The Effects of Defined Benefit Pension Incentives and Working Conditions on Teacher Retirement Decisions

2006 ◽  
Vol 1 (3) ◽  
pp. 316-348 ◽  
Author(s):  
Joshua Furgeson ◽  
Robert P. Strauss ◽  
William B. Vogt
Keyword(s):  
Defined Benefit ◽  
Public School Teachers ◽  
Present Value ◽  
Female Teachers ◽  
Retirement Incentives ◽  
Teacher Retirement ◽  
Percentage Points ◽  
Retirement Behavior ◽  
Older Teachers ◽  
Pension Benefits

The retirement behavior of Pennsylvania public school teachers in 1997–98 and 1998–99, a period when state early retirement incentives were temporarily increased, is modeled using a choice framework that emphasizes both pecuniary and nonpecuniary factors of the retirement decision under a defined benefit retirement plan. We find each to have large and statistically significant effects on the decision to retire. The present value of inflation-adjusted pension benefits of a public defined benefit plan is found to be an important and sizable determinant of retirement. A $1,000 (or .4 percent) increase in the real present value of pension benefits is estimated to increase the probability of retirement for female teachers by .02 to .08 percentage points; this implies an elasticity of retirement for female teachers with respect to the present value of real pensions of between 2.0 to 3.5. These estimated defined benefit pension elasticities for female teachers are higher than for male teachers, whose comparable retirement elasticity was 1.9 to 2.5. A $1,000 increase in current salary is found to reduce themean probability of retirement by .1 percentage points, implying an elasticity of −1.4. Thus, substantial salary increases systematically reduce the probability of older teachers retiring.

Rethinking the Structure of Teacher Retirement Benefits: Analyzing the Preferences of Entering Teachers

2018 ◽  
Vol 41 (1) ◽  
pp. 63-78 ◽  
Author(s):  
Josh B. McGee ◽  
Marcus A. Winters
Keyword(s):  
New York ◽  
New York City ◽  
Economic Incentives ◽  
Certainty Equivalent ◽  
Defined Benefit ◽  
Public School Teachers ◽  
Retirement Plans ◽  
School Teachers ◽  
Retirement Benefits ◽  
Teacher Retirement

Most U.S. public school teachers participate in defined benefit retirement plans, which base benefits on years of service and their last few years of salary. These plans are often backloaded and include sharp economic incentives. We consider the implications of transitioning to a cost-equivalent defined benefit plan under which teachers would earn benefits more evenly across their careers. We show that new teachers who are risk averse would prefer the alternative plan. The magnitude is often substantial. For example, for an entering teacher the certainty equivalent for the CB plan is about 2.1 times the certainty equivalent for the respective FAS plan in New York City and 29 times larger than the respective heavily backloaded FAS plan in Philadelphia.

How Pensions Contribute to the Premium Paid to Experienced Public School Teachers

2017 ◽  
Vol 46 (5) ◽  
pp. 250-258 ◽  
Author(s):  
Joshua B. McGee ◽  
Marcus A. Winters
Keyword(s):  
New York ◽  
Public School ◽  
Experienced Teachers ◽  
Defined Benefit ◽  
Public School Teachers ◽  
Retirement Plans ◽  
Cash Balance ◽  
Total Compensation ◽  
Public School Systems ◽  
Pension Benefits

Many argue that public school systems should stop linking teachers’ salaries so closely to their years of experience. However, the effect of deferred retirement compensation on the premium paid to experienced teachers has, to date, been underappreciated. To shed more light on this issue, we calculate the total compensation earned by teachers in New York City and Philadelphia from both salary and deferred retirement compensation under each system’s currently operating defined-benefit plan. Retirement compensation in both cities is back-loaded, which substantially increases the premium paid to highly experienced teachers. In late-career years, teachers often earn a larger compensation premium from the accrual of pension benefits than from salary. We show that cash-balance retirement plans, which are less back-loaded, would substantially reduce experience premiums without reducing the total compensation for the average entering teacher.

scholarly journals Are financial retirement incentives more effective if pension knowledge is high?

