Background: The decline of defined benefit (pension) plan coverage in the private sector is well documented, but its role in the public sector is more nuanced. While many employees in public service fields, such as education, healthcare, government, and nonprofit are still covered by pension plans, the landscape is changing, and employees are increasingly relying on their own savings to prepare for retirement.

Corebridge Financial surveyed a nationally representative sample of more than 1,000 public sector employees as part of its study, “Helping public sector workers achieve retirement readiness”, to better understand how individuals are planning for and taking action to secure their financial future.

Findings: According to the research, only 42% of survey respondents expect to fund retirement using pension funds compared to almost three quarters of respondents (73%) who are expecting to use funds from defined contribution plans or IRAs. However, it’s important to note that only 38% of survey respondents understand the difference between a defined benefit and defined contribution plan.

* Respondents may select all that apply.

Source: Corebridge Financial, Survey of public sector workers, November 2023.

When it comes to retirement planning, only one in four survey respondents has clearly defined goals on how much they will need in retirement. Further, less than half (41%) say they are on track to meet their goals. Survey respondents are also underestimating the number of years they will likely spend in retirement: 57% think they will spend 20 years or less in retirement and one in four earning up to $50,000 expect retirement to be 10 years or less.

A greater focus on boosting savings rates and advice utilization is needed. About half of employees are contributing 1% to 5% of their salary to their retirement plan and only half (54%) know the maximum amount they can contribute. As for advice, 54% of employees who do not work with a financial professional say they would feel more confident about retirement if they did.

Bottom line: These figures underscore the need to enhance DC plan educational, retirement planning, and advisory resources available to public sector workers.Modernizing public sector DC plans is an important step to helping employees achieve retirement readiness. Opportunities for modernization could include the introduction of automatic features (where allowed), expanding access to financial advice, and offering a consolidated or streamlined plan offering.

Insights shared by guest contributors are their own and do not represent the views of DCIIA or the RRC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Findings are from the Corebridge Financial survey of public sector workers. This survey was conducted by Morning Consult for Corebridge Financial on November 7-13, 2023, among a national sample of 1,103 Public Sector Workers.

This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.

Corebridge Financial, Inc. and its subsidiaries provide a wide range of life insurance, retirement solutions, and other financial services. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risks, and provide for retirement.

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