Distribution of Benefits in Teacher Retirement Systems and Their Implications for Mobility
While it is generally understood that defined benefit pension systems concentrate benefits on career teachers and impose costs on mobile teachers, there has been very little analysis of the magnitude of these effects. The authors develop a measure of implicit redistribution of pension wealth among teachers at varying ages of separation. Compared with a neutral system, we find that often about half of an entering cohort's net pension wealth is redistributed to teachers who separate in their fifties from those who separate earlier, and we also identify some variation across six state systems. This implies large costs for interstate mobility. We estimate that teachers who split a thirty-year career between two pension plans often lose over half their net pension wealth compared with teachers who complete a career in a single system. Plan options that permit purchases of service years mitigate few or none of these losses. It is difficult to explain these patterns of costs and benefits on efficiency grounds. More likely explanations include the relative influence of senior versus junior educators in interest group politics and a coordination problem between states. © 2010 American Education Finance Association
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 5 (2010)
Issue (Month): 4 (October)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://www.mitpressjournals.org/loi/edfp|
When requesting a correction, please mention this item's handle: RePEc:tpr:edfpol:v:5:y:2010:i:4:p:519-557. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites)
If references are entirely missing, you can add them using this form.