Annuity Options in Public Pension Plans: The Curious Case of Social Security Leveling

Abstract

for research assistance. The opinions and conclusions expressed herein are solely those of the authors and do not represent the opinions or policy of the North Carolina Retirement System, any other institution with which the authors are affiliated, or the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Work after Retirement: Worklife Transitions of Career Public Employess

“…be receiving a higher monthly benefit. Further, many public plans offer a Social Security leveling option whereby the individual receives a higher benefit up until age 62 (see Clark, et al, 2018). At that point, the benefit is reduced such that the sum of the pension and expected Social Security benefit is equal to the prior benefit amount.…”

Factors Influencing the Choice of Pension Distribution at Retirement

“…If measured by assets, a larger percentage of the DC funds was rolled over or remained in the plan, indicating that individuals with smaller accounts were more likely to take a lump sum distribution of all of their pension assets.9 It is important to remember that state and local pension plans are not subject to ERISA and its requirements. 10 Several state retirement systems offer an annuity linked to Social Security benefits under an arrangement known as Social Security leveling; seeClark et al (2018).…”