Who Benefits from Pension Enhancements?

Cory Koedel, Shawn Ni () and Michael Podgursky

No 1207, Working Papers from Department of Economics, University of Missouri

Abstract: During the late 1990s public pension funds across the United States accrued large actuarial surpluses. The seemingly flush conditions of the pension funds led legislators in most states to substantially improve retirement benefits for public workers, including teachers. In this study we examine the benefit enhancements to the teacher pension system in Missouri. These enhancements resulted in large windfall gains for teachers who were close to retirement when the legislation was enacted. By contrast, novice teachers, and teachers who had not yet entered the labor force, were made worse off. The reason is that front-end contribution rates have been raised for current teachers to offset past liabilities accrued from the enhancements. Other things equal, the teaching profession in Missouri is now less appealing for young teachers as a result of the pension enhancements.

Keywords: pension; pension risk; defined-contribution pension; teacher pension; teacher pension risk (search for similar items in EconPapers)
JEL-codes: I20 J33 J38 (search for similar items in EconPapers)
Pages: 33 pgs.
Date: 2012-05-23, Revised 2012-06-08
New Economics Papers: this item is included in nep-age and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Who Benefits from Pension Enhancements? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:1207

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