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 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.

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.

scholarly journals Worker Choices About Payouts in Public Pensions

2017 ◽  
Author(s):  
Robert L. Clark ◽  
Janet Raye Cowell
Keyword(s):  
Local Governments ◽  
Pension Plans ◽  
Policy Implications ◽  
Empirical Literature ◽  
Defined Benefit ◽  
Retirement Plans ◽  
The Public ◽  
State And Local ◽  
State Employees ◽  
State Pension

This chapter reviews available data on the annuity choices offered to retirees who participate in defined benefit (DB) plans. DB plans are most commonly offered by state and local governments to their employees, and information on annuity options is readily available. The authors examine all state pension plans that cover general state employees and teachers, and develop a table showing the similarities and differences across these approximately eighty separate state retirement plans. The authors determine the proportion of retirees selecting each of the annuity options. Where possible, annuity options in the public sector are compared to those offered by private sector employers. The chapter also reviews the empirical literature on who chooses the various annuity options offered in DB plans. Finally, the authors consider the policy implications of plan design and how this affects the types of annuities offered to retirees.

The UK Occupational Pension System in Crisis

2006 ◽  
Author(s):  
Gordon L. Clark
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Pension System ◽  
Occupational Pension ◽  
Defined Benefit ◽  
The Public ◽  
Occupational Pensions ◽  
Modern Capitalism ◽  
Defined Benefit Plans ◽  
Uncertain Future

The crisis in occupational pensions in Britain extend beyond coverage rates and benefit levels. Private-sector sponsors of existing defined-benefit plans face an uncertain future notwithstanding the establishment in 2005 of the Pension Protection Fund. As for the public sector, the unfunded status of many defined-benefit plans raises significant doubts about their long-term viability. Whatever happens to the Turner Report, the pension crisis has just begun; it is bound to dominate domestic politics for another generation. Most private sector employees do not have access to social security entitlements while public sector employees may see their entitlements passed back to central government to become yet another liability on an already overburdened state. This chapter examines the crisis in the British occupational pension system, the link between pensions and modern capitalism, corporate capitalism in a global environment, lessons for public policy, capital market efficiency and occupational pensions in the public sector.

From Stand-Alone Pensions to Alternative Retirement Plans: Examining State and Local Governments

2021 ◽  
pp. 088636872110307
Author(s):  
Bruce J. Perlman ◽  
Christopher G. Reddick
Keyword(s):  
United States ◽  
Local Governments ◽  
Pension Reform ◽  
The United States ◽  
Pension Plans ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Retirement Plans ◽  
Funded Pensions ◽  
State And Local

Defined benefit (DB) pension plans are the dominant retirement program for state and local governments in the United States. However, in the last 15 years, some have given new employees a choice of alternatives to stand-alone DB pension plans such as cash balance (CB), defined contribution (DC), and hybrid retirement plans. This article examines this shift through survival analysis using panel data of 190 state and local pension plans across the United States. From 2001 to 2019, we modeled five change factors found in the pension reform literature, namely, financial constraints, interest group influence, plan membership, and liability, along with other state factors. Our analysis shows that all five of these factors impacted the shift to alternative retirement plans from stand-alone DB plans. Notable findings are that well-funded pensions were more likely to shift to alternative retirement plans, and interest groups such as police, fire, and teachers were more likely to keep stand-alone plans.

An Introduction to Teacher Retirement Benefits

2010 ◽  
Vol 5 (4) ◽  
pp. 402-437 ◽  
Author(s):  
Janet S. Hansen
Keyword(s):  
Private Sector ◽  
Pension Plans ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Public And Private ◽  
Teacher Shortages ◽  
Retirement Benefits ◽  
Teacher Retirement ◽  
State And Local ◽  
Public And Private Sector

Like most other state and local government employees, teachers participate primarily in defined benefit pension plans whose benefits are largely based on final average salaries and length of service. Such pensions have been replaced in many private sector firms by defined contribution pensions. A number of questions have arisen about the feasibility and desirability of continuing to rely on defined benefit pensions for teachers. This article provides a brief history of teacher pensions and an overview of teacher retirement benefits today, including differences in the legal and economic context for public and private sector pensions that are important considerations in plan design. It then introduces issues related to financial sustainability, teacher mobility, and teacher shortages. The article concludes with an overview of key differences between traditional defined benefit and defined contribution plans and raises the possibility of adopting a “hybrid” kind of plan that includes features from both kinds of traditional plans.

