Background
More than 30 million Americans participate in some form of public government employee retirement plan. Among others, they include:
- federal, state, and local government employees;
- military personnel; and
- teachers, police, and firefighters.
There are thousands of these plans that vary enormously in every aspect. They have different coverage, benefit levels, vesting rules, employee contributions, early retirement provisions, integration with Social Security, inflation protections, and funding soundness.
Compared with private defined-benefit plans, public plans often provide higher benefit amounts, better inflation protection, and lower ages for benefit eligibility. Disparities between women’s and men’s benefits tend to be smaller in the public sector than in private plans. The same is true of the pension benefits of people from historically disadvantaged racial and ethnic groups compared to the benefits of white participants.
Critics of public retirement systems sometimes claim that the benefits are excessively generous compared with those in the private sector. However, retirement benefits are only one part of total compensation. Total compensation, including both salary and benefits, should be the yardstick for judging whether public employees are paid more or less than their private-sector counterparts.