Pension Flexibility

Retaining Effective Teachers Policy

Pension Flexibility

The state should ensure that pension systems are portable, flexible and fair to all teachers.

Best practices

Alaska provides a fair and flexible defined contribution pension plan for all teachers. This plan is also highly portable, as teachers are entitled to 100 percent of employer contributions after five years of service. South Dakota's defined benefit plan has some creative provisions, which makes it more like a defined contribution plan. Most notably, teachers are able to withdraw 85 percent of their employer contributions after three years of service. In addition, Florida, Ohio, South Carolina and Utah are noteworthy for offering teachers a choice between a defined benefit or hybrid plan and a defined contribution plan.

Suggested Citation:
National Council on Teacher Quality. (2011). Pension Flexibility national results. State Teacher Policy Database. [Data set].
Retrieved from: https://www.nctq.org/yearbook/national/Pension-Flexibility-9
Best practice 2

States

Meets goal 0

States

Nearly meets goal 2

States

Meets goal in part 15

States

Meets a small part of goal 31

States

Does not meet goal 1

State

Research rationale

NCTQ's analysis of the financial sustainability of state pension system is based on actuarial benchmarks promulgated by government and private accounting standards boards. For more information see U.S. Government Accountability Office, 2007, 30 and Government Accounting Standards Board Statement No. 25.

For an overview of the current state of teacher pensions, the various incentives they create, and suggested solutions, see Robert Costrell and Michael Podgursky. "Reforming K-12 Educator Pensions: A Labor Market Perspective." TIAA-CREF Institute (2011).

For evidence that retirement incentives do have a statistically significant effect on retirement decisions, see Joshua Furgeson, Robert P. Strauss, and William B. Vogt. "The Effects of Defined Benefit Pension Incentives and Working Conditions on Teacher Retirement Decisions", Education Finance and Policy (Summer, 2006).

For examples of how teacher pension systems inhibit teacher mobility, see Robert Costrell and Michael Podgursky, "Golden Handcuffs," Education Next, (Winter, 2010).

For additional information on state pension systems, see Susanna Loeb, and Luke Miller. "State Teacher Policies: What Are They, What Are Their Effects, and What Are Their Implications for School Finance?" Stanford University: Institute for Research on Education Policy and Practice (2006); and Janet Hansen, "Teacher Pensions: A Background Paper", published through the Committee for Economic Development (May, 2008).

For further evidence supporting NCTQ's teacher pension standards, see "Public Employees' Retirement System of the State of Nevada: Analysis and Comparison of Defined Benefit and Defined Contribution Retirement Plans." The Segal Group (2010).

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