Pension Incentives and Job Mobility

Gustman, Alan L.; Steinmeier, Thomas L.

doi:10.17848/9780585183466

Cited by 60 publications

(12 citation statements)

References 22 publications

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“…Whether this is causal or simply correlational has been difficult to confirm. Second, there appear to be no major differences in turnover rates between employees offered DB versus DC plans (Gustman and Steinmeier, 1995). This is contrary to what might be expected, since DB plans tend to be more ‘back-loaded’ – meaning that employees with long tenures receive more valuable retirement benefits than short-tenure employees.…”

Section: Relevant Prior Studiesmentioning

confidence: 99%

Lessons for public pensions from Utah's move to pension choice

Clark

Hanson

Mitchell

2016

Journal of Pension Economics and Finance

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We explore what happened when the state of Utah moved away from its traditional defined benefit pension. In its place, it offered new hires a choice between a conventional defined contribution plan and a hybrid plan option, where the latter has both a guaranteed benefit component and a defined contribution plan where employees bear investment risk. We show that around 60% of new hires failed to make any active choice and, as a result, were automatically defaulted into the hybrid plan. Slightly more than half of those who made an active choice elected the hybrid plan. Post-reform, employees who failed to actively elect a primary retirement plan were also far less likely to enroll in a supplemental retirement account, compared with new hires who actively selected a plan. We also find that employees hired following the reform were more likely to leave public employment, resulting in higher separation rates. This could reflect a reduction in the desirability of public employment under the new pension design and an improving economic climate in the state. Our results imply that public pension reformers must consider employee responses in addition to potential cost savings, when developing and enacting major pension plan changes.

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Section: Relevant Prior Studiesmentioning

confidence: 99%

Lessons for public pensions from Utah's move to pension choice

Clark

Hanson

Mitchell

2016

Journal of Pension Economics and Finance

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“…Researchers do agree that defined benefit plans have strong disincentives to mobility. For example, Gustman and Steinmeier (1995) explore how back loading, vesting, and capital losses for defined benefit plans alter mobility behavior. Of the many interesting findings in this work is that back loading of pensions discourages mobility, but not nearly as much as the compensation premium that accompanies pensioned jobs.…”

Section: Evidence To Datementioning

confidence: 99%

Pension type, tenure, and job mobility

Haverstick

Munnell

Sanzenbacher

et al. 2010

Journal of Pension Economics and Finance

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Over the last 25 years, the United States has seen a dramatic shift in the private sector away from defined benefit plans and towards defined contribution plans. While commentators constantly cite an increase in labor mobility as a major reason for the shift in the private sector from defined benefit to defined contribution plans, researchers to date have not been able to document any difference in mobility by pension type. This study argues that the inability to find such a relationship stems from ignoring the important role of job tenure. Using data from the Survey of Income and Program Participation (SIPP) and the Panel Study of Income Dynamics (PSID), the results of duration analyses that include the interaction of job tenure and pension type reveal that workers with between five and ten years of tenure at a firm are 23 % more likely to leave a job with a defined contribution plan than with a defined benefit plan. This difference is consistent with differences in the timing of benefit level entitlement between the two types of plans.

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“…(1993), Allen and Clark (1987), Woodbury and Bettinger (1991), Woodbury and Huang (1993), Clark and McDermed (1993), Feldstein (1994), Gentry and Peress (1994), and Gustman and Steinmeier (1995).…”

mentioning

confidence: 99%

Taxation and Saving

Bernheim

1999

117

108

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National saving consists of two components: private saving and public saving. Private saving takes place among 1 households (personal saving) and corporations (corporate saving). Public saving is the sum of budget surpluses (or deficits) for federal, state, and local governments. For the most part, this chapter concerns the impact of tax policy on the personal component of national saving. However, collateral effects on other components of national saving (e.g. changes in government revenue and shifts between corporate saving and private saving) are considered where relevant.

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Pension Incentives and Job Mobility

Cited by 60 publications

References 22 publications

Lessons for public pensions from Utah's move to pension choice

Lessons for public pensions from Utah's move to pension choice

Pension type, tenure, and job mobility

Taxation and Saving

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