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Abstract

The dramatically increased costs of maintaining many public pension systems after the recent economic downturn have spurred a number of state and local governments to reassess the sustainability of traditional defined benefit (DB) pension plans and to explore reforms. To relieve this fiscal burden, some municipalities have considered implementing defined contribution (DC) plans for some portions of their workforce. This article explores critical issues attendant to implementing this paradigm shift. Utilizing a survey, the authors examine the perceptions of municipal finance and human resource managers regarding this potential transition. Findings indicate that these groups hold virtually identical positions on these issues. Reforms undertaken to bolster sustainability of the DB-centered model may bear unanticipated consequences—both positive and negative—that are largely unexplored given their recentness. Practitioners should prepare for these eventualities.

Keywords

public pension reform pension paradigm switch Florida municipalities two-tiered retirement system

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Critical Issues in the Transition From the Defined Benefit to the Defined Contribution Pension Model

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