But here’s the rub: Only a small minority of teachers participate in the defined contribution plan (approximately 3 percent). One likely reason is that Ohio nudges teachers into the traditional pension plan by making it the default when. Entering teachers do not make an affirmative choice. The state also forbids existing teachers—once they’re in the traditional pension—to switch to the defined contribution plan. It’s also possible that the unions, which have long favored traditional pensions and are dominat by more senior teachers. Might even influence the decisions of new teachers.
These policies and practices discourage teachers
Whose contributions are needed to help cover UK Phone Number List retirement liabilities, from participating in the 401(k)-style plan. State legislators have a couple of options when it comes to moving teachers towards a 401(k)-style model. One possibility is to switch the default option for entering teachers to the defined contribution plan—something that is likely to drive. More teachers in this direction. A more direct option would be to simply close the traditional pension plan to entering teachers (while preserving the status quo for current teachers and retirees) and offer only a defined contribution plan moving forward.[2] Several other states have done this for public sector workers, as have numerous private employers.
Though not likely an easy transition
It would require a plan (and probably money) to cover CW Leads existing pension promises to teachers—this type of “soft freeze” would be a first step in permanently ending the traditional pension and the long-term risks it poses to the state, taxpayers, and schools. Some may also worry that these moves could stir a hornet’s nest. That’s a fair concern, and leading this change wouldn’t be for the faint of heart. Yet beneath the union front, survey data suggest that teachers are open to 401(k)-style plans. In a recent national survey of public employees, Joshua Rauh of Stanford University found that nine in ten said they would be willing to switch to a defined contribution plan, provided their employers make a sufficient contribution (10 percent of salary was the median amount). A national survey by the Equable Institute found that a slight majority of teachers (54 percent) indicate an openness to a change in retirement models.
