FIGURE 5-14  Pension plan participants in the private sector by plan type, 1975–2008. SOURCES: Data for defined benefit (DB) and defined contribution (DC) from Department of Labor, Form 5500; data for individual retirement accounts (IRAs) and Keogh plans from Internal Revenue Service, Statistics of Income.

one reason for the increase in the labor force participation of older workers since the mid-1990s.

State and Local DB Plans Have Strong Incentives to Retire Early

While there has been a rapid conversion to personal retirement accounts in the private sector, DB plans with strong early retirement incentives are still common among federal, state, and local employees. Figure 5-15 shows the trend in the federal (nonmilitary) sector. There is less time-series information on DB versus DC coverage for the state and local sectors. Except for a few scattered plans in higher education, there were no DC plans in state government until 1996. By 2010, 13 states offered their employees a DC plan (typically a secondary plan). Recently, Michigan and Alaska required all new employees to participate solely in a DC plan, but in these states the primary plan for earlier hires is still DB.

The best state and local data are from the BLS compensation surveys. The 2010 survey of state and local governments found that 90 percent offered retirement benefits, with 85 percent participating; that 84 percent offered a DB plan, with 79 percent participating; that 29 percent offered a DC plan, with 17 percent participating; and that most persons who were offered a DC plan were also offered a DB plan.

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