Commentary and Criticism about the National Education Association
We have absolutely no affiliation with the National Education Association and do not represent its views in any way, shape or form.
I write about teacher pension problems a lot. It all sounds doom and gloom I know but I do it as a wake-up call and warning for teachers. Too many of my colleagues don't have a clue about what is coming and they will be the most hurt as a result. My basic advice is save and invest on your own - don't just rely on your expected pension.
The normal response from teachers is:
"That's not right. We contributed our hard earned money to the system out of our paychecks. The politicians promised us a solid defined-benefit and they are legally required to provide it to us. Period."
YOU CAN'T GET BLOOD FROM A STONE
Everything in that statement is technically correct - until the point where you understand that the money may not be there down the line.
What happens then? Well, if you consider Puerto Rico, it defaulted on its bonds. Of course it was obligated to pay but it just didn't have the money so it didn't pay. Same for Venezuela - this country just defaulted on some of its bonds. When the money isn't there, the money can't be paid.
What is that you say? Pensions are different? You say that public employees are not investors like those bondholders were?
I see your point, but in the end it may not matter. When a state pension is underfunded this means that it eventually won't be able to pay out future benefits in full.
BACK TO PENSION FACTS
I normally write about this topic in reference to New Jersey because that is where I teach. But the pending pension crisis is looming for so many other states that I thought that it would be appropriate to write about it here:
For reference, here are some pension blog posts from my anti-NJEA Blog Page:
Bloomberg posted an article in June of this year entitled "Pension Fund Problems Worsen in 43 States." This article came with an excellent picture to show the state of the U.S. pension system so you can actually identify how your state is fairing.
The first two lines from the article state the case clearly:
"The news continues to worsen for America’s public pensions and for the people who depend on them. The median funding ratio—the percentage of assets states have available for future payments to retirees—declined to 71.1 percent in 2016, from 74.5 percent in 2015 and 75.6 percent in 2014."
Check out how your state is doing.
And while you are at it, start thinking about saving more of your money outside of the pension system.