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    Report: Defined Benefit Plans Increase Retention and Reduce Turnover Costs

    Issues & Perspectives

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    November 1, 2017

    New study finds defined benefit plans give educational employers an effective recruitment tool and ensure retirement security for teachers.

    Seems like a logical conclusion. So why are critics of defined benefit (DB) plans saying DB plans are ineffective and that they shortchange teachers?

    The National Institute on Retirement Security recently released a detailed study conducted by Dr. Christian Weller, Professor of Public Policy at the University of Massachusetts Boston. The report, “Win-Win: Pensions Efficiently Serve American Schools and Teachers,” presents facts that show how DB pension plans are good public policy, in addition to enjoying overwhelming public support.

    A quick summary of Dr. Weller’s findings:

    • DB pensions provide important incentives for effective teachers to stay in the teaching profession.
    • DB pensions ensure teachers save for retirement – avoiding the “do-it-yourself” investment strategy that does not work for everyone.
    • DB pensions reduce income inequality for low- and middle-income earners due to the current structure of the tax system.
    • DB pensions provide more retirement income and are less risky when compared to defined contribution plans.

    The report concludes that DB plans are a key component of teacher compensation and it’s good public policy to offer them to educators.

    Read the full report.

    See PERA on the Issues, Independent Analysis: PERA Wins Gold

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