A Role for Defined Contribution Plans in the Public Sector


Summary:

Three new plans studied in Georgia, Michigan, and Utah combine elements of both defined benefit and defined contribution plans. (4/11)

Author(s):
Alicia H. Munnell, Jean-Pierre Aubry, Josh Hurwitz, and Laura Quinby of the Center for Retirement Research at Boston College
Publication date:
April 2011
Filed under:
Research Studies
Key findings:
  • In recent years, a few states have shifted from defined benefit (DB) to defined contribution (DC) pension plans.
  • Many of the new plans are “hybrids” with a slimmed down DB plan and a minimal DC plan, which shifts substantial risk to employees.
  • An alternative hybrid design could offer a full DB plan up to an income cap and “stack” a DC plan on top for those with higher incomes.
  • The “stacked” approach would give those with modest incomes the full protection of a DB plan while limiting taxpayers’ commitment to those with higher incomes.
Download publication:
A Role for DC Plans