{"id":335839,"date":"2021-09-07T13:05:00","date_gmt":"2021-09-07T10:05:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/encore-do-all-state-and-local-workers-receive-lifetime-annuities\/"},"modified":"2021-09-07T13:05:00","modified_gmt":"2021-09-07T10:05:00","slug":"encore-do-all-state-and-local-workers-receive-lifetime-annuities","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/encore-do-all-state-and-local-workers-receive-lifetime-annuities\/","title":{"rendered":"#Encore: Do all state and local workers receive lifetime annuities?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a41ef070e6c2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a41ef070e6c2\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/encore-do-all-state-and-local-workers-receive-lifetime-annuities\/#Basically_yes_but_some_exceptions_exist\" >Basically yes, but some exceptions exist<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/encore-do-all-state-and-local-workers-receive-lifetime-annuities\/#Alicia_H_Munnell\" >Alicia H. Munnell<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Encore: Do all state and local workers receive lifetime annuities?<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Basically_yes_but_some_exceptions_exist\"><\/span>\n  Basically yes, but some exceptions exist<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\" role=\"region\" aria-label=\"article body\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000398640\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000398640\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       The conventional wisdom is that all state and local government workers receive a lifetime annuity from their employer pension plan. Is that true? \u00a0<\/p>\n<p> My colleagues <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crr.bc.edu\/about-us\/people\/bc-crr_bios\/researchers\/jean-pierre-aubry\/\" class=\"icon none\">JP Aubry<\/a> and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crr.bc.edu\/about-us\/people\/bc-crr_bios\/kevin-wandrei\/\" class=\"icon none\">Kevin Wandrei<\/a> recently collected data on payout options under state and local retirement plans <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crr.bc.edu\/briefs\/do-all-state-and-local-workers-receive-an-annuity-in-retirement\/\" class=\"icon none\">to answer the question<\/a> more definitively.\u00a0They were particularly concerned about the roughly 6.5 million employees who <em>do not<\/em> participate in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social<\/a> Security (known as \u201cnoncovered\u201d workers).\u00a0<\/p>\n<div class=\"paywall\">\n       They first focused on defined benefit (DB) plans, in which 88% of all state and local workers and 98% of noncovered workers participate. Within this \u201cannuity-first \u201cframework, the four most common payout options are:<\/p>\n<ul class=\"articleList\">\n<li>\n      <em>Single-life annuity: <\/em>The retiree receives benefits for life.\u00a0<\/p>\n<\/li>\n<\/ul>\n<ul class=\"articleList\">\n<li>\n      <em>Joint-survivor life annuity: <\/em>The retiree receives benefits for life. When the retiree dies, the designated survivor \u2014 usually a spouse \u2014 receives an annuity for life.<\/p>\n<\/li>\n<\/ul>\n<ul class=\"articleList\">\n<li>\n      <em>Joint-survivor period certain annuity: <\/em>This option guarantees survivor benefits for a specific period \u2014 often 10 years. If the retiree dies after the guarantee period, the survivor receives no benefits. <\/p>\n<\/li>\n<li>\n      <em>Partial lump sum:<\/em> The retiree receives a portion of the promised annuity as a one-time payment, which is often deposited into a retirement account such as an IRA. <\/p>\n<\/li>\n<\/ul>\n<p>Figure 1 shows that virtually all state and local workers are offered a single- and joint-life annuity. About 40% are offered a period certain annuity, and about a quarter are offered a lump-sum option.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:70.42857142857143%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-396790?width=540&amp;size=1.420643729189789 540w, https:\/\/images.mktw.net\/im-396790?width=620&amp;size=1.420643729189789 620w, https:\/\/images.mktw.net\/im-396790?width=639&amp;size=1.420643729189789 639w, https:\/\/images.mktw.net\/im-396790?width=700&amp;size=1.420643729189789 700w, https:\/\/images.mktw.net\/im-396790?width=700&amp;size=1.420643729189789&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-396790?width=700&amp;size=1.420643729189789&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-396790?width=700&amp;size=1.420643729189789&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-396790?width=700&amp;height=493\" alt=\"\" title=\"\"><\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\"><\/figcaption><\/figure>\n<\/div>\n<p>       The lump sum option sounds more threatening than it is. Most of the plans limit the lump-sum amount to 36 months (roughly 20%) of the retiree\u2019s promised annuity payments. Moreover, given the small fraction of workers in plans that offer a lump sum and the relatively low take-up rate (roughly 20%), only 6% of all state and local workers \u2014 and 8% of noncovered workers \u2014 choose this option.\u00a0<\/p>\n<p>In addition to the small share of state and local workers that \u201cun-annuitize\u201d part of their DB benefit, 12% of all state and local workers (and 2% of noncovered workers) currently participate in something other than a traditional DB as their primary retirement plan. These alternatives include:<\/p>\n<ul class=\"articleList\">\n<li>\n      a cash balance plan (a DB plan that defines benefits based on a defined contribution (DC)-like account). <\/p>\n<\/li>\n<li>\n      a stand-alone DC plan; or<\/p>\n<\/li>\n<li>\n      a hybrid plan (a DC plan combined with a reduced DB plan);<\/p>\n<\/li>\n<\/ul>\n<p>Similar to traditional DB plans, the default payout option for public sector cash balance plans \u2014 which currently cover just 3% of state and local workers \u2014 is an annuity. However, among the public sector DC plans \u2014 which currently cover 9% of state and local workers \u2014 annuitization is never the default. In fact, 3% of state and local workers participate in DC plans that do not offer an annuity option at all.<\/p>\n<p>In short, while most state and local workers will receive a lifetime pension annuity in retirement, a small share of all state and local workers \u2014 about 6% \u2014 convert a portion of their pension annuity into a lump sum and another 8% will potentially enter retirement with un-annuitized DC assets.\u00a0 <\/p>\n<p>Among state and local workers who do not participate in Social Security, about 8% take a partial lump sum while 1% will potentially enter retirement with un-annuitized DC assets.\u00a0 <\/p>\n<p>So, the conventional wisdom is basically right. But some exceptions exist, and these are likely to increase as enrollment in primary DC plans grows.\u00a0<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Alicia H. Munnell\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/author\/alicia-h-munnell\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:contributors@marketwatch.com\",\"text\":\"contributors@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\" aria-label=\"links to  author page\"><span class=\"ez-toc-section\" id=\"Alicia_H_Munnell\"><\/span>Alicia H. Munnell<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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Is that true? \u00a0 My colleagues JP Aubry and Kevin Wandrei recently collected data on payout options under state&#8230;<\/p>\n","protected":false},"author":1,"featured_media":335840,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-335839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/335839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=335839"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/335839\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/335840"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=335839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=335839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=335839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}