How retirement provisions affect tenure of state and local workers

Abstract

The brief's key findings are: (1) The "backloaded" benefit structure of public sector defined benefit plans favors long-tenure workers over short-tenure workers. (2) However, when a defined benefit plan is combined with either Social Security or a defined contribution plan, the degree of backloading is reduced. (3) Not surprisingly, then, the analysis shows that public workers with either Social Security or a defined contribution plan are less likely to stay until retirement age. (4) Giving workers more flexibility to switch jobs leads to better employment matches.