‹ Back

~Why Teachers Should Negotiate a 403b Match~

 

Many assume that teachers and Ed Techs have an amazing pension that is going to take care of them in retirement.  Unfortunately this is far from reality.

 

Take a teacher who worked in Maine schools for 30 years.  That teacher will likely be eligible to receive a pension equal to 60% or so of their salary.  If you can live off 60% of your salary, more power to you!  I think most people will find this difficult (and also keep in mind that Maine Public Employee pensions will fail to keep up with inflation over time).  And if that teacher happened to have worked in another career prior to teaching, and already paid into Social Security, there's a good chance they won't get much of that in retirement either, due to the Windfall Elimination Provision (WEP).

 

Next, consider what employees and employers contribute to these two different retirement systems:  Social Security versus the Maine State Retirement System.

 

 

Employees covered by Social Security pay 6.2% of their salary into Social Security.  By contrast, teachers and ed techs pay 7.65% of their salary into the Maine State Retirement System.

 

In jobs covered by Social Security, employers pay 6.2% of their employees' salaries into the system.  By contrast, school districts only pay 4.47% of teachers and ed techs' salaries into the Maine State Retirement System, and historically that figure has been well below 4%. 

 

So these school employees are paying more into their retirement systems than other employees, and school departments are paying in less than other employers.

 

In addition, employers commonly offer a 403b match for employees covered by Social Security, where employers might match up to 10% of the employee's salary in contributions to their 403b or 401k.  But matches for teachers and ed techs unheard of in Maine.  But that can change.  All teachers and Ed Techs need to do is negotiate a 403b match into their contracts.  

 

A 403b match is one way to make up for the deficiency in school departments' contributions to the Maine State Retirement System, and it would also help even the scales when it comes to preparing school employees for retirement.

--------------------------

October 11, 2024