Search EdWorkingPapers

Search for EdWorkingPapers here by author, title, or keywords.

Traditional vs. Cash Balance Pension Plans: The Case of Kansas, the 1st Teacher CB Plan

It has long been argued that cash balance (CB) pension plans offer a more equitable distribution of benefits than traditional final-average-salary (FAS) plans for teachers, particularly between short-termers and career teachers.   However, it has also been understood that the impetus for reform would come from fiscal distress, rather than a concern for equity.  In this paper I examine how the nation’s first CB plan for teachers, in Kansas, adopted under such conditions, has played out for the level and distribution of benefits and system costs, compared to the FAS plan it replaced.  My key findings are:  (1) employer-funded benefits were modestly reduced, despite the surface appearance of somewhat generous employer matches; (2) more importantly, the cost of the pension guarantee, which is off-the-books under standard actuarial accounting, was reduced quite substantially.  Thus, although much of the distributional benefit, originally put forth, did materialize, the primary gain for states considering reform may well be the reduction in the cost of risk-bearing.

Keywords
teacher pensions
Education level
Topics
Document Object Identifier (DOI)
10.26300/j18n-te15

EdWorkingPaper suggested citation:

Costrell, Robert M.. (). Traditional vs. Cash Balance Pension Plans: The Case of Kansas, the 1st Teacher CB Plan . (EdWorkingPaper: -92). Retrieved from Annenberg Institute at Brown University: https://doi.org/10.26300/j18n-te15

Machine-readable bibliographic record: RIS, BibTeX