While retirement may seem distant for many, retirement security became an increasingly important issue for policymakers in 2015. Here are highlights in pension-related policy news and research from this past year.
The most popular and signficant pension stories from our website in 2015:
- School pension costs have doubled. In a guest post, Robert Costrell describes how nationally, pension costs have more than doubled in the last decade, from about $500 per pupil in 2004 to over $1,000 today.
- New teachers are paying for past pension debt. A new CALDER working paper estimates that new teachers are contributing, on average, over 10 percent of their salaries to pay down their pension plan's past debt. Similarly, our report found that new teachers are bearing the brunt of post-recession cuts.
- Three-quarters of new teachers will earn less in pension benefits than they contributed. Because pensions are so heavily backloaded, teachers must work many years before their future benefits exceed the value of their required contributions. In the median state, teachers must serve at least 25 years to receive a pension worth more than their own contributions. Read The Atlantic’s coverage of our report here.
And around the country, here were our picks for some of the most important pension news stories in 2015:
- Military pension reform. President Obama signed into law a historic overhaul of the military’s pension system. Beginning in 2018, new members of the military will participate in a hybrid retirement plan. The new plan is a significant change from the previous pension plan, which required members serve at least 20 years to receive any retirement benefits. Military families, however, continue to be penalized by non-portable, state retirement plans.
- MyRA and government-sponsored retirement accounts. Over half of all private sector workers do not participate in a retirement plan. In November 2015, the federal government rolled out a low-cost retirement option called "my retirement account," or myRA. States such as Illinois and California have passed their own legislation to automatically enroll workers without an employer-sponsored retirement plan into a state-sponsored government plan.
- Illinois pension reform overturned. In Illinois, the state Supreme Court overturned a pension reform law that would have reduced benefits for current workers. A similar Chicago pension reform law was overturned by a district court and will be reviewed by the state Supreme Court in 2016. The rulings mean that state policymakers will need to rethink pension reform.
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