Teacher pensions benefit administrators

School superintendents and administrators have no incentive to reform teachers’ pensions, write a trio of University of Missouri economists. Administrators “reap the largest benefits” from the pension system, write Cory Koedel,  Shawn Ni and Michael Podgursky in Education Next.

. . . the pension system transfers wealth from lower-income professionals to higher-income professionals. Beginning teachers are subsidizing a handsome payoff to better-paid administrators, who are the appointed guardians of the public interest in the education system.

Virtually all public school teachers and administrators benefit from generous defined-benefit retirement plans. A Missouri teacher with 30 years of experience earns 75 percent of her final average salary. The median retirement age is 56. Superintendents and other administrators get more for their pension contribution than senior teachers.

There’s no evidence these pension plans improve the quality of the teaching workforce, the economists write.

It seems likely that schools could do a better job of recruiting young teachers by putting money in upfront salaries rather than in end-of-career pension benefits.

Given the powerful incentives that are in place, there is no reason to expect school administrators or their organizations to support reforms that would provide a more modern and mobile retirement system for young educators, like those found in nearly all other professional employment settings.

When it comes to pensions, “labor and management are on the same side of the bargaining table,” they conclude.

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  1. Mark Roulo says:

    “When it comes to pensions, ‘labor and management are on the same side of the bargaining table,’ they conclude.”


    As long as the money doesn’t run out. I’d be a bit concerned about my pension if I was a Detroit public school teacher (retired or not). Or one in Stockton. But maybe those pensions are fully funded?

  2. Richard Aubrey says:

    In the private sector, we have the union on one side and a greedy, bloated, rapacious plutocrat on the other. The latter tries very hard to keep his ill-gotten gains which he has viciously stolen from the unfortunates who are employed by him.
    IOW, it’s an even fight. Probably come out in the middle.
    In the public sector, nobody’s on the side of trying to keep things moderate. There is no side which stands to lose by paying more. In fact, since public entities are pretty sanguine about not funding as ERISA requires private firms to do, nobody pays for years and years after the “negotiations”.
    FDR knew this.

  3. Foobarista says:

    Beware! Those awesomely talented academic bureaucrats may quit en-masse and get eight-figure-salary jobs in the dreaded Private Sector if we start talking about their benefits.

    Or so they argue…