Breaking News (or Not): Public Employees Prefer Defined Benefit to 401(k) Plans

Posted By: John Sullivan

Granted, they’ve got a Clifford-sized dog in the hunt, but a new study explains why public employees prefer defined benefit plans over defined contribution plans.

Noting a defined benefits plan’s “higher, more secure retirement income compared to a 401(k)-style plan,” the study from University of California, Berkeley compared CalSTRS pension benefits for California public school teachers.

Unsurprisingly, it finds that switching to an account-based retirement system–such as a 401(k) or cash balance plan–“would sharply reduce the retirement income security of teachers.”

“The study clearly shows that most classroom teaching in California is performed by long-career teachers,” Teachers’ Retirement Board Chair Harry Keiley, said in a statement. “This proves conclusively that the CalSTRS plan design benefits an overwhelming number of lifetime educators who are well-positioned to benefit from a traditional pension.”

No research on taxpayer cost or budget deficits in Sacramento were included in the release.

For the full article, click on the link below.
[Source]: 401(K) Specialist