Home Teachers and Teaching The Teacher Pension Cost Gap Continues to Widen

The Teacher Pension Cost Gap Continues to Widen

In the Spring 2009 issue of Education Next, Robert Costrell i presented data for the growing gap between employer pension costs for public school teachers and employer pension costs for private sector managers and professionals.? The real key chart in this article was a time-series showing pension costs (including Social Security) to be a percent of salaries for any two groups.? These are definitely computed within the National Compensation Survey, a manager survey? on wages and benefits conducted quarterly via the Bls (BLS) of your U.S. Department at work.??? For reasons of sample size, the BLS only began releasing data on public school teachers in March, 2004.?? The newest data we reported in the article was from September 2008.? We revealed that pension benefit expenses are significantly larger for public school teachers compared to private sector managers and professionals, and the the space was widening.

This gap continues to widen.?? We reproduce below an updated time series like the latest quarterly data (June 2009), that’s just released last week.? The vertical dotted line shows the top point of any time series reported with our article.?? In March 2004, pension costs were 1.9 percentage points higher for teachers than for private sector managers and professionals.? By September? 2008 this gap had much more than doubled to 4.2 points, as reported while in the article.?? By June 2009, the gap had grown further still, to 4.9 percentage points.??? As is also readily affecting the graph, the reason behind the widening on the gap is growing pension costs for public school teachers.? Retirement benefit costs form of hosting sector managers and professionals were relatively flat.

As we noted in this article, as large as this gap is, it understates the gap as a whole retirement benefit costs because BLS is not going to collect data on retiree medical health insurance.?? Alot of teachers can access getting some subsidized retiree medical insurance, this benefit has just about disappeared in private sector firms.

The massive unfunded liabilities of teacher pension funds? virtually guarantee that these costs will keep to boost for public schools.?? On top of that, some states may also be increasing employee contributions to shore up these funds.? An essential? question for school administrators (and taxpayers) is actually these? traditional defined benefit pension systems are the perfect technique to recruit, retain, and motivate a superior quality teaching workforce.