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ERIC Number: EJ902751
Record Type: Journal
Publication Date: 2010
Pages: 39
Abstractor: As Provided
ISBN: N/A
ISSN: ISSN-1557-3060
EISSN: N/A
Distribution of Benefits in Teacher Retirement Systems and Their Implications for Mobility
Costrell, Robert M.; Podgursky, Michael
Education Finance and Policy, v5 n4 p519-557 Fall 2010
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.
MIT Press. 55 Hayward Street, Cambridge, MA 02142. Tel: 617-253-2889; Fax: 617-253-1709; e-mail: journals-rights@mit.edu; Web site: http://bibliotheek.ehb.be:2329/loi/edfp
Publication Type: Journal Articles; Reports - Descriptive
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
IES Funded: Yes
Grant or Contract Numbers: R305A060034; R305A060067