Monday, August 10, 2015

Atlantic: as retiring academics collect pensions, that operating cost will get passed along to students in higher tuition

http://www.theatlantic.com/education/archive/2015/08/entitlements-for-education-pension-universities/400820/
...
“We’re no longer really funding students,” said Jane Wellman, a university-financing expert and senior advisor to the College Futures Foundation, a California-based advocacy group aimed at removing barriers to higher education. “We’re funding benefits.” ...

There's a bit more where that came from but there's the pull quote to whet your appetite, just in case.

2 comments:

Eric said...

This looks like an American problem. The US ought to move toward the model used in other countries, whereby employers pay ~10% extra into the worker's retirement fund at the time and have no obligations later. Then it doesn't matter whether the company still exists after they are retired, and it saves complications arising from people working many jobs over their lifetime. Not a perfect system but imo an improvement.

chris e said...

In general defined benefit schemes are actually cheaper than defined contribution schemes, unless the latter is associated with a greatly reduced pension in retirement:

http://www.nirsonline.org/storage/nirs/documents/Still%20a%20Better%20Bang/final_report_bang_for_buck_dec_2014.pdf

In general a lot of employers (both public and private) liked to kick the can down the road when it came to pension obligations (effectively allowing them to offer lower base compensation on the promise of an obligation which they are now trying to wriggle out of).