably shouldn’t be counted along with career teachers and I did not read the full study to see how this was accounted for. Like the many CC students who seek just specific training or knowledge and not a degree, there are teachers who are teaching who are not seeking a career. Similarly, there are grade school teachers who substitute after retirement from their regular jobs (I have a friend who does) and teachers who try teaching and then figure out it is not for them and leave the profession (a large percentage of new teachers, no? maybe too large). Sorting the various categories out looks tremendously complicated. I would want to see the stats on people who make/made a career commitment to teaching and not just an “everybody in the pool” analysis.
Since everybody needs a stable retirement system, maybe there is a need for a US gov. induvidual retirement account system, that takes the place of pension systems and is an alternative to private accounts.
Teachers who leave teaching before five years—at least in California when I was still teaching (1975 – 2005)—were allowed to withdraw all the money they paid into CalSTRS—only their contribution; not the matching contribution from the school district. That money stayed with CalSTRS. Actually, any teacher who quits teaching may withdraw their share of what they contributed into the retirement fund from their pay. It doesn’t matter how many years they taught. If you leave at twenty years and don’t want to collect, you may take all that money in one lump sum (after taxes). I knew a few who did that.
If they taught more than five years, they could leave the money they contributed and collect a small monthly sum when they reached the required age.
If you want info on how many teachers stay to retire on a pension in California you may access CalSTRS website and get that information (I’ve included the link below). I suspect, because these are publicly managed pension plans all of that info is available on-line for each state as it is in California. CalSTRS is managed by a board of trustees appointed by the governor. The 2007-08 global financial disaster led to about $30 Billion in losses to CalSTRS, but CalSTRS, like Social Security, has enough money to fund 100% of its obligations to retired members for many years before the money runs short but never dry.
According to the most recent report, there are currently 236,487 retired members collecting from CalSTRS. I’m one of them. Scroll down to page 18.
Click to access cafr2013.pdf
If the public schools vanish, then we’ll lose access to this information becasue it will not be made public by the private sector schools without a court order and a lengthy court battle possibly all the way to the Supreme Court. And once the money has been drained away, even a court verdict will not bring it back.
CalSTRS managed more than $166 Billion dollars that came from automatic deductions from monthly paychecks and matchmaking contribution from school districts. The teacher’s contribution is about 8% of the gross pay. You may also buy an addition five years. I did. It cost me more than $100,000 to invest in my own retirement plan beyond the required 8%.
Just imagine the schemes the fake reformers are cooking up to get their greedy hands on that $166 Billion and then leave hundreds of thousand of retired teachers without a cent. Greed knows no limits and doesn’t care who it hurts and the suffering it causes.
Twice in the last few decades a governor of California borrowed hundreds of millions from CALstrs to make up for shortfalls in tax revenues and signed a contract to pay that money back with interest. Both times, the governors reneged (one a Democract and the other a Republican) on the agreement and refused to pay. CalSTRS took the state to court and won both times.
I’m an international teacher from Oregon, I’m not sure if I ever want to return home to teach because I would have to deal with all of this! I created my own retirement plan and blogged about it: http://teachingwanderlust.com/2014/03/19/retirement-for-international-teachers/.
Reblogged this on Teaching Wanderlust and commented:
It looks like even teachers in the states have problems cashing out at retirement!
In my state, we pay into both Social Security and a state retirement fund. I also have a personal retirement fund. I hope that ONE of them will exist by the time I’m old enough to retire (I’m 40 years old). Otherwise, I guess I’ll be like the teacher in my building that is retiring this year–at 83 years old.
I suggest that before anyone panics and buys into the myth that Social Security or Teacher Retirements are doomed, check some facts. Public school pension plans usual have annual reports that go into detail. Check your state first. I know where to find this info for California.
It’s obvious that one goal of the fake reformers is to do away with teacher retirement and take away all their rights until they are wage slaves.
And I found this with a brief summary of all 50 states.
http://www.cga.ct.gov/2000/rpt/2000-R-1110.htm
The real money and power behind Ed Deform is getting what it wants here–the de-professionalizing of education.
The ultimate goal is to replace experienced teachers with TFAish do-bots with large classes whose jobs consist primarily of making sure that the kids’ tablets are working to serve up scripted adaptive ed tech and educational videos aligned to the national curriculum for the children of the proles.
This new study by a group of mathematicians and social scientists shows how wealth and income inequality and concentration of power in the hands of elites, if unchecked, will bring about the collapse of civilization:
http://www.rawstory.com/rs/2014/03/14/nasa-industrial-civilization-headed-for-irreversible-collapse/
A quotation from the article:
These factors can lead to collapse when they converge to generate two crucial social features: “the stretching of resources due to the strain placed on the ecological carrying capacity”; and “the economic stratification of society into Elites [rich] and Masses (or “Commoners”) [poor]” These social phenomena have played “a central role in the character or in the process of the collapse,” in all such cases over “the last five thousand years.”
Now, that said, let’s talk about the Commoners’ Core that the elites have cooked up for the children of the proles.