LEXINGTON, Ky. - Teacher pensions across the country are severely underfunded, inflexible, and unfair to employers and employees, according to a new report out Thursday.
Data collected by the National Council on Teacher Quality show that teacher pensions in the U.S. have unfunded liability of nearly $325 billion. That includes $11 billion for the Kentucky Teacher Retirement System.
“We have to take a look at what’s good for teachers, what’s good for taxpayers, and ultimately that’s what’s going to be good for students as well,” says NCTQ Vice President Sandi Jacobs.
Among the report’s recommendations is a change in retirement eligibility for teachers. In Kentucky, teachers can retire with full lifetime benefits after 27 years of service regardless of age. For a teacher who starts their career straight out of college at age 22, they could retire 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,” says Jacobs.
The NCTQ report cites ten states who have changed their their systems in recent years to base teacher retirement eligibility solely on age, saving about $450,000 in retirement benefits per teacher.
Jacobs says lawmakers are often reluctant to make tough policy changes that could be politically challenging.