Teachers and taxpayers need a new model for teacher retirement systems: Richard Hiller
More than 100 years ago higher education in the United States recognized the need to provide an employer-sponsored retirement plan for faculty and staff due to the realities of the educational system from both an employer and employee perspective. The unique nature of employment (especially for faculty) within higher education called for a different approach to retirement than existed in other fields. Thus was born a nationwide retirement system that was designed to recognize both the necessary mobility of faculty between several institutions during a working career and the importance to the institution itself to be able to recruit faculty from this mobile national talent pool.
The very idea that a plan with employee control of the assets was needed to recruit talent is contrary to what many believe in the K-12 teaching world today. In fact, the common belief is that a generous traditional pension plan — which has no individual control on assets — is critical to teacher recruitment. According to the NEA; “Like salary and health benefits, a pension is an earned benefit that encourages people to enter and remain in education over the long term, providing stability and experience.” These seemingly contrary beliefs stem from an understanding of the workforce in question and both ideas have merit.
For decades the ideal in the K-12 teaching professional path was that a teacher would be hired after earning the necessary credentials and would remain teaching in that school or district for the next 35 years. A rich benefits package — including a traditional defined benefit pension plan that offers a guaranteed, formula-based, monthly benefit in retirement based on salary history and service tenure — would aid in attracting young teachers into the position. Additionally, the plan would serve as a “golden handcuff”, discouraging the teacher from leaving the position during her or his career. In a profession that historically was not mobile in nature, this approach was sensible.
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