Teacher Pension Systems, the Composition of the Teaching Workforce, and Teacher Quality

Teacher pension systems target retirements within a narrow range of the career cycle by penalizing individuals who separate too soon or remain employed too long. The penalties result in the retention of some teachers who would otherwise choose to leave, and the premature exit of some teachers who would otherwise choose to stay. We examine how the effects of teachers' pension incentives on workforce composition influence teacher quality. Teachers who are held in by the "pull" incentives in the pension systems are not more effective, on average, than the typical teacher. Teachers who are encouraged to exit by the "push" incentives are more effective on average. We conclude that the net effect of teachers' pension incentives on workforce quality is small, but negative. Given the substantial and growing costs of current systems, and the lack of evidence regarding their efficacy, experimentation by traditional and charter schools with alternative retirement benefit structures would be useful.