Lately the newspaper are increasingly complaining about the upcoming pension bomb that will bankrupt the City when the next recession comes around and if the current conditions stayed the same, they might have a point. However, they are falsely assuming that most of the teachers will last long enough to be vested. The truth is as of 2013-14 school year, only 40.3% of all New York State teachers lasted long enough to be vested and receive any sort of pension. This figure is still dominated by Tier 4 teachers who only need five years to be vested/ However as we look into the future, we find that New York State has imposed a new Tier V and Tier VI pension plans on all public employees who were hired as of January 1, 2010. Since both Tier V and Tier VI pension plans require employees to have ten years of service before they get vested, the 40.3% figure is bound to drop significantly in the next decade.
As more of the Tier IV "baby boomers" retire, the remaining workforce will be subject to the ten year vesting requirement.and we will see New York State's 40.3% number drop. How significant will the drop be? Well, if we take Illinois as an example, when they had a five year vesting requirement, 66.6% of all teachers were able to meet the vesting requirements. Now they expect only 38.% of the new teachers will meet the ten year vesting requirement. That's a 43% reduction in teachers getting vested. If we apply the Illinois reduction to New York State then the expected vesting will drop to 23% for all new teachers who need ten years to be vested! Or only one in four teachers will be eligible for even a minimal pension! This disturbing figure is in line with some other states like Pennsylvania (25%), Hawaii (26%), New Hampshire (25%), and Mississippi (24%) who also has ten year vesting requirements.
I strongly suspect if only large urban areas like New York City, Buffalo, and Rochester were broken down, the teachers who survive long enough to be vested will be much lower than the New York State average. Moreover, as the economy continues to recover, many new teachers will probably leave the teaching profession for jobs with more money, respect, and less stress before they are vested This is especially true in New York City where high paying office jobs are becoming increasingly available and will attract the "newbie teacher". Finally, the more punitive teacher evaluation system will discourage teachers who have other options to leave the teaching profession, particularly in the struggling urban schools.
The bottom line is this, the "pension bomb" that the media and politicians loudly complain about, is really chicken little saying "the sky s falling". Under our present pension system and the demonizing of the teaching profession, New York State will not experience any teacher "pension bomb". In fact, its quite possible that with teachers not lasting long enough to be vested and eligible for a pension, the pension will be fully funded as three out of four new teachers will never be able to draw from it.