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Mary Pat Campbell's avatar

Thanks for bringing up the total compensation aspect of teachers' pay.

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Stephen Douglas's avatar

"So teachers really got large raises in the form of their more valuable pension."

That is what my wife calls "ifcome".

Pensions are a long term commitment. What will the interest rates be in thirty years?

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Allison Schrager's avatar

unknowable. but the market rate of their pension today is higher. and is risk-free.

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Stephen Douglas's avatar

"Unknowable" and "risk-free" seem to cancel each other out?

If I am buying an annuity today, sure. But if I "paid" for that annuity over a 40 year career of varying interest rates*, what then? I assumed this was one of the elements of "shared risk" of a DB plan.

*And varying wages.

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Mike MacDonald's avatar

Great column. Pensions are great, until they are not. Pensions do carry catastrophic risk. Some of them fail completely.

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