14% of private sector workers have a traditional defined benefit pension. Meanwhile 84% of state and local government workers have such a pension and 100% of federal employees have a defined benefit pension.
What’s going on here?
In addition, federal workers and many state workers have a defined contribution plan (401k type) as well. And they have retiree health care coverage while less than 25% of private sector large employers offer such coverage (and declining especially for new hires).
The reason retiree health benefits have declined is not only the immediate costs, but the accrued liability which has a negative impact on employers. State governments have huge liabilities for both retirement and health benefits …. but they largely ignore them as do legislators and citizens.
These health benefit liabilities for covered workers totaled $627 billion in 2013 (latest data available from PEW Research) and states had funded only 6% of these liabilities.