Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-22T01:11:38.671Z Has data issue: false hasContentIssue false
  • English
  • Français

Surplus deferred pension compensation for long-term K-12 employees: an empirical analysis for the Denver Public School Retirement System and four state plans

Published online by Cambridge University Press:  22 November 2010

MICHAEL V. MANNINO  and
ELIZABETH S. COOPERMAN
MICHAEL V. MANNINO*
Affiliation:
University of Colorado Denver
ELIZABETH S. COOPERMAN*
Affiliation:
University of Colorado Denver
*
Correspondence address: The Business School, University of Colorado Denver, Campus Box 165, P.O. Box 173364, Denver, CO 80217-3364, USA.
Correspondence address: The Business School, University of Colorado Denver, Campus Box 165, P.O. Box 173364, Denver, CO 80217-3364, USA.
Get access Rights & Permissions [Opens in a new window]

Abstract

This study uses a unique data set of retiree characteristics and salary histories for administrators, teachers, and non-professional employees of the Denver Public School Retirement System (DPSRS) to analyze surplus deferred compensation for DPSRS and four state K-12 defined benefit pension plans. We find sizable levels of surplus deferred compensation for each plan, with significant differences across plans, job classes, and age groups. Across plans, differences in cost of living allowances impact the expected present value of retirement benefits more than benefit table differences when controlling for each respective factor. Somewhat surprisingly, the plans in our study with the largest present value of future benefits had lower employee contribution rates. Pension wealth for reduced benefits showed larger wealth accrual at younger ages than full, unreduced benefits, and younger cohorts starting work at an earlier age received significantly higher surplus deferred compensation.

