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Wow, you don't get it, do you?

The "pension" the teachers get is essentially no different than a 401(k) where your only choice for withdrawal is an annuity...

The "pension" is funded almost entirely out of teacher's own contributions. As I pointed out before, a 401(k) with a historically average return would produce a larger nest egg for retirement than the teachers' pensions. In other words, if the money the teachers contribute gets just an average rate of return, then their pension is equivalent to a 401(k) in which every employee contributes 10% of their salary and for which the company has a negative match. That's right - its equivalent to a company taking away part of your investment. That is a ROTTEN deal. Show me a single company which has a negative match for some part of the employee's contributions. It wouldn't be legal in any other system.

To state it again.... if you look at the pension plan teachers get, it is exactly like a 401(k) plan in which you put 10% of your salary in, get average rate of return of about 9.8%, and in which the company matches absolutely nothing.

Compare that to the average 401k plan which matches 3% of the total salary (http://www.econ.brown.edu/econ/sthesis/MattPapers/Paper8.html).

If teachers here had that level of match from the state, then they would need to average a gain of 8.6% on their investments to fund their pension.

What if a teacher had invested that 10% of their salary in the S&P 500 (11.4% return from 1970-2005)? According to that "pretty good pension" you're jealous of, they would have had enough to retire with a pension 40% higher than the one they actually got.

In other words, the teachers have fully funded their own pensions through the 10% contribution, and the state has skimmed off the top. Not only that, but all funds from the pension after death go back to the state, not to descendents.

Do you really want that deal?!?!?!?

I do get it. A 9.8% return is as good as most diversified portfolio out on the market. You are comparing the rate of return for stocks only. You don’t consider bonds or the virtues of a balanced portfolio ? I think teachers who are in their late 40s and nearer to retirement have a different perspective than a 25 yo might.

The teacher’s plan you discuss is more explicitly stated as to where the contribution comes from. Do you think any company does not consider pension contributions as a part of total employee compensation, and adjust gross salary accordingly ? In the business world, workers are considered to get more money in salary if there is no employer defined-benefit pension than those workplaces who have 401(k) only plans. And no, many employers do not have a company match(I can’t find any statistics on any %s of employers who do have 401k matches). Some employers contribute company stock only. Think Enron. How did that work out for those employees ?