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Political economy of public sector retirement plans

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  • SCHIEBER, SYLVESTER J.

Abstract

Virtually all state and local government employers in the United States offer workers some sort of retirement benefits today but there is significant variation in the characteristics of those plans. There is also a great deal of public angst about the level and timing of commitments made in these plans. The literature on retirement plans suggests that they are important elements of compensation that plan sponsors use in meeting their human resource goals. But public retirement plans are created and operated in a public policy environment and forces other than local labor market considerations may be brought to bear in the organization and operation of these plans. This paper explores some of the possible explanations for the variation in state retirement plans. Public disclosure data is used to develop a model that explains relative generosity of benefits based on the characteristics of participants and the marketplaces in which the plans are offered. The final section of the paper places the issues explored in a forward looking context. The public disclosure environment recently put in place for public retirement plans is likely to have a more profound effect on state pension operations than any other development in recent history.

Suggested Citation

  • Schieber, Sylvester J., 2011. "Political economy of public sector retirement plans," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(02), pages 269-290, April.
  • Handle: RePEc:cup:jpenef:v:10:y:2011:i:02:p:269-290_00
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    Cited by:

    1. Meijdam, A.C. & Ponds, E.H.M., 2013. "On the Optimal Degree Of Funding Of Public Sector Pension Plans," Discussion Paper 2013-011, Tilburg University, Center for Economic Research.
    2. Godbout, Luc & Trudel, Yves & St-Cerny, Suzie, 2013. "Le régime de rentes du Québec : le rendement différencié selon l’année de prise de la retraite de 1968 jusqu’en 2056," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(2), pages 89-113, Juin.
    3. Robert Novy-Marx & Joshua D. Rauh, 2012. "The Revenue Demands of Public Employee Pension Promises," NBER Working Papers 18489, National Bureau of Economic Research, Inc.

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