2017 ◽  
Vol 17 (3) ◽  
pp. 278-315
Author(s):  
MATTHIAS GIESECKE ◽  
GUANZHONG YANG
Keyword(s):  
Financial Incentives ◽  
Financial Incentive ◽  
Information Provision ◽  
Ceteris Paribus ◽  
Retirement Incentives ◽  
Treatment Parameter ◽  
Retirement Behavior ◽  
Financial Consequences ◽  
Pension Benefits ◽  
Available Information

AbstractWe study the combined effects of financial incentives and information provision on retirement behavior. To elicit preferences for retirement timing in the laboratory, we ask subjects to make retirement choices under different payoff schemes that introduce variation in financial incentives. Testing ceteris paribus conditions of the financial incentive alone shows a considerable delay of retirement once early retirement becomes financially less attractive. However, varying available information as another treatment parameter reveals considerable heterogeneity in the functioning of these incentives. Subjects who are explicitly informed about the expected pension wealth respond more strongly to financial incentives compared with those who only know their pension annuity. Being informed about a forward-looking measure of pension benefits makes the financial consequences of retirement choices more salient to the decision maker.

Retirement incentives and behavior of private and public sector workers

2020 ◽  
pp. 1-17
Author(s):  
Courtney Coile ◽  
Susan Stewart
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Financial Incentives ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Quarter Century ◽  
The Past ◽  
Retirement Incentives ◽  
Retirement Behavior ◽  
Public Sector Workers

Abstract Over the past several decades, private sector workers in the USA with employed-sponsored pensions have experienced a dramatic shift from defined benefit (DB) to defined contribution plans, while this trend has been less pronounced for public sector workers. In this paper, we use data from the Health and Retirement Study to explore changes in the retirement incentives and retirement behavior of public and private sector workers over the past quarter-century. We find that both groups have become less likely to report having a DB pension or any pension. Compared to their private sector counterparts, public sector workers have a higher level of retirement wealth and a larger financial gain from continued work at older ages, and these differences by sector are growing across cohorts. Both groups respond to financial incentives in making retirement decisions. However, growing differences by sector in the gain to continued work do not appear to have translated into diverging retirement behavior, as we observe similar trends in the two groups.

scholarly journals Creative thinking and entrepreneurial behavior among k-12 teachers: a predictive study

Psico ◽  
2018 ◽  
Vol 49 (4) ◽  
pp. 395 ◽  
Author(s):  
Roque Do Carmo Amorim Neto ◽  
Vinicius Picanço Rodrigues ◽  
Arnaldo Melendez
Keyword(s):  
Creative Thinking ◽  
Teaching Experience ◽  
Public School Teachers ◽  
Entrepreneurial Behavior ◽  
Female Teachers ◽  
Years Of Teaching Experience ◽  
The Mean ◽  
Older Teachers ◽  
K 12 ◽  
Predictive Study

This study aimed at investigating the influence of creative thinking on teachers’ entrepreneurial behavior and the demographic characteristics correlated with teachers’ entrepreneurial behavior. Participants were 344 U.S. public school teachers. The mean age was 42.1 (SD = 11.5) and the mean years of teaching experience was 14.6 (SD = 10). Female teachers comprised the larger gender group (n = 250, 73%). The results indicated that age and creative thinking were the only variables showing significant unique contributions to entrepreneurial behavior. These findings highlight the importance of creativity for teachers trying to innovate in the classroom. The results also indicate that accumulated experience allows older teachers to better understand how the different layers of the educational system function. ***  Pensamento criativo e comportamento empreendedor entre professores da educação básica: um estudo preditivo ***Este estudo teve como objetivo investigar as influências do pensamento criativo e de características demográficas no comportamento empreendedor de professores do ensino básico e médio. Os participantes foram 344 professores de escolas públicas dos Estados Unidos. A idade média foi de 42,1 (desvio padrão = 11,5) e a média de anos de experiência foi de 14,6 (desvio padrão = 10). Professoras compreendem a maioria da amostra (n = 250, 73%). Os resultados indicaram que a idade e pensamento criativo são as únicas variáveis significativas que contribuem para o comportamento empreendedor em professores. Esses resultados demonstram a importância da criatividade para professores que tentam inovar em sala de aula. Os resultados também mostraram que a experiência acumulada permite aos professores mais velhos entender melhor como as diferentes camadas do sistema educacional funcionam.Palavras-chave: Pensamento criativo; Variáveis demográficas; Comportamento empreendedor; Professores. 

