New Study Affirms Public Employees’ Strong Support For Defined Benefit Pension Plans Versus A 401K

1. Employees directing their own investments in a 401K plan typically tend to earn lower returns than state pension plans. NIRS attributes this to four factors: lower expenses, professional management, an optimal investment allocation used by the DB plan and the benefit of longevity risk pooling.

2. Rather than lower costs by moving from a DB to a 401K plan, states actually experience increased retirement costs for themselves and taxpayers. Thus, NIRS says in its report, “Changing from DB to a 401K plan does not solve the underlying funding problems a state may be experiencing.”

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