Research Report Can California Teacher Pensions Be Distributed More Fairly?
Richard W. Johnson, Benjamin G. Southgate
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The California State Teachers’ Retirement System has been grossly underfunded for the past decade. State policymakers have responded by cutting plan benefits for new hires and raising teachers’ required plan contributions. These changes, however, have undermined teachers’ retirement income security. Only 35 percent of new hires will receive pensions worth more than the value of their required plan contributions. Most new hires would have better financial outcomes if they could opt out of the mandatory retirement plan and invest their contributions elsewhere. Additional plan reforms should focus on changing the benefit formula to distribute pensions more equitably across the workforce.
Research Areas Education Wealth and financial well-being Aging and retirement Taxes and budgets
Tags Pensions School funding Wages and nonwage compensation Teachers Retirement State and local tax issues Retirement policy
Policy Centers Income and Benefits Policy Center