Retirement incentives and behavior of private and public sector workers

2020 ◽  
pp. 1-17
Author(s):  
Courtney Coile ◽  
Susan Stewart
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Financial Incentives ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Quarter Century ◽  
The Past ◽  
Retirement Incentives ◽  
Retirement Behavior ◽  
Public Sector Workers

Abstract Over the past several decades, private sector workers in the USA with employed-sponsored pensions have experienced a dramatic shift from defined benefit (DB) to defined contribution plans, while this trend has been less pronounced for public sector workers. In this paper, we use data from the Health and Retirement Study to explore changes in the retirement incentives and retirement behavior of public and private sector workers over the past quarter-century. We find that both groups have become less likely to report having a DB pension or any pension. Compared to their private sector counterparts, public sector workers have a higher level of retirement wealth and a larger financial gain from continued work at older ages, and these differences by sector are growing across cohorts. Both groups respond to financial incentives in making retirement decisions. However, growing differences by sector in the gain to continued work do not appear to have translated into diverging retirement behavior, as we observe similar trends in the two groups.

Transitions from career employment among public- and private-sector workers

2019 ◽  
Vol 18 (04) ◽  
pp. 529-548 ◽  
Author(s):  
Joseph F. Quinn ◽  
Kevin E. Cahill ◽  
Michael D. Giandrea
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Pension Plans ◽  
Full Time ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Private And Public ◽  
Public And Private Sector ◽  
Career Employment ◽  
Public Sector Workers

AbstractDo the retirement patterns of public-sector workers differ from those in the private sector? The latter typically face a retirement landscape with exposure to market uncertainties through defined-contribution pension plans and private saving. Public-sector workers, in contrast, are often covered by defined-benefit pension plans that encourage retirement at relatively young ages and offer financial security at older ages. We examine how private- and public-sector workers transition from full-time career employment, with a focus on the importance of gradual retirement. To our surprise, we find that the prevalence of continued work after career employment, predominantly on bridge jobs with new employers, is very similar in the two sectors, a result with important implications in a rapidly aging society.

Pension and Health Benefits for Public-Sector Workers

2013 ◽  
Author(s):  
Lee A. Craig
Keyword(s):  
United States ◽  
Public Sector ◽  
Private Sector ◽  
Health Benefits ◽  
The United States ◽  
Pension Plans ◽  
Federal State ◽  
Defined Benefit ◽  
State And Local ◽  
Public Sector Workers

In the United States, retirement and health benefits make up a substantial proportion of the total compensation of public-sector workers. This chapter explores the history and the main characteristics of such retirement and health benefits, as they have developed in the United States. As shown, on average, these benefits tend to be more valuable than those provided to private-sector workers. Public-sector workers are more likely than their private-sector counterparts to be covered by a retirement plan and by employer-provided health insurance. Public-sector pension plans are more likely to be defined benefit plans than are private-sector plans. Many public-sector employers have promised their employees more in benefits than they have set aside to pay for those benefits. Estimates suggest that the 2,670 federal, state, and local retirement plans currently in operation are underfunded collectively by as much as $5 trillion, and public-sector health plans are probably underfunded by roughly $1 trillion.

scholarly journals Behavioral economics perspectives on public sector pension plans

2011 ◽  
Vol 10 (2) ◽  
pp. 315-336 ◽  
Author(s):  
JOHN BESHEARS ◽  
JAMES J. CHOI ◽  
DAVID LAIBSON ◽  
BRIGITTE C. MADRIAN
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Pension Plan ◽  
Pension Plans ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Public And Private ◽  
Savings Behavior ◽  
The Public ◽  
Public And Private Sector

