Which plan to choose? The determinants of pension system choice for public school teachers*

Dan Goldhaber and Cyrus Grout

Journal of Pension Economics and Finance, 2016, vol. 15, issue 1, 30-54

Abstract: This paper examines a natural experiment in which Washington State teachers were offered the opportunity to choose between enrolling in a traditional defined benefit (DB) plan and a hybrid plan with DB and defined contribution (DC) components. We find plan preference is weakly related to estimates of the relative financial benefits of being in either the DB or hybrid system and strongly related to teacher age. Importantly, we also find that the majority of teachers prefer the hybrid plan, and that teachers opting into the hybrid plan tend to be more effective based on student output measures of teacher productivity. These results suggest that policy shifts toward pension systems that include DC options do not necessarily make teaching a less desirable profession, particularly for the most productive employees.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jpenef:v:15:y:2016:i:01:p:30-54_00

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