The National Public Pension Coalition (NPPC) shared three common misconceptions about public pensions in a recent blog post. One common misconception…
Since most private-sector workers primarily use a 401(k), policymakers should switch public employees to one, too. However, the National Institute on Retirement Security (NIRS) released research showing defined benefit (pension) plans are effective recruitment and retention tools for public employees. The report showed public employees highly favored their pension plans and would greatly consider leaving if their pensions changed or were cut. NIRS also released a report examining states that closed pensions plans and switched to Defined Contribution (DC) or 401(k) style plans. Research showed closing the plans did not address the existing Unfunded Accrued Liability (UAL), or debt. Costs for these states actually increased after closing pension plans. Plus, to date, there is no research showing DC plans or hybrid plans provide the same level of benefits or retirement security compared to pensions.
NPPC debunks more misconceptions about public pensions in their blog post. Click here to read the post.
Read the research cited in this post:
NIRS: State and Local Employees Views on Their Jobs, Pay and Benefits
NIRS: Enduring Challenges: Examining the Experiences of States that Closed Pension Plans