fbpx

Latest Posts

Home

Facebook

Twitter

Search
About

What is the average teacher pension in Minnesota?

For newly retired Minnesota teachers, the “average pension” from the past ten years is $27,593.21, according to TeacherPensions.org, a project of Bellwether Education Partners.

But the estimated percentage of new teachers who will actually receive a pension is 50 percent. Which means 50 percent of new Minnesota teachers will likely leave the system before qualifying for a pension, despite contributing to it. And because Minnesota’s pension plan is not fully portable, teachers who leave the system early cannot even take at least a partial employer contribution with them. If they decide to withdraw what they contributed to the plan, they will only receive their contributions plus interest (or, basically the same amount they would have earned by putting the contributions into a savings account).

The Teachers Retirement Association (TRA) manages pensions for the majority of teachers in Minnesota. The plan supplements Social Security and Medicare benefits by providing teachers with defined pension payments when they retire.

The State of Minnesota’s unrealistic assumptions about investment returns on pension assets has left all the funds short on assets to pay future benefits. The state says it is short by around $20 billion (my colleague Kim Crockett calculates the number is closer to $40 billion-$60 billion). The numbers can be elusive, as they all depend on complicated assumptions.

TRA said last year that its share of that unfunded liability is around $9 billion, with only 70 cents on the dollar to pay teacher benefits. Today’s younger teachers pay more into the fund than retired teachers did, with about half of younger teachers’ contributions going to the unfunded liability.

The financial health of the pension plan affects the fund’s long-term viability and its ability to offer real retirement security for employees. If the TRA pension fund is not appropriately reformed, Minnesota educators may not get the retirement benefit they have been promised.

Here is a helpful three-minute breakdown that explains why the current defined benefit does not work well for most teachers:

Comments

Subscribe

Categories

Upcoming Events

  • Morning in Minnesota: St. Cloud

    Location: St. Cloud

    Sign up HERE! Courtyard by Marriott St. Cloud 404 West Saint Germain Street St. Cloud, MN, 56301 Please join Center of the American Experiment on Tuesday, July 21 for breakfast with Center policy fellow and education expert Catrin Wigfall as she explains K-12 education in the state and its persistent disparities despite decades of increased spending. Following her presentation, Catrin will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude   Catrin Wigfall is a Policy Fellow at Center of the American Experiment. She is also the director of EducatedTeachersMN and EmployeeFreedomMN. Catrin’s…

    Register Now
  • Morning in Minnesota: Marshall

    Location: Marshall Golf Club

      Sign up for this event HERE! Please join Center of the American Experiment on Thursday, July 16 at Marshall Golf Club for a breakfast with Center economist, John Phelan, as he discusses Minnesota’s economic future. Following his presentation, John will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude John Phelan is a graduate of Birkbeck College, University of London, where he earned a BSc in Economics, and of the London School of Economics where he earned an MSc. He worked in finance for ten years before becoming a professional economist. He…

    Register Now
  • 2020 Annual Dinner Featuring Sarah Huckabee Sanders- Now in September!

    Location: Minneapolis Convention Center Ballroom 1301 2nd Ave S Minneapolis, MN 55403

    NEW SEPTEMBER DATE: We have made the difficult decision to once again move the date of this event. We will now host our Annual Dinner on Saturday, September 19th. All tickets bought for the April 4th, or June 18th dates are transferrable. We are so sorry for any inconvenience this has caused, but we look forward to seeing you on September 19! Direct any questions to Kathryn Hinderaker (kathryn.hinderaker@americanexperiment.org or 612-428-7005).   American President: The Unorthodox Approach to Politics that Changed the World. Sarah Huckabee Sanders served as White House Press Secretary for President Donald J. Trump from 2017 to…

    Register Now