Do Public Sector Workers Increase Their Outside Savings in Response to Pension Cuts?

Laura Quinby () and Geoffrey Sanzenbacher
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Laura Quinby: Center for Retirement Research at Boston College
Geoffrey Sanzenbacher: Boston College

No 1023, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: As state and local policymakers enact benefit cuts to reduce the cost of their pension systems, the life-cycle model suggests that workers will adjust by saving more on their own. But, whether workers actually respond to pension characteristics remains an open question. After all, income received far in the future may not be salient to young workers deciding how much of their earnings to consume in the present. To answer the question, this paper links the Survey of Income and Program Participation to the Public Plans Database and explores whether state and local workers consider the amount of their pension savings, the funded status of their plan, or their Social Security coverage when deciding whether to participate in a supplemental defined contribution (DC) plan.

Keywords: pension systems; benefits; savings (search for similar items in EconPapers)
JEL-codes: J26 J32 J45 (search for similar items in EconPapers)
Date: 2021-01-22
New Economics Papers: this item is included in nep-age and nep-lma
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