AbstractWe describe the pension plan features of the states and the largest cities and counties in the U.S. Unlike in the private sector, defined benefit (DB) pensions are still the norm in the public sector. However, a few jurisdictions have shifted toward defined contribution (DC) plans as their primary savings plan, and fiscal pressures are likely to generate more movement in this direction. Holding fixed a public employee's work and salary history, we show that DB retirement income replacement ratios vary greatly across jurisdictions. This creates large variation in workers’ need to save for retirement in other accounts. There is also substantial heterogeneity across jurisdictions in the savings generated in primary DC plans because of differences in the level of mandatory employer and employee contributions. One notable difference between public and private sector DC plans is that public sector primary DC plans are characterized by required employee or employer contributions (or both), whereas private sector plans largely feature voluntary employee contributions that are supplemented by an employer match. We conclude by applying lessons from savings behavior in private sector savings plans to the design of public sector plans.

Retirement and Pensions in American Economic History

2018 ◽  
pp. 354-374
Author(s):  
Robert Clark ◽  
Lee A. Craig
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Economic History ◽  
Pension Plans ◽  
Federal State ◽  
Defined Benefit ◽  
Retirement Plans ◽  
The Us ◽  
Defined Benefit Plans ◽  
State And Local

The proportion of the US population that survives to retirement age has increased over time, as has the share of the older population that retires. Higher incomes at older ages explain the increase in the incidence of retirement. Pensions provide much of that income. In general, public-sector workers, especially military personnel, were covered by pensions before their private-sector counterparts, and coverage in the public sector remains more widespread, and generous, than it is in the private sector. Public-sector pension plans are more likely to be defined benefit plans than are private-sector plans. Many public-sector employers have promised their employees more in benefits than they have set aside to pay for those benefits. Estimates suggest that the federal, state, and local retirement plans currently in operation are underfunded by as much as $5 trillion.

Pension Reforms and Public Sector Turnover

2019 ◽  
Vol 30 (1) ◽  
pp. 96-112 ◽  
Author(s):  
Evgenia Gorina ◽  
Trang Hoang
Keyword(s):  
Public Sector ◽  
State Level ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Retirement Benefits ◽  
Employment Benefits ◽  
Pension Reforms ◽  
Defined Contribution Plans ◽  
Retirement Systems ◽  
State Pension

Abstract Over the past decade, many states have reformed their retirement systems by reducing benefit generosity, tightening retirement provisions, introducing non-defined-benefit (DB) plan options and even replacing DB plans with defined-contribution plans. Many of these reforms have affected post-employment benefits that public workers will receive when they retire. Have these reforms also affected the attractiveness of public sector employment? To answer this question, we use state-level data from 2002 to 2015 and examine the relationship between state pension reforms and public employee turnover following the reforms. We find that employee responsiveness to the reforms was tangible and that it differed by reform type and worker education. These results are important because the design of public retirement benefits will continue to influence the ability of the public sector to recruit and retain high-quality workforce.

scholarly journals Compensation for State and Local Government Workers

2012 ◽  
Vol 26 (1) ◽  
pp. 217-242 ◽  
Author(s):  
Maury Gittleman ◽  
Brooks Pierce
Keyword(s):  
Public Sector ◽  
Local Government ◽  
Private Sector ◽  
Primary Data ◽  
Labor Statistics ◽  
State And Local Government ◽  
State And Local ◽  
Government Workers ◽  
Bureau Of Labor Statistics ◽  
Public Sector Workers

Are state and local government workers overcompensated? In this paper, we step back from the highly charged rhetoric and address this question with the two primary data sources for looking at compensation of state and local government workers: the Current Population Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics, and the Employer Costs for Employee Compensation microdata collected as part of the National Compensation Survey of the Bureau of Labor Statistics. In both data sets, the workers being hired in the public sector have higher skill levels than those in the private sector, so the challenge is to compare across sectors in a way that adjusts suitably for this difference. After controlling for skill differences and incorporating employer costs for benefits packages, we find that, on average, public sector workers in state government have compensation costs 3–10 percent greater than those for workers in the private sector, while in local government the gap is 10–19 percent. We caution that this finding is somewhat dependent on the chosen sample and specification, that averages can obscure broader differences in distributions, and that a host of worker and job attributes are not available to us in these data. Nonetheless, the data suggest that public sector workers, especially local government ones, on average, receive greater remuneration than observably similar private sector workers. Overturning this result would require, we think, strong arguments for particular model specifications, or different data.

