Running and providing for teachers’ retirement plans is a matter of facts and figures, argues a scholar at the American Enterprise Institute (AEI).
In “Teacher Pensions Have a Math Problem” AEI Adjunct Fellow in Education Policy Studies Michael Q. McShane expresses wonder that teacher pensions are as controversial as they sometimes are and argues that “cooler heads” should prevail. “Pensions don’t have an ideology problem; they have a math problem,” writes McShane.
McShane takes issue with the notion that supporting pension reform necessarily equates to a desire to give retirees short shrift. Rather, he argues that it is possible to seek reform and to still want teachers “to have a solid, stable retirement.” He adds, however, that “as currently constituted, most pensions are in a poor position to provide that.” McShane attributes that to the following factors:
McShane argues that there are alternatives to traditional pension plans, such as defined contribution plans, which he posits “can be a cost-effective way of providing a quality retirement to teachers,” and notes, “perform, on average, about as well as defined benefit plans, and are not as susceptible to political shenanigans as their defined-benefit peers.”
McShane warns that while other education-related matters evoke sharp debate, “if we do not get our pension house in order, those will be trivial concerns in the decades to come.”
In “Teacher Pensions Have a Math Problem” AEI Adjunct Fellow in Education Policy Studies Michael Q. McShane expresses wonder that teacher pensions are as controversial as they sometimes are and argues that “cooler heads” should prevail. “Pensions don’t have an ideology problem; they have a math problem,” writes McShane.
McShane takes issue with the notion that supporting pension reform necessarily equates to a desire to give retirees short shrift. Rather, he argues that it is possible to seek reform and to still want teachers “to have a solid, stable retirement.” He adds, however, that “as currently constituted, most pensions are in a poor position to provide that.” McShane attributes that to the following factors:
- pension underfunding;
- unrealistic assumptions and promises;
- longevity requirements for participants; and
- public budget pressures.
McShane argues that there are alternatives to traditional pension plans, such as defined contribution plans, which he posits “can be a cost-effective way of providing a quality retirement to teachers,” and notes, “perform, on average, about as well as defined benefit plans, and are not as susceptible to political shenanigans as their defined-benefit peers.”
McShane warns that while other education-related matters evoke sharp debate, “if we do not get our pension house in order, those will be trivial concerns in the decades to come.”
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