Do Smaller Public Employer Pensions Spur More Saving?

by and

SLP#76

The brief’s key findings are:

  • In theory, workers would increase their supplemental saving in response to lower pension income, but do they in practice?
  • The answer matters for state and local workers, as pension income varies, some plans are poorly funded, and not all workers have Social Security.
  • The results show that workers with less expected pension income are more likely to save, but the effects are small, and they do not respond to the other factors.
  • The takeaway is that if public employers reduce pension benefits, workers are unlikely to make up the difference by saving more on their own.

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