New York City's defined benefit pension plans deliver the same retirement income as a defined contribution 401(k)-type individual account, for 40 percent less cost, according to a report by the National Institute on Retirement Security and Pension Trustee Advisors on behalf of the Office of New York City Comptroller John C. Liu.

"A Better Bang for New York City's Buck" found that defined benefit savings came from superior investment returns, better management of longevity risk and portfolio diversification. The report found that defined benefit plans had higher investment returns because of the pooled nature of the assets and lower fees stemming from economies of scale, but also because the assets are professionally, not individually, managed. The City plans' enhanced investment returns save from 21 to 22 percent.

New York City's defined benefit plans save between 10 and 13 percent compared to a typical defined contribution plan because pensions pool the longevity risks of a large number of individuals and can determine and plan for mortality on an actuarial basis.