Third Way Perspectives

Subscribe via RSS

Posts Tagged ‘pension reform’

Young Teachers Deserve Retirement Protections, Too

September 24th, 2014

by

How does it feel to lose $11,000 and know you’ll never get it back? This past week I discovered that I lost just that amount in retirement savings because like roughly half of America’s young teachers, I taught for fewer than five years.

Randi Weingarten, president of the American Federation of Teachers, made a startling admission on a recent segment of “Morning Joe.” She said fighting teacher tenure laws was pointless because most teachers in American classrooms today have less than two years of teaching experience. While that figure is a slight exaggeration toward the low end, Weingarten is right in recognizing that the teaching profession looks drastically different — and newer — from before.

Despite this, most teachers still find themselves paying into a pension system that is a relic left from a time when educators stayed in the same job in the same place for an entire career. Teachers in most states receive defined benefit pensions that are based on a backloaded formula that factors in salary and years of service: teachers receive minimal benefits in their early years, but are rewarded quickly and heavily as they near retirement age. The rules of these defined benefit plans reward longevity and punish mobility — even mobility within the profession between school districts or states. It works if you stay in one place and keep teaching, but doesn’t if you switch careers or move out of state, which is what I did.

When I left a Los Angeles Unified School District classroom after three years and moved to Washington, D.C., I learned that three years of employer contributions to my retirement became three years of donations to someone else’s. Since California requires five years of teaching to vest in a pension (19 states require 10 years), I was only entitled to recoup the 8 percent annual contribution that was deducted from my paycheck each pay period. I was forced to cede back to the pension program the 8.25 percent of annual contributions that were made — ostensibly on my behalf by my employer — an amount totaling more than $11,000. Invested very conservatively, this money would be worth at least $35,000 when I get ready to retire one day — but realistically several times that based on historical returns or what state pension funds expect to earn.

Read the rest of this entry »