The Yankee Institute for Public Policy “develops and advances free-market, limited-government solutions in Connecticut” and today they focused on our blog entry on Teacher Pensions (for which I was interviewed) :
Connecticut teachers receive the highest average pensions, while Connecticut state employees rank second according to an analysis by a New Jersey based actuary.
Connecticut’s teachers averaged $50,502 in pension payments putting them in the top spot, ahead of Illinois. State employees ranked second in the nation, behind California, with average pensions of $40,438.
John Bury, an actuary and head of Bury & Associates, collected data on 154 public retirement plans across the country and shared it on his website, BuryPensions.com. Twenty-six of the plans reviewed were specific only to teachers.
The figures also showed that Connecticut’s teacher pension system was only 60 percent funded leaving a $10.8 billion dollar shortfall. This made Connecticut 9th worst among the twenty-six teacher-only plans.
“There is very little attention paid to this anywhere,” Bury said. His interest in public retirement data stems from his work consulting for private retirement plans where close monitoring and adequate funding are required. Bury said that public retirement plans have no such constrictions. “That just seems bizarre to me. That would never happen in the private sector.”
Bury notes that teasing the information out from actuarial data can be difficult at times because some plans may include college professors who earn higher salaries or janitorial staff who earn less. “There are so many nuances about these things,” he said. “But I think we got it pretty right.”
Connecticut teachers also have one of the highest average salaries in the nation, trailing only New York and Washington D.C., which contributes to the higher pensions. The average teacher salary was $69,766 in the 2012-2013 school year, according to the National Center for Education Statistics, while the national average was $56,383.
If teachers work to normal retirement age, they earn pensions equal to 2 percent of their final salary for each year they worked. Therefore, if a teacher worked for 25 years they would receive a pension equal to roughly 50 percent of their final salary.
In 2014, The Day reported that Connecticut teacher pensions averaged $47,386 and that most teachers work 35 years, thus increasing their pension payment.
Unlike state employees and most other workers, Connecticut teachers don’t participate in Social Security. They don’t pay the 6.2 percent tax while working and don’t receive benefits when retired. Instead, teachers contribute 6 percent of their salaries toward their retirement. According to the Social Security Administration, the average yearly benefit is $14,845.80.
- Coverage under Social Security, which became quasi-mandatory in 1991, should be considered when comparing pension benefits among states since states where public employees (like Connecticut teachers) are not covered by Social Security can be expected to have higher public pension benefits,
- As I whined about in the Yankee blog, there is very little attention paid to the public pension crisis considering the staggering amount of money involved in either adequately funding or defaulting on these obligations. Those few of us concerned can only dream of one day getting even .001% of the publicity that a football player not standing for the Star Spangled Banner gets.