Defined Benefit Pension Plan Distribution Decisions by Public Sector Employees

Robert L. Clark, Melinda Morrill and David Vanderweide

No 18488, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Studies examining pension distribution choices have found that the tendency of private-sector workers is to select lump sum distributions instead of life annuities. In the public sector, defined benefit pensions usually offer lump sum distributions equal to employee contributions, not the present value of the annuity. Using administrative data from the North Carolina state and local government retirement systems, we find that over two-thirds of public sector workers under age 50 separating prior to retirement from public plans in North Carolina left their accounts open and did not request a cash distribution from the pension system within one year of separation. Furthermore, the evidence suggests many separating workers, particularly those with short tenure, may be forgoing important benefits due to lack of knowledge, understanding, or accessibility of benefits. In contrast to prior research in the private sector, we find no evidence of a bias toward cash distributions for public employees in North Carolina.

JEL-codes: H75 J45 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-age and nep-lab
Note: AG LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published as Defined Benefit Pension Plan Distribution Decisions by Public Sector Employees , Robert L. Clark, Melinda Sandler Morrill, David Vanderweide. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century , Clark, Rauh, and Duggan. 2014
Published as Robert L. Clark & Melinda Sandler Morrill & David Vanderweide, 2014. "Defined benefit pension plan distribution decisions by public sector employees," Journal of Public Economics, vol 116, pages 73-88.

Downloads: (external link)
http://www.nber.org/papers/w18488.pdf (application/pdf)

Related works:
Journal Article: Defined benefit pension plan distribution decisions by public sector employees (2014)
Chapter: Defined Benefit Pension Plan Distribution Decisions by Public Sector Employees (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18488

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18488

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().