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This State Just Proposed an Amazing Retirement Option for Teachers
posted by: Alana | November 20, 2015, 07:04 PM   


What would you do if you were offered the option to choose between a traditional pension plan and the opportunity to invest in a retirement plan similar to a 401(k)? Teachers in Indiana may very well get that choice if key lawmaker and chairman of the House Education Committee Rep. Bob Behning has anything to say about it.


While the teacher union in Indiana is quick to claim the idea “won’t do anything to support the profession,” they don’t seem to be able to site any specific drawbacks to offering it either. As the profession grows and evolves, advocates maintain the option may attract new and experienced professionals to the classroom.


Here’s the difference…


Traditional Plan:

Teachers are paid based on salary and years of service but are only vested after a certain number of years. If a teacher moves or leaves the profession before they can collect, they forfeit any contributions they made.


New Plan:

Similar to a 401(k) where usually both employers and employees contribute to the plan, money would be invested in mutual funds, stocks, and other opportunities that magnify savings. Teachers would then take that money with them if they were to move on for any reason.


The proposed Indiana plan is said to look similar to one the state’s lawmakers recently adopted as their own retirement plan. In this plan, legislators invest 5% of their salary into their retirement and the state matches a portion of that investment.


Rep. Behning says that the intent behind this proposal is to cater to and attract young millennial teachers entering the field of education after a bout in their given industry. Furthermore, the plan is expected to be relatively cost-neutral to the state and would not involve a reduction of benefits.


“A lot of millennials will tell you they want the flexibility to do other things in life,” says Behning. “They may not stay in a set career for 10 or 15 years. It’s just a more attractive benefit.”


According to the 2015 AAE Workforce and Pension Policy Survey, teachers are indeed warming to a choice in retirement. For example, eighty-nine percent of teachers would support a portable pension system that would allow teachers to take the pension money earned during their time in a school system to be rolled into a 401K in another job.


Teachers are growing increasingly dissatisfied with the status quo. A one-size-fits-all approach does not always meet the needs of today’s changing workforce. As college educated professionals, teachers deserve the same choices afforded in virtually any other industry. AAE supports any policy that puts teachers in the driver’s seat of their profession and their future.

Do you think that teachers deserve to have options in retirement plans?
Tell is in the comments below!


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