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Public Employees’ Retirement Investment Plan Decisions More Complex than for those in the Private Sector

Compared to private sector employees, public sector employees face expanded and more complex choices of retirement savings plans that often makes choosing one difficult, according to a series of reports released today by the TIAA Institute.

Federal tax policy provides state and local governments with the opportunity to offer 401(k) and 457 plans, and in some instances, some public organizations are offered 403(b) plans in addition from which to choose. These comprehensive reports provide a detailed comparison of the rules and regulations governing these different types of retirement savings plans.

‘Choosing a Retirement Saving Plan When 401(k), 403(b) and 457 Plans are Offered’ and ‘Retirement Saving in Multi-Plan Environment,’ by Robert L. Clark, Aditi Pathak, and Denis Pelletier looked closely at the retirement choices presented to all North Carolina school districts, and found that although public school districts in North Carolina offer a 403(b) retirement plan alternative, only about 17% of school personnel who are eligible participate in the program.

Other key findings include:

  • 10% of active participants contribute to two or more plans.
  • Highly-compensated employees and managers show no tendency to utilize secondary plans to exceed annual retirement contribution limits.

‘Teachers in North Carolina wanting to save for retirement face a complex set of choices,’ said Robert L. Clark, Poole College of Management, North Carolina State University. ‘First, they must decide whether to enroll in either the state-managed 401(k) or 457 plans or a locally-managed 403(b). Those that select to participate in the 403(b) must then select a vendor from the list of approved investment firms that often have 5 or more vendors. Thus, teachers must carefully review their saving options and then select the best plan and vendor. The range of choices makes saving decisions more difficult compared to those faced by the typical private sector worker.’

‘This research provides vital information for employees to better understand what retirement plans work best for them and their families,’ said Stephanie Bell-Rose, Head of TIAA Institute. ‘Finding and contributing to a retirement plan is critical in building and securing a strong financial future. These reports provide a platform to help North Carolinian public employees pick the plan that works best for their financial goals.’

In total, the researchers examined the records of more than 71,000 employees in the school districts across North Carolina. The data collected included variables such as age, gender, marital status, race, occupation, and many others.

To view the reports in full, please click here.

This news story was prepared and distributed by TIAA-Teachers Insurance and Annuity Assocation of America, via Publicnow on May 24, 2017.

About the TIAA Institute

The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in-depth research, provides access to a network of thought leaders and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success. For more information about the TIAA Institute, visit .


TIAA is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has $938 billion in assets under management (as of 03/31/2017, and based on assets under management across Nuveen Investments affiliates and TIAA investment management teams) and offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.