National Council on Teacher Quality: A letter from NCTR Executive Director, Meredith Williams

August 4, 2014. I am the Executive Director of the National Council on Teacher Retirement (NCTR), a trade association for U.S. pension funds that provide retirement benefits to K–12 educators and related personnel. Our membership includes 68 state, territorial, and local pension systems, serving more than 18 million active and retired teachers, non-teaching personnel, and other employees with combined assets of more than $2 trillion in their trust funds.

I am writing with reference to the National Council on Teacher Quality (NCTQ) 2014 analysis of states’ retirement and pension policy for teachers, which I understand that you intend to include in a published report later this year. Frankly, while providing each teacher pension plan with the opportunity to review and comment on your analysis of its plan may appear to be commendable, I find it to be an empty gesture.

Specifically, your analysis is based on what you refer to as three specific “indicators” that you have evaluated, many of the details of which, as described by NCTQ, we strongly disagree. For example, NCTR does not believe that only a defined contribution (DC) plan or a cash balance plan should be offered as public employees’ primary pension vehicle. Nor do we believe that retirement eligibility must not be based to any degree on years of service. Finally, we do not agree that these are the only ways in which to ensure retirement systems that are both sustainable and fair.

Furthermore, each state and local government pension fund is unique, with different constituencies, different demographics, and differing designs reflecting each state’s specific view of the important goals to be accomplished through its public retirement system. These factors, along with various state statutes, policies, and regulations specific to each fund, reflect the very real differences that exist among them. The flexibility necessary for plan sponsors to adopt retirement eligibility requirements, contribution and benefit accrual rates and other features that reflect these factors as well as the occupational realities of their employees would be unduly restricted by NCTQ’s arbitrary standards for vesting, contribution rates and other design features.

If we disagree with your standards of measurement―which we do―what does it matter if you have “accurately” measured our systems using such a faulty yardstick?

As my predecessor pointed out in response to earlier iterations of your views regarding teacher pensions, NCTQ is careless in your conclusions about retirement security for teachers and you do a great disservice to this valued component of society. A DC retirement option or the replacement of existing teacher defined benefit (DB) models with a DC plan is neither sought by teachers themselves, nor preferable as a means for retaining them, nor any more efficient that the existing DB system in providing adequate financial security at a fair cost to taxpayers. Indeed, research conducted by the National Institute on Retirement Security (NIRS) shows that a DB plan can provide a target level of retirement income at almost half the cost of a DC plan.

America’s continued success in an intensely competitive global economy is directly linked to ensuring the best possible education for our citizens. Furthermore, in order to accomplish this goal, our educational system must be able to attract and retain the best and the brightest teachers possible. Pension plans centered on the key elements of the DB model―mandatory participation; shared employer/employee financing; pooled investments; benefit adequacy; and lifetime benefit payouts―are important, well-documented tools in attracting and keeping qualified teachers.

In summary, NCTQ’s analyses and conclusions related to the fairness and flexibility of current State pension systems continue to be unsupported by the facts, and your recommendations related to pensions and teacher retirement reflect neither the documented desires of the very teachers who are the targets of any retention efforts, nor the best interests of the taxpayers who are ultimately their employers.

Sincerely,

Meredith Williams
Executive Director