John Doe worked hard and graduated from a university with a bachelor of science degree in teaching. He quickly discovered that being responsible for a classroom of children is challenging. Keeping up his credentials and taking classes toward his required master’s degree took away from his family time. And on a beginning teacher’s salary, those summers off soon turned into part-time summer employment.
Three years into his teaching career, John made the choice to leave teaching and go into real estate. John joined the five percent of Missouri teachers who quit the profession before becoming vested in the Public School Retirement System of Missouri.
After graduation, John’s fellow university classmate, Mary Smith, was thrilled to get a job teaching science in a local high school. She loves her students. And she loves seeing them gain knowledge of nature and the world around them. For Mary, the relationship she has with her students is worth getting paid less than she could make in industry. And like 73 percent of Missouri teachers, Mary will continue teaching in our state until she reaches full retirement age.
During John’s three years of teaching he paid into the PSRS. He didn’t teach the five years it takes to be vested, so he will only get back what he has paid in but not the matching funds from his school district.
Mary, on the other hand, will contribute 14.5 percent from every paycheck until the day she retires, with matching funds from her school district. Mary’s retirement funds are in good hands with Missouri’s excellent PSRS. Her retirement money, along with that of her fellow Missouri teachers, is managed and invested wisely by the PSRS board of trustees.
All too soon the years will have flown by and Mary will be finished teaching the multitude of students who pass through her classroom. Upon her retirement, the thousands of dollars that she contributed will be waiting for her with a nice pension. Mary will be secure during her retirement years.
Dedicated people enter the teaching field every year despite the challenges and modest pay. In today’s mobile society, love of teaching and dedication to our children might not be enough to keep the best teachers in our classrooms.
Missouri’s defined benefit pension plan through PSRS is essential in attracting and then retaining the very best educators for our children. It also allows retired public educators to contribute nearly $3 billion to Missouri’s economy each year.
The benefits that teachers, children and the residents of Missouri derive from the PSRS are in imminent danger from House Bill 864. This bill, sponsored by western Christian County Rep. Jered Taylor, would require that all Missouri public school educators be given the option of contributing to a 401(k) retirement system. The teachers would contribute an amount of their choice and their employer would contribute an additional 5 percent. That one-time choice would forever lock the teacher out and prevent him or her from being eligible for a pension from PSRS.
A January 2019 study, funded by the National Institute on Retirement, compares teacher pensions with 401(k) plans in six states including Missouri. Authors Nari Rhee and Leon Joyner conclude that “84 percent of Missouri teachers are better off in a defined benefit plan than in a 401(k) plan, and that contribution costs for Missouri teachers would need to be doubled in order to realize the same retirement income in a 401(k) as in a defined benefit plan.”
Obviously, our fictional Mary Smith would not want to increase her contribution to 29 percent of each pay check in order to achieve the same retirement benefits currently afforded through PSRS.
The one percent who teach in Missouri less than five years would benefit from Taylor’s bill. They could take their 401(k) funds, which would include any matching funds from their school district. But those short-time teachers could also be protected if legislators simply reduced the number of years required to be vested.
Rep. Taylor’s bill seems designed to weaken the entire retirement system. Missouri’s PSRS is one of the strongest in the nation. Rep. Taylor shows his ignorance by calling PSRS a Ponzi scheme.
HB 864 has had its second reading and is a quarter of the way through the legislative process on its way to potentially becoming Missouri law. Missouri educators, current and retired, as well as all Missourians who care about our children should let our legislators know that HB 864 is a very bad idea.
Susanna Smith lives in Neosho.