Best-Practice Benchmarks for Public-Sector Core Defined Contribution Plans

Roderick B. Crane
Director, Institutional Client Relations,
Public-Sector Market

Michael Heller
Vice President, Actuarial Consulting Services

Paul J. Yakoboski
Principal Research Fellow
TIAA-CREF Institute

July 2008 |

This paper examines best practices for the design of public-sector defined contribution plans intended to be the primary source of retirement income. The importance of these "core" DC plans should not be undervalued even though far fewer public employees participate in them compared to defined benefit plans. The purpose of identifying best practices is to provide a basis for identifying potential strengths and weaknesses of design that may affect the ability of a plan to achieve the objective of providing adequate and secure income. While it is not expected that public employers will move away from their core defined benefit plans as a primary method of delivering retirement benefits, interest in defined contribution solutions will continue as public sector employers and employees need and will be seeking better results and flexibility from their retirement plan designs.

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