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Defined-benefit plans in most states actually operate as a financial penalty for the bulk of teachers, who need to contribute more than they will ever take out. The system primarily exists to benefit the minority of teachers who have spent their entire career in the same profession and the same state.

Comment: True in Illinois, too, as we’ve regularly documented.

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TRS Illinois allows some sort of transfer or purchase of service credit for years worked out of state (from out of state to TRS). In the majority of school districts in Illinois, teachers contribute little or nothing to the pension fund. Most in TRS Tier I retire with less than a full career and receive more than they contribute. Where is an example of a TRS employee contributing more than they received? TRS has a spousal death benefit and a dependent beneficiary survivor benefit. “If you terminate teaching with a TRS employer, you may apply for a refund of your retirement contributions. This refund consists of the… Read more »

For new teachers it’s horrible to have such a long break even point. But nobody mentions that defined pensions can’t be inherited either, more and more evidence will come to where 401k looks like a better deal for teachers.