Who Benefits from Pension Enhancements?
During the late 1990's public pension funds across the United States accrued large actuarial surpluses. The seemingly flush conditions of the pension funds led legislators in most states to substantially improve retirement benefits for public workers, including teachers. In this study we examine the benefit enhancements to the teacher pension system in Missouri. These enhancements resulted in large windfall gains for teachers who were close to retirement when the legislation was enacted. By contrast, novice teachers and teachers who had not yet entered the labor force, were made worse off. The reason is that front-end contribution rates have been raised for current teachers to offset past liabilities accrued from the enhancements. Other things equal, the teaching profession in Missouri is now less appealing for young teachers than it was before the pension enhancements were enacted.
Keywords: Pension, Budget Surplus, Liabilities
You May Also Be Interested In
Teacher Pension Enhancements and Staffing in an Urban School District
Shawn Ni, Michael Podgursky, Xiqian Wang
A Method for Identifying Salary Spiking: An Assessment of Pensionable Compensation and Reform in Illinois
Dan Goldhaber, Cyrus Grout, Kristian Holden
Evidence on the Dimensionality and Reliability of Professional References’ Ratings of Teacher Applicants
Dan Goldhaber, Cyrus Grout, Malcolm Wolff, Patricia Martinkova