PERSPECTIVES: Pensions for State and Local Government Workers Not Covered by Social Security: Do Benefits Meet Federal Standards?

by Laura D. Quinby, Jean-Pierre Aubry, and Alicia H. Munnell
Social Security Bulletin, Vol. 80 No. 3, 2020
Table equivalent for Chart 4. Estimated present-value lifetime wealth from a combination of Social Security and a Safe Harbor–compliant defined contribution plan for a hypothetical 2018 labor force entrant aged 25, by number of years in noncovered employment
Years Lifetime wealth Counterfactual Social Security wealth
No COLA With COLA No COLA With COLA
1 927,125.02 1,172,646.22 908,533.68 1,154,054.88
2 945,451.53 1,190,972.73 908,533.68 1,154,054.88
3 963,516.98 1,209,038.18 908,533.68 1,154,054.88
4 981,325.08 1,226,846.29 908,533.68 1,154,054.88
5 998,879.51 1,244,400.71 908,533.68 1,154,054.88
6 999,942.49 1,241,074.63 908,533.68 1,154,054.88
7 1,000,758.96 1,237,502.05 908,533.68 1,154,054.88
8 1,001,332.45 1,233,686.48 908,533.68 1,154,054.88
9 1,001,666.40 1,229,631.38 908,533.68 1,154,054.88
10 1,001,764.24 1,225,340.16 908,533.68 1,154,054.88
11 972,864.31 1,184,277.74 908,533.68 1,154,054.88
12 943,734.94 1,142,985.88 908,533.68 1,154,054.88
13 914,379.40 1,101,467.86 908,533.68 1,154,054.88
14 884,800.91 1,059,726.88 908,533.68 1,154,054.88
15 864,296.99 1,029,572.17 908,533.68 1,154,054.88
16 848,625.42 1,005,614.23 908,533.68 1,154,054.88
17 831,838.50 980,297.26 908,533.68 1,154,054.88
18 813,891.57 953,563.68 908,533.68 1,154,054.88
19 794,737.60 925,352.95 908,533.68 1,154,054.88
20 774,327.07 895,601.36 908,533.68 1,154,054.88
21 752,607.89 864,241.97 908,533.68 1,154,054.88
22 729,525.26 831,204.39 908,533.68 1,154,054.88
23 705,021.55 796,414.64 908,533.68 1,154,054.88
24 692,490.85 776,885.68 908,533.68 1,154,054.88
25 689,424.94 769,430.71 908,533.68 1,154,054.88
26 686,171.34 761,788.06 908,533.68 1,154,054.88
27 682,115.56 753,176.43 908,533.68 1,154,054.88
28 677,236.77 743,568.68 908,533.68 1,154,054.88
29 670,806.29 732,038.48 908,533.68 1,154,054.88
30 659,501.70 714,364.91 908,533.68 1,154,054.88
SOURCE: Authors' calculations.
NOTES: Appendix Table C-1 presents the underlying assumptions.
The Social Security component of the combined benefit is WEP-adjusted.
Table equivalent for Chart 6. Percentage distribution of state and local government defined benefit plans, by counterfactual weath ratio
Ratio range Percentage
0.85–0.89 4.6
0.90–0.94 10.8
0.95–0.99 27.7
1.00–1.04 7.7
1.05–1.09 15.4
1.10–1.14 3.1
1.15–1.19 16.9
1.20 or higher 13.9
SOURCE: Auhors' calculations based on plan actuarial valuation reports.
NOTES: Rounded components of percentage distribution do not sum to 100.0.
Appendix Table C-3 presents the assumptions about the hypothetical worker for whom each plan's counterfactual wealth ratio is calculated.
Table equivalent for Chart 7. Percentage distribution of state and local government defined benefit plans for teachers and police officers, by counterfactual wealth ratio
Ratio range Police officers Teachers
0.85–0.89 9.1 b
0.90–0.94 4.6 14.3
0.95–0.99 9.1 28.6
1.00–1.04 a 21.4
1.05–1.09 4.6 14.3
1.10–1.14 a 7.1
1.15–1.19 36.4 7.1
1.20 or higher 36.4 7.1
SOURCE: Authors' calculations based on plan actuarial valuation reports.
NOTES: Rounded components of percentage distributions do not sum to 100.0.
Appendix Table C-3 presents the assumptions about the hypothetical workers for whom each plan's counterfactual wealth ratio is calculated.
a. No plans in the 1.00–1.04 or 1.10–1.14 ranges.
b. No plans in the 0.85–0.89 range.
Table equivalent for Chart 8. Percentage distribution of state and local government defined benefit plans, by counterfactual wealth ratio and worker's tenure in noncovered employment
Ratio range 12 years of tenure 5 years of tenure
0.85–0.89 4.6 a
0.90–0.94 10.8 a
0.95–0.99 27.7 a
1.00–1.04 7.7 61.5
1.05–1.09 15.4 a
1.10–1.14 3.1 23.1
1.15–1.19 16.9 7.7
1.20 or higher 13.9 7.7
SOURCE: Authors' calculations based on plan actuarial valuation reports.
NOTES: Rounded components of percentage distributions do not necessarily sum to 100.0.
Appendix Table C-3 presents the assumptions about the hypothetical workers for whom each plan's counterfactual wealth ratio is calculated.
a. No plans in the 0.85–0.89, 0.90–0.94, 0.95–0.99, or 1.05–1.09 ranges.
Table equivalent for Chart 9. Percentage distribution of state and local government defined benefit plans, by counterfactual wealth ratio and worker's age of entry into noncovered employment
Ratio range Begin at 25 Begin at 35
0.85–0.89 6.2 4.6
0.90–0.94 36.9 10.8
0.95–0.99 9.2 27.7
1.00–1.04 15.4 7.7
1.05–1.09 6.2 15.4
1.10–1.14 18.5 3.1
1.15–1.19 6.2 16.9
1.20 or higher 1.5 13.9
SOURCE: Authors' calculations based on plan actuarial valuation reports.
NOTES: Rounded components of percentage distributions do not sum to 100.0.
Appendix Table C-3 presents the assumptions about the hypothetical workers for whom each plan's counterfactual wealth ratio is calculated.
Table equivalent for Chart 10. Percentage distribution of state and local government defined benefit plans, by counterfactual wealth ratio for low and high earners
Ratio range Low earner High earner
0.85–0.89 4.6 4.6
0.90–0.94 10.8 23.1
0.95–0.99 29.2 15.4
1.00–1.04 7.7 13.9
1.05–1.09 15.4 7.7
1.10–1.14 6.2 4.6
1.15–1.19 16.9 13.9
1.20 or higher 9.2 16.9
SOURCE: Authors' calculations based on plan actuarial valuation reports.
NOTES: Rounded components of percentage distributions do not necessarily sum to 100.0.
Appendix Table C-3 presents the assumptions about the hypothetical workers for whom each plan's counterfactual wealth ratio is calculated.
Table equivalent for Chart 11. Percentage distributions of state and local government defined benefit plans by year of projected trust fund exhaustion under alternative rates of return on investment
Period 5.3 percent return 7.6 percent return
2021–2025 5 3
2026–2030 5 3
2031–2035 16 16
2036–2040 24 3
2041 or later 50 76
SOURCE: Authors' calculations based on data for 2012–2016 from the Public Plans Database.
NOTE: Rounded components of percentage distributions do not necessarily sum to 100.