PENSION STRUCTURE AND EMPLOYEE TURNOVER: EVIDENCE FROM A LARGE PUBLIC PENSION SYSTEM

Public pension systems in many U.S. states face large funding shortfalls, and policymakers have considered moving toward defined contribution (DC) pension structures in the interest of reducing the likelihood of future shortfalls. Concerns exist, however, that such changes might increase levels of e...

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Bibliographic Details
Published in:Industrial & labor relations review 2017-08, Vol.70 (4), p.976-1007
Main Authors: GOLDHABER, DAN, GROUT, CYRUS, HOLDEN, KRISTIAN L.
Format: Article
Language:English
Subjects:
Employee turnover
Employees
Employers
Evidence
Labor relations
Pension plans
Pensions
Policy making
Retirement Benefits
States
Teachers
Wisdom
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Summary:Public pension systems in many U.S. states face large funding shortfalls, and policymakers have considered moving toward defined contribution (DC) pension structures in the interest of reducing the likelihood of future shortfalls. Concerns exist, however, that such changes might increase levels of employee turnover. The empirical evidence on the relationship between pension structure and turnover is mixed, and is quite limited in the case of public-sector plans. The authors study a single class of public-sector employees (teachers) who are enrolled in either a traditional defined benefit (DB) plan or a hybrid DB-DC plan during overlapping periods of time. Contrary to conventional wisdom, the authors find little evidence that the introduction of the hybrid plan increased employee turnover; in fact, they find that turnover is lower among teachers who transferred out of the DB plan into the hybrid plan. Employers may benefit by shifting the debate away from plan structure per se and toward a discussion of how to provide employees with pension plans they will highly value.
ISSN:0019-7939
2162-271X
DOI:10.1177/0019793916678424