Do Smaller Public Employer Pensions Spur More Saving?
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.