Pension Plan Choice among University Faculty

Understanding the Defined Benefit versus Defined Contribution Choice

“…Two other related papers, by Clark, Harper, and Pitts (1997) and Clark, Ghent, and McDermed (2003), evaluate how newly hired North Carolina State University faculty chose between the state public DB plan and several DC plans. Their surveys of the faculty hired between 1971-1995 and 1983-2001 show that older, female, and black newly hired faculty were more likely to select the DB plan.…”

Strategic HR Management with an Aging Workforce: Using Demographic Models to Determine Optimal Employment Policies

“…A more detailed discussion of the UNC system and these administrative data is provided by Clark, Ghent, and McDermed (2006). The total number of faculty increased by 13.7% between 1982 and 1992, but rose only by 4% between 1992 and 2002.…”

“…Therefore, the quit rate should be lower during mid-career for participants in defined benefit plans and the age-specific retirement rates should be higher. See Clark et al (2006) and Clark and Pitts (1999). 4 The decline in the incidence of defined benefit plans follows a national trend in the United States as fewer employers are offering these types of retirement plans and more companies are offering defined contribution plans, especially 401(k) plans.…”

“…5 Workers select the type of pension plan they prefer by comparing the expected value of enrolling in the two types of plans. The expected value of the two plans differs by individual characteristics and the risks they face associated with turnover, life expectancy, wage growth, and inflation (Clark et al 2006). options and choices for the remainder of the individual's career. Individuals in the state plan will be more restricted in their mobility options than will those in defined contribution plans.…”

“…For a detailed description of the pension plans offered by UNC to its faculty, seeClark et al (2006) andClark and Ghent (2008).…”