July 7, 2015

Eating Their Young: How Cuts to State Pension Plans Fall on New Workers

By Leslie Kan | Chad Aldeman

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In terms of retirement benefits, now is the worst time in at least three decades to become a teacher. After years of expansion, a number of states enacted legislation cutting benefits for workers in response to financial pressures. The cuts fall hardest on new and future teachers, particularly for teachers hired after the recession who do not plan to teach in the same state for 30 or more years.

This brief uses a unique historical data set to analyze how states changed teacher retirement benefits from 1982 to 2012. Specifically, states use various pension variables to boost teacher benefits during good times or cut them during harder times. While benefit increases tend to apply to all workers, benefit decreases typically only affect new workers. As a result, two teachers with the same career length would experience significant differences in benefits simply based upon when they were hired.

Moreover, pension benefits are already inherently unequal for teachers with varying career lengths. Shifting the benefit parameters to create lower benefits for new workers only magnifies these structural inequities. The following report analyzes the changes states have made over time, and how those changes impact the retirement security for our nation’s public school teachers.

To avoid further cuts that harm the teaching profession, states must fully fund the promises they’ve already made, while also balancing the needs of the present and future teaching workforce and providing sustainable benefits for all teachers.

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