Brief How Long Must State and Local Employees Work to Accumulate Pension Benefits?
Richard W. Johnson, Barbara Butrica, Owen Haaga, Benjamin G. Southgate
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Traditional defined benefit pension plans that cover nearly all state and local government employees generally provide generous retirement benefits to long-tenured public servants but little retirement security to those with shorter tenures. Virtually every plan requires employee contributions. In half of those plans, employees must work at least 20 years before their future benefits are worth more than those contributions. Employees who separate earlier get nothing from their plan. Alternative designs like cash balance plans distribute benefits more equally across the workforce and allow employees who spend less than a full career in public service to accumulate retirement benefits.
Research Areas Wealth and financial well-being Aging and retirement Taxes and budgets
Tags Older workers Pensions Wages and nonwage compensation State and local tax issues Retirement policy
Policy Centers Income and Benefits Policy Center