Few states have adopted pure defined contribution plans, but there has been a recent increase in the number of non-traditional retirement plans, including hybrid plans that give employees more flexibility while reducing state financial burdens.
In New York, teachers were subject to mandatory retirement laws that capped the age a teacher could work. Mandatory retirement laws do not exist anymore, but current pension systems do subtly encourage older teachers to retire.
When a teacher leaves the classroom, she may also leave the state or district retirement system. As a teacher leaves, what happens to her pension contributions?
States may be getting a deal for their teachers. Among other trends, the teaching force is simultaneously becoming younger and less experienced. This translates to cheaper costs for the state, but at the price of teacher retirement security.
The Urban Institute issued a report evaluating the impact of the hybrid plan for Rhode Island’s teachers. According to the study, 80 percent of teachers will benefit from the new system.
