|A New Lesson From Teachers?|
We learned the fundamental “Three Rs” from our teachers. Maybe it’s time to add two additional Rs to lessons from educators: Retirement Readiness. Nearly 80 percent of West Virginia teachers, administrators and service personnel just voted to switch back to a pension.
Given a choice, some 15,000 employees and retirees elected to abandon their defined contribution individual accounts for the security of a defined benefit pension.
The vote comes after policymakers toiled for several years to restore the pension system amid concerns about low retirement savings in the new individual account system. In voting for the change, teachers displayed an overwhelming willingness to increase their own financial commitments to the retirement system, while simultaneously lowering the cost to taxpayers.
The Associated Press reports that teachers “complained that they could not retire on the earnings from their individual investment accounts” and blamed the problem partially on “spotty and even misleading advice from firms providing investment options to plan members.”
The results were certified by State of West Virginia Consolidated Public Retirement Board. The shift back to the pension system will take effect on July 1, 2008.
In a press release, Judy Hale, president of the American Federation of Teachers West Virginia said, “These employees, trapped in a failed retirement plan that had little chance of producing enough money for retirement, can now count on a secure and viable retirement benefit.”
Clearly, West Virginia’s education personnel have done their homework and know that that a defined benefit pension provides the best path to Retirement Readiness.
Posted By: Ilana Boivie, NIRS Policy Analyst on June 4, 2008