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Which plan to choose? The determinants of pension system choice for public school teachers

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  • GOLDHABER, DAN
  • GROUT, CYRUS

Abstract

This paper examines a natural experiment in which Washington State teachers were offered the opportunity to choose between enrolling in a traditional defined benefit (DB) plan and a hybrid plan with DB and defined contribution (DC) components. We find plan preference is weakly related to estimates of the relative financial benefits of being in either the DB or hybrid system and strongly related to teacher age. Importantly, we also find that the majority of teachers prefer the hybrid plan, and that teachers opting into the hybrid plan tend to be more effective based on student output measures of teacher productivity. These results suggest that policy shifts toward pension systems that include DC options do not necessarily make teaching a less desirable profession, particularly for the most productive employees.

Suggested Citation

  • Goldhaber, Dan & Grout, Cyrus, 2016. "Which plan to choose? The determinants of pension system choice for public school teachers," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(1), pages 30-54, January.
    • Handle: RePEc:cup:jpenef:v:15:y:2016:i:01:p:30-54_00
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    Cited by:

    1. Fuchsman, Dillon & McGee, Josh B. & Zamarro, Gema, 2023. "Teachers’ willingness to pay for retirement benefits: A national stated preferences experiment," Economics of Education Review, Elsevier, vol. 92(C).
    2. Dan Goldhaber & Cyrus Grout, 2016. "Pension Choices and the Savings Patterns of Public School Teachers," Education Finance and Policy, MIT Press, vol. 11(4), pages 449-481, Fall.
    3. Clark, Robert L. & Hanson, Emma & Mitchell, Olivia S., 2016. "Lessons for public pensions from Utah's move to pension choice," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(3), pages 285-310, July.
    4. Ni, Shawn & Podgursky, Michael & Wang, Xiqian, 2022. "Teacher pension enhancements and staffing in an urban school district," Journal of Pension Economics and Finance, Cambridge University Press, vol. 21(4), pages 613-633, October.
    5. Kim, Dongwoo & Koedel, Cory & Xiang, P. Brett, 2021. "The trade-off between pension costs and salary expenditures in the public sector," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(1), pages 151-168, January.

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