scholarly journals Giving Time: Examining Sector Differences in Volunteering Intensity

2019 ◽  
Vol 30 (1) ◽  
pp. 22-40 ◽  
Author(s):  
Stephen B Holt
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Public Administration ◽  
Local Level ◽  
Social Desirability Bias ◽  
Public And Private ◽  
Nationally Representative ◽  
The Difference ◽  
Public And Private Sector ◽  
Public Sector Workers

Abstract Sector differences in prosocial motivations and behaviors among workers receives a great deal of attention in public administration scholarship. Extant literature consistently finds public sector workers are more likely to engage in prosocial behaviors, such as volunteering, than their peers in the private sector. Less attention has been paid to the sector gap in volunteerism along the intensive margin. Using time-diary data, which accounts for potential social desirability bias, from a nationally representative sample, this study investigates the gap between public sector workers and their private sector counterparts. The results suggest that public sector workers spend more time, on an average day, volunteering than observably similar private sector peers, and the difference cannot be explained by other observable differences between public and private sector workers. The gap in volunteer intensity is largest at the local level and among teachers. The implications of these results for research and practice are discussed.

Why are US men retiring later?

2018 ◽  
Vol 19 (3) ◽  
pp. 442-457
Author(s):  
Wenliang Hou ◽  
Alicia Munnell ◽  
Geoffrey Todd Sanzenbacher ◽  
Yinji Li
Keyword(s):  
Social Security ◽  
Structural Model ◽  
Retirement Age ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Retirement Plans ◽  
Original Cohort ◽  
The Past ◽  
Retirement Timing ◽  
Retirement Study

AbstractOver the past two decades, the share of individuals claiming Social Security at the Early Eligibility Age has dropped and the average retirement age has increased. At the same time, Social Security rules have changed substantially, employer-sponsored retirement plans have shifted from defined benefit (DB) to defined contribution (DC), health has improved, and mortality has decreased. In theory, all of these changes could lead to a trend toward later claiming. Disentangling the effect of any one change is difficult because they have been occurring simultaneously. This paper uses the Gustman and Steinmeier structural model of retirement timing to investigate which of these changes matter most by simulating their effects on the original cohort (1931–1941) of the Health and Retirement Study (HRS). The predicted behavior is then compared with the actual retirements of the Early Boomer cohort (1948–1953) to see how much of the later cohort's delayed claiming and retirement can be explained by these changes. The Early Boomer cohort was less likely to be fully retired than the HRS cohort at both age 62 (36.7% vs. 44.0%) and age 64 (49.5% vs. 53.9%). The model suggests that the shift from DB toward DC plans was the biggest contributor to these declines, followed by better health. Social Security rules and improvements in mortality played smaller roles.

scholarly journals Workplace pensions and remuneration in the public and private sectors in the UK

2016 ◽  
Vol 237 ◽  
pp. R30-R37 ◽  
Author(s):  
Jonathan Cribb ◽  
Carl Emmerson
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Public Service ◽  
Defined Benefit ◽  
Public And Private ◽  
The Public ◽  
Public Sector Reforms ◽  
The Uk ◽  
Workplace Pensions ◽  
Defined Benefit Pensions

We estimate the changing value of workplace pensions in the UK and incorporate their value into an estimate of the public sector pay differential. Falling pension membership in the private sector and growing value of public service pensions led to a significant increase in the estimated public sector pay differential from 1997 to 2009, even though headline pay grew faster in the private sector. From 2009 to 2012, although pay grew faster in the public sector, reforms to public service defined benefit pensions, particularly indexation to the CPI rather than RPI, significantly reduced the public pay differential.

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