Unfunded Liabilities in Teacher Pensions Rising
A new report says teacher pensions across the country have an unfunded liability of nearly $325 billion. The National Council on Teacher Quality issued its findings today. Council Vice President Sandi Jacobs says one problem is retirement eligibility. In Kentucky, teachers can retire with full lifetime benefits after 27 years of service, regardless of age.
For a person who began their teaching career straight out of college, that could mean retirement as early as age 49.
“That costs the Kentucky pension system almost $800,000 in retirement benefits before that teacher reaches age 65, a more traditional retirement age. So these early retirements based on years of service rather than age add up to tremendous costs to the system.”
Jacobs says the eligibility rules put older teachers at a disadvantage. The National Council on Teacher Quality says pensions should be fair to all teachers and allow for more flexibility. Ten states have changed their systems in recent years to base teacher retirement eligibility solely on age, saving about $450,000 in retirement benefits per teacher.