Teacher Retirements Higher in Public Sector

Analysis of new data from the U.S. Department of Labor shows that employer contributions to retirement benefits for public school teachers in 2008 were substantially higher than for private professionals, a group that includes lawyers, physicians, financial managers, engineers, computer programmers, and others.

According to new research by economists Robert Costrell of the University of Arkansas and Michael Podgursky of the University of Missouri-Columbia, employer contributions to teacher pensions grew from under 12 percent of earnings in 2004 to well over 14 percent in 2008, while pension costs for private sector professionals remained essentially unchanged.

Costrell’s and Podgursky’s research, published in a recent issue of Education Next (Spring 2009), reveals that employer contributions to public school teachers’ retirement benefits, as a percent of earnings, were more than 4 percentage points higher than in the private sector, up from less than 2 points higher in 2004 — a gap that has more than doubled in the past four years.

Costrell and Podgursky found that when compared with the private sector, total employer contributions are higher for teachers whether or not they are also covered by Social Security. In states with employer contribution to social security benefits for teachers, the total average contribution to pensions is over 15 percent of earnings; in states without, the average is just over 11 percent of earnings. In both cases, teachers benefit from greater average employer contributions than those received by private sector employees, which run just over 10 percent of earnings.

Analysis of new data from the U.S. Department of Labor shows that employer contributions to retirement benefits for public school teachers in 2008 were substantially higher than for private professionals, a group that includes lawyers, physicians, financial managers, engineers, computer programmers, and others.

According to new research by economists Robert Costrell of the University of Arkansas and Michael Podgursky of the University of Missouri-Columbia, employer contributions to teacher pensions grew from under 12 percent of earnings in 2004 to well over 14 percent in 2008, while pension costs for private sector professionals remained essentially unchanged.

Costrell’s and Podgursky’s research, published in a recent issue of Education Next (Spring 2009), reveals that employer contributions to public school teachers’ retirement benefits, as a percent of earnings, were more than 4 percentage points higher than in the private sector, up from less than 2 points higher in 2004 — a gap that has more than doubled in the past four years.

Costrell and Podgursky found that when compared with the private sector, total employer contributions are higher for teachers whether or not they are also covered by Social Security. In states with employer contribution to social security benefits for teachers, the total average contribution to pensions is over 15 percent of earnings; in states without, the average is just over 11 percent of earnings. In both cases, teachers benefit from greater average employer contributions than those received by private sector employees, which run just over 10 percent of earnings.

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