Scrambling the Nest Egg: How Well do Teachers Understand Their Pensions and What Do They Think about Alternative Pension Structures?

February 2009

This paper is published by Vanderbilt University's National Center on Performance Incentives

In this paper we add to the nascent literature on teacher pensions by exploring two questions: How well do teachers understand their current pension plans? And, what do they think about alternative plan structures?

For our analysis we use data from a 2006 original survey of teachers in Washington State. We link survey results on pension knowledge and preferences to detailed data on school and district characteristics so that we can analyze variation across individuals and workplaces. The results suggest that Washington's teachers are fairly knowledge about their pensions. In addition, a majority of teachers indicated a preference for investing additional retirement savings in a defined contribution (DC) plan; newer teachers appear to be especially receptive to DC plans.

While some might take these findings to suggest that pension reforms will make teaching more attractive to future teachers, many important questions about the relationship between teachers and pensions remain.

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