Disentangling annuities and transfers: The case of Greek retirement benefits

2020 ◽  
Vol 22 (3) ◽  
pp. 287-305
Author(s):  
Chrysa Leventi ◽  
Manos Matsaganis
Keyword(s):  
Net Present Value ◽  
Relative Importance ◽  
Present Value ◽  
Retirement Benefits ◽  
Longitudinal Approach ◽  
Social Contributions ◽  
The Difference ◽  
Intragenerational Equity ◽  
Pension Benefits ◽  
Spending Cuts

The aim of this paper is to estimate the relative importance of annuities and transfers in Greek retirement benefits and to assess their impact on intergenerational and intragenerational equity. We analyse a large sample of private sector workers retiring in 2008. Adopting a longitudinal approach, we compute the net present value of contributions paid and benefits received by individuals over their life course. We define the difference between the two as the implicit transfer, which can be either positive or negative. Lifetime retirement benefits are calculated both according to the rules in place at the time of retirement, and after the spending cuts introduced in 2010-2013. Our findings suggest that for the vast majority of retirees pension benefits are heavily subsidized, i.e. exceed the actuarially fair level paid for by social contributions. Austerity policies have reduced but not eliminated this subsidy.

scholarly journals Peaks, Cliffs, and Valleys: The Peculiar Incentives in Teacher Retirement Systems and Their Consequences for School Staffing

2009 ◽  
Vol 4 (2) ◽  
pp. 175-211 ◽  
Author(s):  
Robert M. Costrell ◽  
Michael Podgursky
Keyword(s):  
Early Years ◽  
Defined Benefit ◽  
Employee Behavior ◽  
Key Factors ◽  
Pension Systems ◽  
Teacher Retirement ◽  
School Staffing ◽  
Dramatic Decline ◽  
Highly Nonlinear ◽  
Retirement Systems

This article examines the pattern of incentives for work versus retirement in six state teacher pension systems. We do this by examining the annual accrual of pension wealth from an additional year of work over a teacher's career. Accrual of wealth is highly nonlinear and heavily loaded at arbitrary years that would normally be considered mid-career. One typical pattern exhibits low accrual in early years, accelerating in the mid- to late fifties, followed by dramatic decline or even negative returns in years that are relatively young for retirement. Key factors in the defined benefit formulas that drive such patterns are identified along with likely consequences for employee behavior. The authors examine efficiency and equity consequences of these systems as well as options for reform.

scholarly journals The transition to NDC in Italy: assessing distributive and financial effects

2021 ◽  
pp. 1-16
Author(s):  
Carlo Mazzaferro
Keyword(s):  
Net Present Value ◽  
Pension System ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Ratio Distribution ◽  
Actuarial Fairness ◽  
Notional Defined Contribution ◽  
High Level ◽  
Pension Benefits

Abstract Moving from a Defined Benefit (DB) to a Notional Defined Contribution (NDC) pension formula creates significant re-distributive effects. We estimate the amount and the intensity of these effects in the case of the Italian transition to NDC, which began in 1995. Based on administrative data of the main Italian pension scheme (FPLD), we study the evolution of yearly inequality within old-age pension benefits. Furthermore, we study the adequacy and the actuarial fairness of the pension system, by estimating the replacement rates and the Net Present Value Ratio distribution for workers who retired in the period 1996–2019. Our results show that the very generous interpretation of acquired rights determined by the 1995 reform has contributed to maintaining a high level of adequacy and a significant level of intergenerational imbalance. The financial costs of this imbalance are estimated and its extent is significant.

scholarly journals Job Satisfaction Among Public and Private School Teachers

2015 ◽  
Vol 1 (1) ◽  
pp. 1-13
Author(s):  
Maher Bano ◽  
Syeda Kaniz Fatima Haider ◽  
Alay Ahmad
Keyword(s):  
Job Satisfaction ◽  
Public Schools ◽  
Public School ◽  
Private Schools ◽  
Private School ◽  
Sampling Technique ◽  
Public School Teachers ◽  
School Teachers ◽  
Female Teachers ◽  
Significant Difference

This paper compares job satisfaction of private and public school teachers in Peshawar. Sample comprised of sixty (N=60) teachers of both genders ranging in age from 25-50 years. Thirty (n=30) were public school teachers including fifteen (n=15 male) and fifteen (n=15) female teachers, thirty (n=30) private school teachers they included fifteen (n=15) male and fifteen (n=15) female teachers. The data was collected through non-probability sampling technique from Mardan city of Khyber Pakhtunkhwa. A questionnaire was constructed for the purpose of measuring Job satisfaction for teachers. The alpha reliability coefficient was significantly high, thus ensuring the reliability of the scale. The results showed that public teachers are more satisfied with their job as compared to teachers working in private schools. It was further revealed that there was no significant difference between male and female teachers working in public schools and private schools.

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