A new research brief examines the workforce impacts of existing defined benefit pension plans to assess the likely effects of a switch to defined contribution individual accounts or cash balance plans.
The National Institute on Retirement Security's "The Great Recession: Pressures on Public Pensions, Employment Relations and Reforms" found that public employers would attract a different labor force if they switched retirement benefits away from pensions because public employees would be less committed to their employers and thus less likely to invest in nontransferable skills that are critical to delivery of taxpayer services.
Not having a steady pension plan would also increase employee turnover, the report found. DC accounts and cash balance plans no longer defer compensation into the future and thus offer fewer economic incentives to employees to stay with public employers.
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