Here's the dope on teacher pensions

Ed Inghrim, Director, Saucon Valley School Board Lower Saucon Township:

Recently New Jersey Gov. Chris Christie announced a freeze on spending and said pensions and benefits are the major driver of spending increases at all levels of government. He citied two examples of retired public employees. A 49-year-old retiree, who paid $124,000 toward retirement pension and health benefits, will get $3.3 million in pension payments and nearly $500,000 for health care benefits -- $3.8 million on a $120,000 investment. A retired teacher who paid $62,000 toward her pension and nothing for full family medical, dental and vision coverage, will collect $1.4 million in pension and $215,000 in health care benefit premiums over her lifetime.

I decided to check his math using the Saucon Valley School District teacher contract as a model. I assumed a teacher hired at age 24 at $40,000 would work 30 years and get an average pay increase of 4 percent a year (quite conservative) and contribute 7.5 percent of salary to the state retirement system. Retiring at 54, the teacher's total pension contribution would be $168,255. Assuming the teacher lived to 85 and got health benefits until Medicare eligible, he or she would collect about $3.4 million after retiring. Not a bad return. If the annual raise were 5 percent, the teacher would get a return of $4.2 million on an investment of $199,317.

Saucon Valley School District 2009-2010 budget document (PDF).

Posted by Jim Zellmer at February 18, 2010 3:52 AM
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