NAGDCA Director Proposes Growing DC Plan Usage in Public Retirement Systems
NAGDCA is calling for increasing the usage of defined contribution (DC) plans in state and local government systems, as a response to barriers deterring public sector workers’ from saving for retirement.
In a presentation at the National Conference on Public Employee Retirement Systems (NCPERS) Chief Executives Summit this month, NAGDCA Executive Director Matt Petersen suggested raising the role of DC plans in public sector retirement systems due to “changes and factors” that have impeded on these workers’ retirement savings.
These influences include a change in public employee tenure, which has decreased in modern workforces for the general public sector population, rather than for police officers and teachers who tend to serve the traditional 30-year tenure that public retirement systems derive their assessments on, said Petersen.
Petersen also claimed that defined benefit (DB) plans have diluted their contributions since the financial crisis in 2008, adding that median benefits for workers in lower tiers of public sector pension systems have fallen by 15% since and have thereby reduced guarantees to public workers. The impact of these actions will not be known for another 10 to 15 years as these workers have not yet retired, he said.
“Public sector retirement systems have evolved in many ways since the Great Financial Crisis. While some of these changes are obvious, others may be less so,” Petersen stated. “The bottom line is that public sector retirement systems can no longer provide meaningful contribution to their employees’ ability to save adequately for retirement with business as usual.”
Another factor is the possible impact of Social Security’s imminent insolvency—which now shows a 23% cut to benefits by 2033, according to the latest Social Security Trustees Report.
Given these changes, Petersen called for enhancing the role of DC benefits in public sector retirement systems and improving benefit education for participants.
“The public sector must think beyond DB, and plan sponsors need to take the lead in educating and reframing benefits for their participants,” he concluded. “Nothing less than a public sector employees’ ability to save adequately for a secure retirement is at stake.”
Editor’s Note: This article has been modified to highlight Matt Petersen’s comments on DC plan usability and prominence in public retirement systems.
SEE ALSO:
· 2025 Social Security Trustees Report Shows 23% Benefit Cut on Tap by 2033
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
