New paper from Fordham by Matt Chingos and Marty West looks at a natural experiment on teacher pensions that unfolded in Florida over the last decade (pdf). It’s significant for a couple of reasons. One, there is still more noise than signal in the unfolding debate about changes to teacher retirement schemes. It’s clear there is a serious sustainability problem, the best fixes that are both actuarially sound and good public policy for schools and teachers, much more contested. This is a useful analysis to help examine the issue. Second, and more generally, glasnost?! This is the kind of research that is sorely needed. Getting data on pensions has been a struggle for researchers. Some data systems can’t talk to one another and in too many places there is a deliberate effort not to share data. Even absent a Florida-like plan there are choices that workers in every state make that researchers could analyze with access to the appropriate data.
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A more serious Friday evening response:
1) Apart from the policy structure of the Florida Retirement Investment Plan (in some ways pretty close to what Sunstein & Thaler would recommend as universal for all U.S. employees), Florida is not a great state as a target — FRS is pretty well-funded and has been for almost two decades.
2) Where Florida and other states have erred in the past few years is in stretching out the vesting period. This is precisely the type of pension structure that drives many people nuts for its perversity. FWIW, I don’t know of any unions that want extended vesting.
3) I vaguely recall a guest issue of one of the ed finance journals a few years ago full of pension-related papers. It sank in competition with other ideas. If this is Glasnost, was that detente?
Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.
How can that be? Because the “contributions” consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.