June 20, 2019
The Hunt Institute recently gathered North Carolina policymakers and education stakeholders to discuss the role of pensions in the broader teacher compensation conversation, and how pensions may impact efforts to recruit and retain educators. This was the final convening of our spring education policy series, intended to help legislators learn more about issues affecting North Carolina’s students and teachers during the legislative long session.
Chad Aldeman, a senior associate partner at Bellwether Education Partners and an expert on teacher pension policy, began the morning with a brief presentation focused on how teacher pensions work in North Carolina and how they affect teacher recruitment and retention.
Across the country, about 90 percent of public school teachers are enrolled in statewide “defined benefit” pension plans, where they are guaranteed a specific benefit amount in retirement, depending on their salary and years of service. On average, schools contribute 17 percent of each teacher’s salary toward pension plans, and these costs are rising rapidly. Here in North Carolina, contributions to the North Carolina Retirement System on behalf of educators have roughly tripled over the past 15 years. However, Chad argued that benefits for workers have gotten worse, even as costs have risen.
Pensions are often seen as an important tool to help schools attract and retain teachers, but many state pension systems don’t reflect the reality that today’s workforce is much more mobile than it was when the systems were first created.
In most states, teachers are not immediately entitled to pension benefits and must work a certain number of years to qualify for, or “vest,” a minimum pension amount. In North Carolina, teachers must work for five years in order to qualify for the North Carolina Teachers and State Employees Retirement System; however, many new teachers do not stay in the profession long enough to vest their pensions. This results in more than half of new hires leaving with no pension at all, and a third who receive some benefit but don’t break even on their own contributions. That leaves fewer than 20 percent of teachers earning their full career pension benefit.
Chad also found that pensions aren’t necessarily the recruitment tool they once were. Rising employee contribution rates haven’t deterred new teachers from entering the profession, and early-career teachers do not stay just to vest their pension benefits. Pensions do seem to help retain teachers nearing retirement age, but factors like salary, geography, and general working conditions are much more powerful recruitment and retention tools for younger teachers.
Thanks to Chad and to all of our event attendees for thoughtfully engaging with us on this topic. A Key Takeaways document was shared with our participants to capture significant points and provide additional resources.
The Hunt Institute is excited to continue providing opportunities for North Carolina policymakers to engage with researchers and practitioners on relevant and timely issues, so please check back soon to learn what we’ll be discussing this fall.
Allie Jaarsma, Policy & Research Intern
Allison Goff, Policy Analyst