Wow... that link has so many holes in it I’m not sure where to start...
Generous pensions that require no contributions?!?! Teachers in Ohio pay 10% of their salary to their pension plan - no ifs, ands, or buts.
For that, if they work a full career, they can get a pension that pays out 66% of the average of their last three years’ salaries.
What does that mean?
If you go by the 5% rule and withdraw 5% of the funds each year (and don’t adjust for inflation) during retirement, that means that if you get annual 3% raises, the state’s annual contribution as a % of your salary to your pension is defined by:
cont=-68.795*x^3+41.613*x^2-8.3046*x+0.4795
where x is the annual return on invested funds.
If the market returns an 8% annual return, that means the teacher’s pension has the equivalent cost to the state of 4.6% of their annual income. If the market returns 9%, the state’s cost is 1.9%. If the market returns more than about 9.8%, the state makes a profit off the teacher’s contributions to their own pensions.
I don’t know where you come from, but I consider that a horrid deal.
(and no, I am NOT a teacher)
Considering that most workers get NO pension other than what they themselves contribute to their 401(k), teachers at least have something a lot more significant.
If the average worker is lucky enough, they might get a company match for some part of their contributions.
Teachers contribute 10% ? Wow, that’s just devastating ! And 66% of their average salary of their highest paid years ? Here, that would be 66% of about $117k, or 72k per year for a pension.
Sounds pretty good to me.