Abstract
Like most other state and local government employees, teachers participate primarily in defined benefit pension plans whose benefits are largely based on final average salaries and length of service. Such pensions have been replaced in many private sector firms by defined contribution pensions. A number of questions have arisen about the feasibility and desirability of continuing to rely on defined benefit pensions for teachers. This article provides a brief history of teacher pensions and an overview of teacher retirement benefits today, including differences in the legal and economic context for public and private sector pensions that are important considerations in plan design. It then introduces issues related to financial sustainability, teacher mobility, and teacher shortages. The article concludes with an overview of key differences between traditional defined benefit and defined contribution plans and raises the possibility of adopting a “hybrid” kind of plan that includes features from both kinds of traditional plans.
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