Report: Many Teachers May Fall Short in Retirement Savings
A new report warns that many teachers in states that don't extend Social Security benefits to public employees could end up with severe gaps in their retirement savings.
The report, released last week by the Washington-based consulting firm Bellwether Education Partners, notes that teachers in 15 states—approximately 40 percent of all public school educators—are not covered by Social Security due to state opt-out provisions in effect prior to 1983.
For their retirement savings, the teachers in those states are generally enrolled in state pension plans. However, according to the analysis, many teachers do not stay in their jobs long enough to qualify for full—or even partial—benefits under such plans.
"Because of high mobility in the teaching profession and rules that penalize young and mobile workers, roughly half of all teachers do not qualify for even a minimum pension benefit," the report says, echoing a previous Bellwether analysis on young educators' participation in defined-benefit pension plans.
Due to rigorous years-of-service requirements, according to the new report, even teachers who stay in their jobs for 10 or 15 years may end up with only marginal benefits from their pension plans.
In addition, because many state pension plans are in uncertain financial condition, teachers may be "vulnerable to future benefit cuts or increases in their employee contributions," the report says.
Bellwether, with support from the Joyce Foundation and the Arnold Foundation, has also created a website on pension-reform issues called teacherpensions.org. (The Joyce Foundation also provides support for Education Week's coverage of policy efforts to improve the teaching profession.)
To give teachers a more reliable and portable source of retirement income for their years in education, the report's authors recommend that states take steps to adopt Social Security for them.
Extending Social Security coverage to more public workers would also help stabilize the general Social Security fund by increasing the number of workers paying into it, the report says.
The authors note that some public unions have historically opposed calls for opted-out states to extend Social Security due to "fears that coverage [under Social Security] will lead to undesirable changes to existing pension plans."
The report makes the case, however, that "Social Security could be integrated into a restructured pension system in such a way as to maintain secure benefits for career teachers while also extending retirement security to the rest of the teaching workforce." Such systems, the authors suggest, could also play a role in bolstering states' teacher-recruitment efforts.
In an email response to the report, American Federation of Teachers President Randi Weingarten said the union "strongly believes—as we have reiterated since 2011—in a three-legged stool of Social Security, an employer-sponsored defined benefit pension, and individual voluntary savings as a national model for retirement security."
However, Weingarten also questioned the motives of one of Bellwether's funders, the Arnold Foundation, which she said has spent millions of dollars attacking public pensions.
According to an April Wall Street Journal article, the foundation has maintained that it "doesn't want to end public retirement plans but stabilize them" and has characterized unions' allegations against its work as attempts to "avoid discussing solutions to pension-funding problems."
A spokesperson for the National Education Association said in an email the union did not have an official position on the issue of expanding Social Security coverage to teachers not currently covered.