A Role for Defined Contribution Plans in the Public Sector

Source: Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz, and Laura Quinby, Center for Retirement Research at Boston College, SLP#16, April 2011

From the abstract:
In the wake of the financial crisis, policymakers have been talking about shifting from defined benefit plans to defined contribution plans in the public sector. Three states – Georgia, Michigan, and Utah – have taken action, joining the 10 states that had introduced some form of defined contribution plans before 2008. Interestingly, these new plans are “hybrids” that combine elements of both defined benefit plans and defined contribution plans. Such an approach spreads the risks associated with the provision of retirement income between the employer and the employee. This brief provides an update on defined contribution initiatives in the public sector and then discusses whether the hybrids that have been introduced are the best way to combine the two plan types.

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