New hires subsidize older teachers’ pensions

The New York Times does a fine job today summarizing an Urban Institute study of teacher pensions form state to state. Non-spoiler alert: The news is mostly bad, especially for newer teachers:

Teachers’ pension plans have always rewarded long-serving veterans at the expense of short-termers. But now, as more and more plans develop shortfalls, states have been imposing cost-cutting measures, and recent research shows that the newest hires are bearing the brunt of the changes, raising questions of fairness.

The story includes some nifty charts. One shows that 79 percent of new Colorado teachers will never break even on their pensions. That’s about in the middle of the pack of states. Massachusetts is the worst: 100 percent of new teachers there will never catch up. The “best” state is Oregon, where only 37 percent of new teachers will never break even.

Why do so few reachers break even? As , and others, have written, few teachers remain in the profession long enough for their benefits to exceed their contributions. In fact pensions like PERA count on being able to cannibalize the benefits of teachers who leave after just a few years.

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