Issue link: http://educator.cta.org/i/912628
Pension for Retention New study finds pension plans help recruitment and retention By Dina Martin t a time when pensions for teach- ers are under attack, a national study has come out af firming that defined-benefit plans not only bene- fit teachers and schools, they make good public policy. " This latest study really reconfirms what we've known for a long time. Pen- sions earned over three decades, while modest, are an important part of teacher compensation. Secure retirement ben- efits help teachers stay on the job and help us keep experienced teachers in our schools," says Jennifer Baker, CTA's retire- ment legislative advocate. This latest report from the National Institute on Retirement Security, " Win- Win: Pensions Efficiently Serve American Schools and Teachers," re-emphasizes the importance of a defined-benefit plan — a pension — as an incentive for teachers to stay in the profession. With a growing shortage of teachers, pensions are a sig- nificant factor in recruiting new teachers and retaining experienced teaching staff. "is financial incentive is all the more important given that wages have eroded for teachers, which makes it harder for schools to keep experienced teachers," says report author Christian Weller, pro- fessor of public policy at the University of Massachusetts Boston. "Schools and stu- dents benefit because teachers become better at their jobs with more experience." Teachers in the United States are paid on average as much as 60 percent less than similarly educated professionals across the globe, which is why it's crucial they have a sound retirement plan. A defined-benefit plan is a retirement plan sponsored by the employer, where employee benefits are calculated using a CalSTRS Most K-14 educators in California belong to the California State Teach- ers' Retirement System (CalSTRS), the second- largest public retirement fund in the country. Over the life of their careers, CalSTRS members contribute about 10 percent of their monthly salary to help finance their retirement. Employers and the state also contribute, while the returns garnered by CalSTRS' investments do the rest. CalSTRS benefits, along with savings and supplemen- tary 403(b) retirement plans, all contribute to a secure retirement for California teachers. Defined-benefit payments also have been a powerful economic engine in California's 58 counties and have a trickle-down effect on the local, state and national economies as well. Several counties depend almost entirely on the spending of retirees. And thousands of jobs have been created due to the economic activity of retirement benefit plans. In recent years, public employee pensions such as CalSTRS have come under attack, largely by Wall Street. The elimination of public pen- sion systems would be a huge boon for financial planners and companies that stand to invest that money while making profit off the fees they can charge individuals. Also, without institutional investors like CalSTRS — the biggest champions of regulatory and executive compensation reform of the financial industry — there would be little oversight of corporate behavior and no guarantee that money would go back into state and national economies as it does now. A From a National Institute on Retirement Security report, October 2017: Annual wealth changes for teachers entering in 2017 relative to earnings, under Defined Benefit (DB) pension and Defined Contribution (DC) plan, constant normal cost. Continued on page 69 67 D E C E M B E R 2 017 / J A N U A R Y 2 018 C