Teacher Retirement Plans: Case Studies in Washington and Ohio Indicate Value of Pensions
An issue brief finds that teachers prefer a stand-alone defined benefit pension when given a choice between a pension plan or a plan that combines a defined contribution account with a pension.
This new research brief examines the experience in the only two states that have offered a defined benefit (DB) and defined contribution (DC) combination choice – Washington and Ohio. The research offers three key findings:
1. The teacher retirement plan election pattern during 1997 in Washington is unique. The combined DB-DC plan offered by the state included special features and circumstances that enticed teachers to switch:
Teachers were provided with an upfront financial payments in 1997 that encouraged the switch;
Stock market conditions with double-digit gains in the1980s and 1990s may have caused teachers to overestimate the future value of their DC accounts. Thus, the combined DB-DC plan appeared more attractive in 1997; and
The state offered important features such as in-plan annuitization of a teacher’s DC account balance, so he or she would receive guaranteed lifetime income with the state reassuming the longevity risk. In fact, this ability provides teachers with a significantly larger lifetime income than available today from annuities from insurance companies.
2. Ohio had a far different outcome than Washington over the years when teachers could choose between the DB plan and the DB-DC combination plan. Between 2002-2014, 86% of new teachers opted to join the traditional DB plan and only four percent opted for the combined plan. The remaining 10% chose the DC plan, the third option available in Ohio.
3. Education policy research finds that DB pensions play a critical role in recruiting and retaining qualified, productive teachers. Thus, offering an alternative retirement plan design could have adverse effects on teacher retention and quality.
Florida’s Property Tax Initiative and the Unexpected Connection to Retirement Security
Property-tax relief could help homeowners facing rising costs—but what could it mean for the services they rely on and the retirement benefits of the public employees who provide them?
Recorded before a live audience at the Florida Public Pension Trustees Association conference, this Special Edition of Retirement in America examines Florida’s proposed property-tax changes, known as Amendment 3. The conversation looks beyond next year’s tax bill to consider how reduced revenues could affect staffing, emergency response, infrastructure, local control and public pension funding over time.
Watch this Special Edition Episode, Florida’s Property Tax Initiative and the Unexpected Connection to Retirement Security, below.
Workforce Turnover and Retention in the Public Sector: Insights from Public Pension Plans
This report examines how retention changes over public employees’ careers and varies across public workforces and retirement systems. The analysis draws on actuarial turnover assumptions and other information collected from 136 state-administered public pension plans representing 203 plan-employee groups and 12.8 million active members.
