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Study: Pension changes do not increase teacher turnover

In an ILR Review study of pension structure and employee turnover, researchers Dan Goldhaber, Cyrus Grout, and Kristian Holden examined turnover among teachers enrolled in either a traditional defined benefit (DB) plan or a hybrid defined benefit-defined contribution (DC) plan offered by the Washington Department of Retirement Services.  The authors concluded,

Overall, we find little evidence to support the conventional wisdom that movement toward a DC pension structure will necessarily increase employee turnover. More specifically, the patterns of turnover during the first 17 years of service among employees hired just before the introduction of the hybrid plan compared with those hired just after the introduction of the plan do not differ consistently. Furthermore, the quit behavior of new hires who are able to choose between the two plans is quite similar across plans. Finally, among teachers given the opportunity to transfer to the hybrid plan following its introduction in the 1997 school year, we find that those choosing to transfer exhibit significantly lower rates of turnover than do those choosing to stay in the traditional DB plan.

As pension system shortfalls loom in many states, lawmakers will consider cost-saving measures, including DC and hybrid DB-DC plans.  It appears that those changes can be implemented without affecting teacher recruitment and retention, a major concern voiced by those opposing alternatives to DB plans.

Terry Stoops / Vice President for Research and Director of Education Studies

Terry Stoops is the Vice President for Research and Director of Education Studies at the John Locke Foundation. Before joining the Locke Foundation, he worked as the progra...

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