There are a lot of factors that new, prospective K–12 teachers have to consider when entering the education workforce. People typically pay the most attention to things like salary, location, and health insurance benefits. But what are the best U.S. states for new teacher retirement benefits?
Retirement benefits are a unique form of compensation in that they are deferred compensation. It is straightforward to compare the salaries offered to teach in one county versus another, or even to look at the health insurance benefits (medical, dental, and vision) offered by one school district versus another. But comparing retirement plans on a state-by-state basis is more difficult because there is no intuitive way to understand the value of one pension plan versus another, or whether a hybrid plan or defined contribution (DC) plan might be more valuable.
That’s why Equable created the Retirement Security Report, which provides a level playing field on which to rank states based on the quality of retirement benefits they offer to new teachers entering the workforce in 2025.
Equable Insights
- Average Total Lifetime Benefit Value: $1.3 million
- Best State for New Teacher Retirement Benefits: South Carolina
- Lowest-Scoring State for New Teacher Retirement Benefits: New Jersey
Methodology
Our ranking approach starts by assigning a Retirement Benefits Score to each individual benefit tier based on how well it is serving the following teacher profiles.
- Short-term teachers: Those who teach for 10 years or less
- Medium-term teachers: Those who teach for 10-20 years
- Full-career teachers: Those who spend their entire career in K–12 education
We then blend the scores of these three profiles to create a comprehensive assessment for every individual benefit tier. To provide a complete picture of a state’s performance, we then average across tiers to calculate an Overall Retirement Benefits Score for each state. The final score represents the percentage of available points the retirement system averages overall for all open plans available to public school teachers for the 2025 school year.
If a state only has one retirement plan that is open to enrolling new teachers, then the score for that retirement plan is the score for that state. If a state has multiple retirement plans available for new teachers to join, then we calculate the average score of those plans, and that is the score for the state.
In cases where a state has a plan for teachers that is intended to be supplemental to primary retirement benefits or is only offered to part-time teachers, we do not include that in the state’s average. We also do not include retirement plans that are only offered to non-certified public school employees or plans exclusively for higher education employees.
The Best States for New Teacher Retirement Benefits
The following 10 states have the highest Overall Retirement Benefits Scores among all open retirement plans:
- South Carolina (84.8%)
- South Dakota (80.7%)
- Oregon (75.5%)
- New Mexico (73.6%)
- Wyoming (72.7%)
- Mississippi (72.4%)
- Oklahoma (71.9%)
- Washington (71.5%)
- Alaska (71.3%)
- Arkansas (71.0%)
Lowest-Scoring States for New Teacher Retirement Benefits
The following 10 states have the lowest Overall Retirement Benefits Scores among open retirement plans:
- District of Columbia (34.0%)
- Nevada (38.7%)
- Illinois (42.2%)
- Louisiana (42.6%)
- Rhode Island (45.8%)
- Massachusetts (47.1%)
- New Jersey (51.4%)
- Kentucky (51.7%)
- Virginia (52.5%)
- Ohio (52.9%)
- West Virginia (53.2%)
States Ranked by Overall Retirement Benefits Score
Use the interactive table below to explore the average benefits scores for each state and different groups of teachers.
This ranking includes all types of retirement plans for teachers, including pension plans, DC plans, and guaranteed return (or cash balance) plans, as well as hybrid plans that blend together various elements of all three plan types.
Using the approach outlined above, the best state in the country for new teacher retirement benefits is South Carolina with an overall score of 84.8%.
The state has two plans open to new teachers: a pension plan with an overall score of 69.7% and a defined contribution plan with a 99.9% overall score. The pension plan (SC Retirement System Pension Teachers Class 3) scores just 45.1% for short-term workers but receives a perfect score (100%) for full-career workers. The DC plan (SC Retirement DC Teachers) earns a score of 99.8% for short-term workers and 100% for both medium-term and full-career workers.
South Dakota follows closely behind with an overall score of 80.7%, while Oregon rounds out the top three with an overall score of 75.5%. Both states only have one plan open to new teachers, both of which are hybrid plans.
What the Top- and Bottom-Performing States Have in Common
The top-performing states reflect a wide range of plan designs offered across the country. However, like for South Carolina, one common element of these states is that stronger performance for short-term and medium-term workers helped boost their overall scores.
In fact, Washington and Arkansas are the only states in the top 10 where the average score for short-term workers is below 50%. Similarly, Kansas (#28) is the only state with an average short-term worker score over 50% that ranks outside of the top 10.
On the other hand, the lowest-scoring retirement plans are weighed down by their weak scores for full-career workers. For example, the four states with full-career scores below 70% (Virginia, Kentucky, Nevada, and Washington, D.C.) are all in the bottom 10.
What the Data Mean for Teachers
Many of the lowest-scoring retirement plans for teachers are those that were created in the years following the Great Recession.
While some states replaced their pension plans with lower-risk alternative plan designs that offered comparable benefits, others simply reduced the value of pension benefits offered to new teachers. The net result is that the expected lifetime value of pension benefits in 2024 was roughly $140,000 less than it was in 2006, a 10% decline in less than two decades.
Teachers hired before states began creating new tiers of benefits with less value will still retire with the benefits they were promised. This means the benefit value reduction will be felt primarily by new generations of teachers.
All of the new pension plans and benefit tiers were put in place as part of a wave of legislation to reduce costs and the risks to taxpayers from future investment shortfalls. These goals are understandable in the context of economic recession and financial volatility. In the years since the financial crisis, teacher pension plans have accumulated over $600 billion in pension debt — i.e., unfunded liabilities. The cost of paying this pension debt down has become an acute burden for states and school districts.
But the state legislatures who chose to continue offering pension benefits only through a lower valued tier of benefits have effectively shifted the costs of their legacy retirement plans on to educators. By cutting the benefit values for future teachers, states are forcing those individuals to find additional ways to use their salaries to save for retirement independent of the state retirement system. The best U.S. states for new teachers do not put teachers in this position.
Notes
- “Pension” means a defined benefit pension plan, “DC” means a defined contribution plan, “GR” means guaranteed return plan (or cash balance plan), and “Hybrid” means a hybrid plan that combines elements of pension, DC, and/or GR plans.
- Different retirement plan designs (pension, DC, GR, hybrid) have different available Retirement Benefits Score points, given the underlying variance in the kind of provisions offered by each plan design. The percentages shown are the percentage of available Retirement Benefit Score points.
- The following states offer multiple plans to teachers who must make a choice which they want to join: Florida, Indiana, Michigan, Ohio, Pennsylvania, South Carolina, Utah, Washington.
- The following states show average scores for a statewide teacher plan and separately managed municipal teacher plan: Connecticut, Georgia, Illinois, Massachusetts, Minnesota, Missouri, New York, Virginia.
- Colorado has separate pension plans for Denver Public Schools and all other state school districts, but both plans are managed by the same state administrative organization.
- Nevada has two pension plan designs with different contribution rate structures. In most school districts the employer decides which to offer, but in some places employees have a choice.
- Rhode Island offers a variety of hybrid benefit tiers to teachers depending on their enrollment in Social Security and other specific benefit provisions as designated by the school districts or specific employers.
- Texas has two pension plan designs that new members can join that differ slightly in their provisions based on the previous state employment history of the individual.