Source: Education Next

Much of the debate over teacher pensions is framed as an either/or: Either we keep current defined benefit plans or we shift teachers to low-cost 401k-style defined contribution plans like in the private sector. A recent paper by Bellwether Education Partners shows that this is a false dichotomy. There are cost-neutral alternatives, such as cash balance plans or well-designed defined contribution plans, that could do a better job of providing all teachers with retirement security than the typical defined benefit plan does today. Yet adopting a wholly different model is not the only option for state policymakers who want to provide more teachers with adequate savings—and that’s probably a good thing, since defined benefit plans are likely to be with us for a while. Bellwether estimates that under current plans about 80 percent of new, young teachers will leave before qualifying for retirement benefits that meet our definition of “adequate” retirement benefits. This post explores ways to improve that figure using existing defined benefit pension plan structures.