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Give Teachers a Choice on Pensions

Attracting the best college graduates to teaching is a perennial subject for debate.  There have been many proposals made but few as interesting, in my opinion, as offering teachers a choice about their pensions ("Modeling Preferences Between Defined-Benefit Teacher Compensation Plans," Manhattan Institute, Jun.).

Presently, defined-benefit pensions are heavily back-loaded, meaning that a significant lifetime pension accrues only after teachers typically work 25 or 30 years.  This model is called a final- average- salary defined- benefit plan (FAS-DB).  But it does not fit all teachers.  For example, teachers who are burned out or wish to enter a different field of work don't leave because of the way the FAS-DB is structured. Teachers who fall into this category shortchange students who would likely learn with more motivated teachers.

On the other hand, if teachers were offered the choice of what is called a smooth-accrual defined-benefit plan (SA-DB), many would be better served because they would have a plan tailored to their individual needs. For example, young teachers who wish to start a family and remain at home to raise their children would likely choose an SA-DB. These teachers would help their students learn as much as they could by leaving the profession when they are still at the top of their game. 

I realize that not all teachers know at the beginning of their careers whether they will remain in the field for the rest of their working years.  Moreover, much depends on the personality of teachers. Some are more risk-averse than others. But on average I think that a risk-neutral beginning teacher would be more likely to choose a SA-DB plan because it would provide a higher salary initially and bigger increases in the early years even though it would reduce their pension. In other words, benefits would accrue smoothly to teachers year after year, without sudden jumps as they approach retirement.

It's impossible to speak for all teachers. The plan that works for some would not for others. That's why teachers should be given a choice.  It would provide flexibility that is sorely lacking now and has the potential to help students receive better instruction.

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The opinions expressed in Walt Gardner's Reality Check are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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