Keywords

H55Public PensionsJ26Retirement PoliciesJ33Compensation PackagesI22Education FinanceDefined benefit planscompensationsalary historypublic employeesretirement policies
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 10 , Issue 3 , July 2011 , pp. 457 - 483
Copyright
Copyright © Cambridge University Press 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Biggs, Andrew G. (2009) Public pensions cook the books. The Wall Street Journal, 6 July 2009. Available online at http://online.wsj.com/article/S8124683573382697889.htmlGoogle Scholar
Brainard, Keith (2007) Public Fund Survey Summary of Findings for FY 2006. p. 7. The Public Fund Survey available online at http://www.publicfundsurvey.org (accessed 14 April 2008)Google Scholar
Clingman, M. and Nichols, O. (2004) Scaled factors for hypothetical earnings examples under the 2004 Trustees Report assumptions. Social Security Administration Actuarial Note, No. 2004.3, December. Available online at http://www.socialsecurity.govGoogle Scholar
Costrell, Robert M. and Podgursky, Michael (2007 a) Efficiency and Equity in the Time Pattern of Teacher Pension Benefits: An Analysis of Four State Systems. The Urban Institute, available online at http://www.urban.org/url.cfm?ID=100170Google Scholar
Costrell, Robert M. and Podgursky, Michael (2007 b) Golden peaks and Perilous Cliffs: Rethinking Ohio's teacher pension system. Education Resources Information Center, Thomas B. Fordham Institute, available online at http://www.edexcellence.net/foundation/publication/index.cfmGoogle Scholar
Costrell, Robert M. and Podgursky, Michael (2009 a) Peaks, Cliffs and Valleys: The Peculiar Incentives in teacher retirement systems and their consequences for school staffing. Education Finance and Policy, 4(2): Spring, 175–211.CrossRefGoogle Scholar
Costrell, Robert and Podgursky, Michael (2009 b) Teacher retirement benefits: even in economically tough times, costs are higher than ever. Education Next, 9(2): Spring, 59–63; available online at http://www.hoover.org/publications/ednext/Teacher_Retirement_Benefits.htmlGoogle Scholar
Costrell, Robert and Podgursky, Michael (2009 c) Distribution of Benefits in Teacher Retirement Systems and Their Implications for Mobility, on educationnext, (October) online at http://educationnext.org/files/Costrell_Podgursky_mobility.pdfCrossRefGoogle Scholar
DiCarlo, Matthew, Johnson, Nate, and Cohran, Pat (2008) AFT Survey and Analysis of Teacher Salary Trends 2007, AFT Research Paper, pp. 1–37. Available online at http://www.aft.org/researchGoogle Scholar
DiNapoli, Thomas P. (2009) Employer Pension Fund Contributions to Increase in 2011, News from the Office of the New York State Comptroller, Press Release, 3 September 2009. Available online athttp://www.osc.state.ny.us/press/releases/sept09/090309.htm (accessed 13 June 2010).Google Scholar
Fitch, Stephane (2009) Gilt-Edged Pensions. Forbes Magazine, 16 February 2009. Available online at http://www.forbes.com/forbes/2009/0216/078_print.htmlGoogle Scholar
Furgeson, Joshua, Strauss, Robert P. and Vogt, William B. (2006) The Effects of Defined Benefit Pension Incentives and Working Conditons on Teacher Retirement Decisions. Education Finance and Policy, 1(3): Summer, 316–348.CrossRefGoogle Scholar
Hansen, Janet S. (2008) Teacher pensions: A background paper. Committee for Economic Development, ED502293, May. Available online at http://www.ced.org/docs/report/report_educ200806pensions.pdfGoogle Scholar
Hedges, Larry V. (1981) Distribution theory for Glass's estimator of effect size and related estimators. Journal of Educational Statistics, 6(2): Summer, 107–128.CrossRefGoogle Scholar
Hogarth, J. (1988) Accepting an early retirement bonus: an empirical study. Journal of Human Resources 23: 21–33.CrossRefGoogle Scholar
Kotlikoff, L. and Wise, D. (1989) Employee retirement and a firm's pension plan. In Wise, D. (ed.), The Economics of Aging. Chicago: University of Chicago Press, pp. 279–333.Google Scholar
Lazear, E. P. (1990) Pensions and deferred benefits as strategic compensation. Industrial Relations, 29(2): (Spring), 263–280.CrossRefGoogle Scholar
Lazear, E. P. and Moore, R. L. (1988) Pensions and turnover. In Bodie, Z., Shoven, J. B. and Wise, D. (eds) ‘Pensions in the U.S. Economy’ Chicago: University of Chicago Press for NBER, 163–188.Google Scholar
Mannino, Michael V. and Cooperman, Elizabeth S. (2009) Deferred compensation for career employees in public defined benefit pension plans: evidence from Colorado PERA. Journal of Pension Economics and Finance, 8(1): 35–61.CrossRefGoogle Scholar
Mitchell, Olivia S., Poterba, James M., Warshawsky, Mark J. and Brown, Jeffery (1999) New evidence on the money's worth of individual annuities. American Economic Review 89(5): 1299–1318.CrossRefGoogle Scholar
Nelson, F. Howard and Gould, Jewell C. (2002) Teacher Salaries, Expenditures and Federal Revenue in School Districts Serving the Nation's Largest Cities, 1990–91 to 2000–01, American Federation of Teachers (AFT) Research Report, pp. 1–28. Available online at http://www.aft.org/researchGoogle Scholar
Pew Center on the States (2008), Promises with a Price: Public Sector Retirement Benefits. Philadelphia, PA: The Pew Charitable Trusts. Available online at http://www.pewtrusts.org/uploadedFiles/wwwpewtrustorg/Reports/State_policy/pension_report.pdf (accessed on 15 April 2008).Google Scholar
Schiller, Bradley R. and Randall, D. Weiss (1980) Pensions and wages: a test for equalizing differences. Review of Economics and Statistics, 62(4): 529–538.CrossRefGoogle Scholar
Shiller, Robert J. (2005) The Life-Cycle Personal Accounts Proposal for Social Security: An Evaluation. Yale ICF Working Paper No. 05–06, Cowles Foundation Discussion Paper No. 1504, March 2005. Available online at http://ssrn.com/abstract=703221Google Scholar
Spriggs, William E. and Ratner, David (2005) Social security price indexing proposal means benefit cuts for workers. EPI Issue Brief 209, Economics Policy Institute, 1 June. Available from http://www.epi.org/content.cfm/index_pubs-ibGoogle Scholar