For teachers,a better kind of pension plan

Abstract

Public school teachers deserve a compensation system that puts them on a secure path toward retirement. The severely backloaded structure of today’s public school teacher pension systems benefit only a small proportion of entering teachers while putting the rest on an insecure retirement path. But there is a cost-neutral solution to this problem that would benefit most teachers entering public school classrooms today without removing any of the protections from the stock market with which teachers have become accustomed. Teacher pensions could be restructured so that teachers earn retirement wealth in relatively equal intervals throughout their careers. The author calls these Smooth Accrual Defined Benefit plans.