- Your State Made You a Promise, and It Has to Be Kept
- Funding Solution: Lower the Assumed Rate of Return
- Funding Solution: Adopt Funding Stabilization Policies
- Funding Solution: Automatically Require Paying Pension Bills
- Funding Solution: Separate Out "Legacy" Pension Debt
- Funding Solution: Test the Resilience of the Pension Fund Regularly
- Funding Solution: Reduce Fees Paid to Wall Street Managers
- Benefit Solution: Guaranteed Income Plan Benefit Design for the 21st Century
- Best Practices for Ensuring Everyone Has a Path to Retirement Security
Best Practices for Ensuring Everyone Has a Path to Retirement Security
Policymakers need to be clear-eyed about their objectives for a retirement system because the design of retirement benefits will look different depending on the goals. Retirement systems might look very different if the goal was to simply recruit the best teachers as opposed to retaining experienced teachers until around 35 years of service and then encouraging them to retire in an orderly fashion.
Policymakers can use salary, health benefits, bonuses, and other compensation-related tools to create incentives for goals that range from recruiting to retention to encouraging teachers to retire as a specific time. Retirement plans work best, however, when policymakers simply aim to give teachers like you a path to retirement security. Otherwise, your pension isn’t really a retirement plan—it is a recruiting plan, or a retention plan, or something else.
As you learned in the last module, retirement plans are not one-size-fits-all. Pensions work really well for the cohort of teachers who are going to teach their entire career in one place. But the backloaded design doesn’t work well for the majority of teachers who are working just a few years or even half of their career in a classroom, or who want to take time off or move across state lines.
This is why the best retirement systems offer multiple kinds of retirement plans. Seven states currently give teachers and educators a choice among different kinds of retirement plans that offer a path to retirement security, regardless of differences in their individual career paths.
What kinds of alternative retirement plans can work for teachers with unique life paths and priorities? Would any of these plans be best for you? That’s the subject of our next module.