Working Paper: How shifting to a defined contribution retirement plan impacted teacher retention in Alaska

Abstract

In 2005, Alaska enacted one of the most radical retirement system reforms in the public sector by discontinuing enrollment into its defined-benefit pension plan and creating a 401(k)-style defined contribution plan for all new public workers hired after July 1, 2006. The pension reform represented a significant change in accrual patterns, a reduction in benefit generosity, and a transfer of investment risk from the employer to the employees.

Using individual-level data for all Alaska teachers in the Teacher Retirement System (TRS) before and after the retirement benefit change (2005–2017), we assess the effects of the reform on teacher mobility out of employment with the Alaska K-12 system. Using a panel of member-specific data, we examine the short-run and longer-run effects of a radical benefit redesign on the labor market behavior of public educators.

Contrary to expectations, we document a decrease in separations after the reform in the short-run while also showing weaker but still negative longer-term impacts of the reform on teacher separations from public sector employment as educators.

Working Paper: Effects of a Transition to a Defined Contribution Retirement Plan on Teacher Separations in Alaska