TY - JOUR T1 - How Do California Teachers Fare under CalSTRS? <em>Applying Workforce Tenure Analysis and Counterfactual Benefit Modeling to Retirement Benefit Evaluation</em> JF - The Journal of Retirement SP - 42 LP - 65 DO - 10.3905/jor.2017.5.2.042 VL - 5 IS - 2 AU - Nari Rhee AU - William B. Fornia Y1 - 2017/10/31 UR - https://pm-research.com/content/5/2/42.abstract N2 - Most public school teachers in the United States are covered by traditional defined benefit (DB) pensions designed to reward long service. Numerous recent studies, including several focused on California, use high attrition rates among new hires to argue that teachers would be better off with a defined contribution (DC) plan or a cash balance (CB) plan. These studies fail to address tenure patterns in the teaching workforce—for example, how long the average teacher currently working in the profession can expect to stay. In this study, we ask whether most teachers currently working in California public schools can expect to stay long enough to accrue higher benefits under their pension than under alternative retirement plans with the same expected cost and the same capital market assumptions. Based on an analysis of CalSTRS membership and actuarial data and our counterfactual benefit modeling, we find that 73% of teachers currently working in California can expect to work at least 20 years, and 46% can expect to work at least 30 years. At least 82% of the California teacher population will stay until age 55, the early retirement age. On an entering-cohort basis, nearly half of current new-hire teachers in California (50%) are better off with the DB pension than the idealized DC plan. Critically, 85% of California’s teaching population will accrue higher benefits under the CalSTRS DB pension than through an idealized 401(k), and 76% will accrue higher benefits than through a generous CB plan.TOPICS: Retirement, legal/regulatory/public policy, simulations, pension funds ER -