Distribution Options in Public Pension Plans

Principal Investigator: Robert Clark

Sponsor: Laura and John Arnold Foundation

Award Period: 6/7/2017 - 10/31/2019

Amount: $162,045

Description: This research is providing the first comprehensive analysis of annuity options offered by state-managed retirement systems for teachers, state employees, and local government employees. These public plans are not subject to ERISA. Important differences between ERISA regulations and the management of public plans include: how lump sum benefits are calculated, the fact that joint and survivor annuities are not the default option, and the interest or discount rates used to calculate monthly benefits. The first deliverable for the project is a report that details each of the payout options and the key assumptions used to calculate the various payouts. The investigator will examine these options to illustrate how they vary across the states. Annuity options have been rather static over time while public labor markets have been changing. The second deliverable for the project will be a comprehensive assessment of whether current payout options are appropriate for today’s career public employees, many of whom retire in their 50's.