How Will Rhode Island's New Hybrid Pension Plan Affect Teachers?

Research Report

How Will Rhode Island's New Hybrid Pension Plan Affect Teachers?

Abstract

In 2011 Rhode Island replaced the stand-alone defined benefit pension plan it provided to state employees with a hybrid plan that reduced the defined benefit component and added a 401(k)-type, defined contribution component. Although controversial, the new hybrid plan will boost retirement incomes for most of the states public school teachers. Our simulations show that two-thirds of newly hired teachers will earn more retirement benefits under the hybrid plan they would have earned under the old plan. Defined contribution plansthe dominant employer-sponsored retirement plan in the private sectorcan play an important role in the reform of public-sector pensions.

Cross-Center Initiative

Cross-Center Initiative: 
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