No More Earmuffs, It’s Possible to Move Forward the Teacher Pension Debate

For decades, there has been a long-held belief that teachers are best served by a defined benefit pension system that guarantees them an annuity upon retirement in exchange for lower compensation during their working years. A great deal of evidence shows, however, that for many teachers, this trade-off simply isn’t panning out, as only 20% of teachers entering the profession today will receive their full pension benefits and less than half will be able to collect even a minimum pension. And this is on top of the fact that nearly 40% of the teaching force is currently left out of the Social Security safety net afforded to most other working professionals.

Despite this new reality, many policymakers choose to avoid conversations about modernizing teacher pension systems altogether.

But a recent Twitter chat hosted by Third Way shows that we can no longer kick the can of addressing teacher pensions down the road. Participants and featured “panelists” — Chad Aldeman, Associate Partner at Bellwether Education Partners, Dan Goldhaber, Director of the Center for Education Data & Research, and Sandi Jacobs, Senior Vice President of State and District Policy at the National Council on Teacher Quality — demonstrate that there are in fact many worthwhile debates policymakers can have to tackle this issue, including plenty of evidence that modernizing pension systems are not in fact the political death sentence many would have you believe.

For example, panelists weighed in on a series of questions, including:

Only 20% of entering teachers today will receive a full pension. Why is our country still stuck on debating if we should preserve existing systems?

According to participants, the problem appears to be twofold: younger teachers (those most likely to be affected by the status quo) are not engaged enough, and there is just a lot of misinformation in general about what pension reform actually means.

2. Teachers in 15 states don’t participate in Social Security. Is adding all teachers to Social Security part of the solution?

This question reveals that there is a clear consensus that moving teachers into Social Security is both a possible (and worthwhile) next step that policymakers can take to improve retirement outcomes for teachers. The biggest hurdles to making it happen? Time and money.

3. Some states have started to experiment with more modern retirement systems. What can we learn from them moving forward?

While there is no silver bullet to removing the large pension debts that exist today, early evidence shows that teachers will participate in new systems when they are offered — and in some cases, these systems even increase retention.

4. Workers today are more mobile than in the past. What unique challenges exist for teacher pensions in this new environment?

There is no question that the current systems are restricting mobility across state lines. The backloading of benefits not only makes teachers wait longer than many other professionals to earn any of their retirement benefits at all, it also results in most teachers losing significant amounts of their pension wealth.

5. What other questions should policymakers be asking to make sure teachers are getting a fair retirement?

It is clear that there are plenty of entry points for policymakers to engage in a conversation around modernizing teacher pensions. For one, there seems to be consensus that moving all teachers into Social Security might be a good place to start. There are also opportunities to both engage younger teachers in the conversation to find out what values they hold when it comes to their own retirement, and to create systems that provide an equitable retirement to those afforded to other professionals. The evidence shows that teachers are willing to give modern systems a chance. Now it’s time for policymakers to do so.

Read more about other key debates in Third Way’s latest report on “The Normal in K-12 Education,” and make sure to tune into future Twitter Q&A’s by following #NewNormK12.