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.
To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.