About

What are pensions? The definition of “pension” is a tax-deferred savings vehicle that allows for the accumulation of assets for later use as retirement income. There are a number of different types of these retirement savings vehicles.  The traditional pension plan provides regular installments, usually for the remaining life of the person receiving the benefit. Other tax-deferred arrangements, such as 401(k) plans and individual retirement accounts (IRAs), provide savings that, upon retirement, can be withdrawn in a lump sum or periodically until the monies run out.

A “public” pension refers to those pensions provided to individuals who work in the public sector: school teachers, government (federal, state, and local) employees, police, firefighters, etc.

According to the U.S. Bureau of Labor Statistics, nearly 90 percent of employees of state and local government have a traditional pension, or defined benefit plan, as their primary retirement vehicle. Public pension benefits are administered by some 2,500 different public retirement systems in the U.S. Together, these systems administer defined benefit plans for some 15 million working and 7.5 million retired public employees, distributing more than $165 billion annually in pension payments.

Pensions are complicated and easily misunderstood. For example there’s a common misconception that public employees don’t contribute to their pensions. They do with every paycheck.  And often pension costs are tied with health care benefits which makes statements like “spiraling costs out of control” even more confusing for which is it – the pension pay-out or the health care coverage?

This blog sets out to share facts, critique reports and studies, examine proposed policies and legislative actions, and look at media stories.

Launched as a collaborative effort of the National Association of State Retirement Administrators and the National Council on Teacher Retirement, PensionDialog is moderated by Ady Dewey. Contact her via e-mail.