The Three R's of Teacher Pension Funding: Redistribution, Return, and Risk

Autor/in	Costrell, Robert M.
Titel	The Three R's of Teacher Pension Funding: Redistribution, Return, and Risk
Quelle	In: Educational Researcher, 52 (2023) 2, S.91-97 (7 Seiten)Infoseite zur Zeitschrift PDF als Volltext Verfügbarkeit
Sprache	englisch
Dokumenttyp	gedruckt; online; Zeitschriftenaufsatz
ISSN	0013-189X
DOI	10.3102/0013189X211027534
Schlagwörter	Risk; Retirement Benefits; Teaching (Occupation); Costs; Taxes; Futures (of Society); Teacher Salaries; Educational Policy; Money Management; State Programs; Kindergarten; Comparative Analysis; California + Suchen Sie Ihr Suchwort? Risiko; Retirement pay; Ruhegehalt; Teaching; Lehrberuf; Cost; Kosten; Abgabe; Future; Society; Zukunft; Lehrerbesoldung; Lehrervergütung; Politics of education; Bildungspolitik; Regierungsprogramm; Kalifornien
Abstract	How are teacher pension benefits funded? Under traditional plans, the full cost of career teachers' benefits far exceeds the contributions designated for them. The gap between the two has three pieces, which may (with some license) be mnemonically tagged the three R's of pension funding: "redistribution," "return," and "risk." First, some contributions made for the benefits of short-term teachers are "redistributed" to fund the benefits of career teachers. Second, pension plans assume rosy "returns" on their investments, which push costs onto future teachers and taxpayers. Finally, the "risk" inherent in providing guaranteed pensions carries other costs, tangible and intangible, notably including the nontrivial risk of insolvency, which would dramatically raise mandated contributions and endanger future teacher benefits. I quantify these three components of the gap between benefits and contributions using the same metric as annual contributions. Illustrating with the California plan, I find the full cost of a career teacher's annual accumulation of benefits can be as high as 46.6% of earnings, nearly triple the corresponding contributions of 17.5%. To understand this gap, which fiscally affects all areas of education policy, researchers and practitioners may find it helpful to think of the three R's of pension funding: "redistribution," "return," and "risk." (As Provided).
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Erfasst von	ERIC (Education Resources Information Center), Washington, DC
Update	2024/1/01