State and Local Government Pensions Are Different From Private Plans


With heightened emphasis on the economic security of future retirees, it is critical to understand the differences between state and local pension plans and those offered by the private sector.

Alicia H. Munnell and Mauricio Soto of the Center for Retirement Research at Boston College
Publication date:
November 2007
Filed under:
Research Studies
Key findings:
  • Public plans are primarily defined benefit, coverage is virtually universal, and only 70 percent of workers are in Social Security.
  • Private plans are mostly 401(k)s, less than half of the workforce is covered, and everyone participates in Social Security.
  • Public plans provide larger benefits, but rely more on employee contributions.
  • Plans in both sectors, though, invest about 70 percent of their assets in equities and their defined benefit plans are 80 to 90 percent funded.
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S-L pensions are different