Labor market aspects of state and local retirement plans: a review of evidence and a blueprint for future research

2011 ◽  
Vol 10 (2) ◽  
pp. 337-361 ◽  
Author(s):  
LEORA FRIEDBERG
Keyword(s):  
Labor Market ◽  
Local Governments ◽  
Pension Plans ◽  
Future Research ◽  
Defined Benefit ◽  
Retirement Plans ◽  
Public And Private ◽  
State And Local ◽  
State Pension ◽  
Government Workers

AbstractTraditional defined benefit (DB) pension plans remain the overwhelming norm for teachers, policemen and other employees of state and local governments. The incentives for workers with DB pension plans to stay in their jobs shift dramatically over the course of their careers. Moreover, limited transferability of pension wealth across states and between public and private jobs impedes mobility in the labor market. Yet, little is known about the labor market effects of pensions on state and local government workers. The literature on private-employer pensions has made contributions on some of these fronts in recent years that can shed light on policy concerns raised by the possibility that pension plans will be modified in coming years. Moreover, some of the limitations constraining research on pensions may be overcome by focusing on government workers, with recent work on public school teachers pointing the way. Very recent studies are finding strong retirement responses to age- and tenure-related incentives built into state pension plans.

scholarly journals Prudent investors: the asset allocation of public pension plans

2008 ◽  
Vol 8 (4) ◽  
pp. 501-525 ◽  
Author(s):  
CHRISTIAN E. WELLER ◽  
JEFFREY B. WENGER
Keyword(s):  
Public Sector ◽  
Local Government ◽  
Asset Allocation ◽  
Conflicts Of Interest ◽  
Pension Plans ◽  
Investment Behavior ◽  
Defined Benefit ◽  
Flow Of Funds ◽  
State And Local Government ◽  
State And Local

AbstractAfter 2000, the vast majority of defined benefit (DB) pension plans encountered a decrease in their funding ratios, largely due to a drop in asset prices. It is possible that public sector pension plans may have acted imprudently by chasing returns, once they encountered underfunding. We identify four indicators for DB plans' imprudent investment behavior: no portfolio rebalancing, employer conflicts of interest, trustee conflicts of interest, and failure to implement best investment practices. To see if public sector pension plans rebalance their portfolios, we use data from the Federal Reserve's Flow of Funds, dating from 1952 to 2007. To test for the remaining three hypotheses, we use data from the Census' State and Local Government Employee Retirement Systems data base, where consistent data for state and local government plans are available from 1993 to 2005. Our results suggest that there is no evidence that public sector plans systematically engaged in imprudent investment behavior and that this did not systematically differ after 2000 from the earlier period.

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.

MPA Graduates and the Dilemma of Job Satisfaction: Does Crossing the Sector Line Make a Difference

1991 ◽  
Vol 20 (4) ◽  
pp. 449-455 ◽  
Author(s):  
Barrie E. Blunt ◽  
Kris Anne Spring
Keyword(s):  
Job Satisfaction ◽  
Public Sector ◽  
Private Sector ◽  
Work Satisfaction ◽  
Federal State ◽  
Non Profit ◽  
The Public ◽  
Public Sector Employment ◽  
State Regional

This study examines levels of job satisfaction for MPA graduates employed in the public, private, and non-profit sectors. Findings are based on a survey and indicate that MPA graduates derive greater satisfaction with pay and promotion opportunities in the private sector than in the public or non-profit sectors. No significant differences were noted between the sectors with regard to work satisfaction or satisfaction with supervisor or co-workers. Further, no differences in levels of satisfaction were noted between four categories of public sector employment; federal, state, regional, or local.

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