Benefit Cuts Encourage Some Public Employees to Leave.

Some state and local pension systems have persistently low levels of funding. While it's generally accepted that systems like Kentucky, Illinois, and New Jersey may eventually reduce benefits for new hires, it's less well recognized that these plans might have to cut benefits for current employees as well, according to the Center for Retirement Research at Boston College. The question the center's May 2019 brief asks is: Do cuts to pension benefits encourage a state's public-sector workers to leave for the private sector?

The brief, based on a recent paper, evaluates a 2005 reform of the Employees' Retirement System of Rhode Island (ERSRI) that cut core benefits for state employees and teachers without raising salaries to compensate. It looks at the extent to which these benefit cuts for current employees encouraged them to leave their jobs, investigates whether teachers (an important and often-studied...