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
Collective Bargaining and State-Level Reforms: Assessing Changes to the Restrictiveness of Collective Bargaining Agreements across Three States
Katharine Strunk , Joshua Cowen, Dan Goldhaber , Bradley D. Marianno, Tara Kilbride, Roddy Theobald
The Hidden Costs of Teacher Turnover
Lucy C. Sorensen, Helen Ladd
Public Pensions and Salary Spiking: A Cautionary Tale of Data Inaccuracy Leading to Erroneous Results
Dan Goldhaber, Cyrus Grout, Kristian Holden