State gets a good deal on teachers’ pensions

The truth is often stretched during election season. This year, some of the misinformation is aimed at the pension system for MTA members and other employees.

We need to fight back with facts. To that end, the MTA Communications and Research divisions have produced an FAQ on Massachusetts Teacher Pensions: The True Costs and Benefits.

Pension FAQ Although the FAQ focuses on the system for preK-12 teachers and administrators enrolled in the Massachusetts Teachers’ Retirement System, education support professionals and public higher education members participate in similar plans and also pay a large share of the costs of their own pensions.

Republican gubernatorial candidate Charles Baker has plans for cutting these “overly generous” pension benefits. Among other changes, he wants to base pensions on average lifetime earnings, not the average of the highest three years, and to raise the retirement age for public employees.

And then there’s Carla Howell, who never lets the facts get in the way of a good sound bite. Howell told Channel 5’s Janet Wu that a way to pay for Question 3’s massive $2.5 billion price tag is to get rid of public employee pensions.

Of course, if the pension system were eliminated, public employees would have to be enrolled in Social Security. That’s been the law since the New Deal was passed. The problem is that rather than saving a dime, such a move would actually cost taxpayers anywhere between $220 million and $385 million a year.

Here’s why.

FACT: Teachers hired since July 1, 1996, pay 11 percent of their salaries toward their own pensions. At that rate, they are funding 95 percent of the normal costs of their own pensions. School districts pay nothing toward teacher pensions.

FACT: For those 11-percenters, the Commonwealth pays less than 1 percent of their salaries toward their pensions. When you average the costs among new and more veteran teachers alike — including those who pay less than 11 percent of their salaries — the state contributes 2 percent.

FACT: Teachers do not participate in the Social Security retirement system while they work as public employees. The MTRS is their Social Security.

FACT: If employees no longer took part in the MTRS and instead were treated like private-sector employees enrolled in Social Security, the employees would pay less (instead of 11 percent to MTRS, they would pay 6.2 percent to Social Security), and the Commonwealth would pay more (instead of 2 percent, on average, the Commonwealth would pay 6.2 percent to Social Security on behalf of each employee).

FACT: According to the MTRS, the Commonwealth is paying $122 million this year toward the normal costs of retirement for MTRS members. If those teachers were instead enrolled in the Social Security system, the Commonwealth would have to pay $342 million — or $220 million more than is currently being paid on their behalf.

FACT: That $220 million is just a start. Most large private-sector employers provide more than just Social Security payments to employees; many provide a partial match to an employee defined contribution plan, such as a 401(k) plan. The employer contribution to such plans is typically 3 percent of the employee’s salary. As a large employer, the Commonwealth would almost certainly be expected to provide some measure of retirement security to public employees. If the Commonwealth were to make a 3 percent contribution to employees’ 401(k)-style plans, the additional cost would be $165 million a year. Add that to the $220 million in Social Security payments and the projected increased annual costs for the taxpayers would be $385 million.

FACT: In addition to paying its share toward the normal costs of retirement for current employees, the Commonwealth also has an unfunded pension liability from prior decades. However, no change in retirement benefits for current or future employees will reduce that liability. It must be paid no matter what changes are made. That liability was incurred in past decades for a variety of reasons. In some years, for example, the Commonwealth shortchanged the pension fund to pay for other services. In others, the Commonwealth made inaccurate projections about investment returns. There is no legal or moral basis for requiring new employees to fund that obligation — a liability they did not cause. As the bipartisan Special Commission to Study the Massachusetts Contributory Retirement System noted, “The burden of amortizing the unfunded liability from past service should be spread broadly among taxpayers and not borne by today’s public employees.”

Fortunately, the state has established an aggressive timetable for paying it off and is scheduled to finish making those payments in 2025.

Massachusetts Teacher Pensions: The True Costs and Benefits


Information about the teachers’ pension system is available on the Massachusetts Teachers’ Retirement System website at

The MTA conducts retirement consultations for individual members throughout the state. The schedule appears in MTA Today and online at

Local presidents who would like to schedule pension workshops for their associations should call Harold Crowley at 800-392-6175 x8240.