Labor & Economic News Blog
Wednesday, May 14, 2014
Defined Contribution Plans in the Public Sector: An Update
The financial crisis and its aftermath generated two types of responses from sponsors of state and local government pensions. The first was to cut back on existing defined benefit plan commitments by raising employee contributions, reducing benefits for new employees and, in some cases, suspending the cost-of-living adjustments for existing retirees. The second response was to initiate proposals to shift some or all of the pension system from a defined benefit to
a defined contribution plan. This brief describes this flurry of defined contribution activity, identifies the factors that led to the changes occurring in the states where they did, and presents data on participation and assets to put the flurry into perspective.
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