Pensions Aren’t That Great for Women

Recently, people across the country celebrated Equal Pay Day, the symbolic day in which the average woman finally catches up to what the average man earned last year. As expected, Labor unions and pension advocates took to Twitter to proclaim how great pensions are for women. Not so fast. In many ways, women are actually worse off under defined benefit pension plans than they would be under more portable plans.

For teachers—over three-quarters of whom are women—state teacher pension plans disadvantage females in several ways:

  • Women who leave the teaching profession before serving a full career—either to change professions, rear a family, or other personal reasons—are shortchanged. Women who leave before vesting will not receive a pension and those who stay on for less than a full career will receive minimal benefits. Because pension wealth accrues unevenly in favor of those who stay for thirty-plus years, all workers who stay less time, including and especially women, lose out.

  • Women are especially dependent on Social Security, but about 1 million teachers are not covered by Social Security at all. Applying the same demographics of all public school teachers to just this population, that makes about 750,000 female teachers who lack the guaranteed retirement and disability benefits given to all other American workers enrolled in Social Security.

  • The female-dominated teacher workforce typically participates in pension plans with other male-dominated workforces with higher salaries. In practice, this means shorter-serving, lower-paid teachers (mostly female) are forced to subsidize the retirements of other groups of workers such as principals and school administrators (mostly male). This can also include other groups of state and local government employees.

Americans have certainly come a long way in the past few decades: the pay gap between men and women has decreased from 36 cents in 1980 down to 16 cents today. Despite the narrowing gap between men and women, the disparity in compensation persists, and it carries over into retirement. Current pension plans aren’t doing enough to provide retirement security to all teachers.

Chad Aldeman is an Associate Partner at Bellwether Education Partners. This blog post originally appeared on TeacherPensions.org.

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