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Did teacher retirements surge in 2020?

According to an Education Week survey conducted in July, one-third of teachers said they were “somewhat likely” or “very likely” to leave their job this year given the coronavirus and personal health concerns.

But fears of a mass exodus did not transpire. Building off of a USA Today article that recently announced fear of a teacher retirement surge may have been “overblown,” Chad Aldeman and Alex Spurrier with Bellwether Education Partners reached out to teacher pension plans for every state regarding the number of retirements in 2020.

After attempting to canvass all 50 states and Washington, D.C., we were able to get retirement data for Alabama, Arizona, Connecticut, Kentucky, Massachusetts, New Hampshire and Pennsylvania. While this is not a random sample, it does capture about 865,000 active workers, including teachers and other education employees. Only one of the states in our sample, Alabama, reported a larger number of retirements this year than in recent years, and that by 7 percent.

Collectively across our sample, we found retirements were down in 2020 by about 5 percent.

While Aldeman and Spurrier recognize they don’t have sufficient data to explain why retirements are down this year, they do point out that the way pension plans are structured tends to “keep teacher retirement patterns relatively steady,” regardless of external economic factors.

About 90 percent of public school teachers are enrolled in defined-benefit pension plans, where retirement benefits are guaranteed based on the worker’s years of experience and age. Those plans offer predictable, guaranteed benefit payments…. In addition, about two-thirds of public school teachers serve in states or districts that provide health care benefits to eligible retirees.

Research has found that these structural factors make a difference. Veteran teachers are aware of their pension benefits and time their retirements accordingly. Retiree health care benefits also give teachers confidence to retire at younger ages than they otherwise would. These factors help keep teacher retirements relatively stable year to year. Even during economic recessions, teacher retirement patterns continue mostly as normal.

School closures also “may have prompted near-retirement teachers to remain in their Zoom classrooms,” Aldeman and Spurrier add.

But that doesn’t change the fact that most states (including Minnesota) have set up expensive, debt-ridden retirement systems that have left pension funds short on assets to pay future benefits. When benefits are backloaded and new teachers’ paychecks are used to protect pension payments made to older teachers, the financial health of the pension plan and the fund’s long-term viability are affected. The estimated percentage of new Minnesota teacher who will actually receive a pension is 50 percent—meaning, 50 percent of new teachers will likely leave the system before qualifying for a pension, despite contributing 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 (which could be part of the reason why teachers aren’t retiring early). 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).

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