Public School Employees Retirement Benefits Outshine Others

Economists Robert Costrell of the University of Arkansas and Michael Podgursky from the University of Missouri-Columbia, found that employer contributions to teacher pensions grew from under 12% of earnings in 2004 to well over 14% in 2008, while pension costs for private sector professionals remained essentially unchanged at just over 10%.

According to a press release, for teachers in states and districts where they are eligible for social security, the economists calculated the weighted average employer contribution to be 9% of earnings, compared to the 4.7% estimate of employer contributions for fiscal year 2007 to retirement for private-sector professionals and managers, calculated from the BLS data – a 4.3% difference.

For states and districts where teachers are not in Social Security, Costrell and Podgursky calculated the average employer contribution at 11.1% of earnings – considerably higher than the 4.7% for private-sector professionals. But, even more surprisingly, the press release said, the teachers’ average employer contribution even exceeds private-sector professionals combined employer contributions to retirement and Social Security, which averaged 10.3% for FY07.

The authors note that their estimate of the gap in retirement benefits favoring teachers is underestimated since the U.S. Department of Labor survey data on which they rely does not include retiree health insurance, a benefit that is increasingly rare in the private sector.

The research report is here .