Do New York City Teachers Have “Adequate” Retirement Benefits?
In response to financial pressures, the New York State Assembly has created new, less-generous retirement plans for teachers and other educators. Employees are assigned to a benefit tier depending on their hire date. There are now six tiers, and each one offers workers less-generous benefits than the prior version.
How far have the benefits fallen, and does the current tier structure provide sufficient retirement benefits?
To answer these questions, this new brief outlines a framework for determining whether a retirement plan’s benefits are “adequate” or not, and then examines whether the New York state teacher pension plans meet that test. Based on this comparison, it finds that the current plan does not provide fully adequate retirement benefits even to the longest-serving teachers. Some portion will reach at least a minimal adequacy threshold, but the typical teacher would need to serve 24 years before doing so.
New York has a long history of pension reforms that preserve the same pension structure for current workers even as it makes the specific benefit rules less generous for new teachers. As such, this paper concludes with recommendations for how policymakers might do a better job of providing adequate retirement benefits to the next generation of teachers. The alternative models presented would not save taxpayers money immediately, but they would allow the city and the state to pay down their existing promises while providing a more secure benefit structure to future employees.
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