Poorly structured policies implemented over the past few decades by states and cities are threatening retirement security for public school teachers, according to a new report published by Bellwether Education Partners.
In "Friends without Benefits: How States Systematically Shortchange Teachers' Retirement and Threaten Their Retirement Security," authors Chad Aldeman and Andrew J. Rotherham estimate that half of all Americans who teach in public schools won't qualify for even a minimal pension benefit, and less than one in five will remain long enough to earn a normal retirement benefit.
The report found that in Maine, 86.1 percent of teachers will not qualify for a pension, and in the District of Columbia four out of five beginning teachers will not. Only about 25 percent of teachers will qualify in Mississippi, Pennsylvania, New Hampshire, and Hawaii, while fewer than 35 percent of teachers will stay long enough to qualify for a pension in Florida, Nebraska, Indiana, South Carolina, New Mexico, Ohio, Georgia, and North Carolina.
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According to the report, less than one in five teachers who enter the classroom at age 25 will stay long to reach their normal retirement age. And in nine states — Maine, Vermont, South Dakota, New Hampshire, Mississippi, Wyoming, Texas, Nebraska, and Arizona — and the District of Columbia fewer than 10 percent of teachers will remain in the state system long enough to earn a secure retirement benefit.
According to the Bellwether analysis, a teacher could forfeit up to 6.5 percent of her annual salary for one year, or, due to compound interest, 22.6 percent of her annual salary after three years.
In dollar terms, a teacher earning $40,000 a year could face a savings penalty of $2,601 for teaching only one year and $9,035 if she left after three years. This money stays with the pension funds and is used to supplement the pensions of the remaining teachers.
As a result, the report said, while the system works for a few, it creates an enormous problem for many, especially given the increasing career mobility of the workforce.
The authors concluded that the retirement security of Americans who teach in public schools should be a national concern and offered guiding principles for policymakers to consider in designing retirement benefits for tomorrow's teachers.
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