It’s well-known that defined benefit pensions provide a secure and dignified retirement to librarians, nurses, correctional officers, and other public employees. They do this by providing a regular, reliable source of income in retirement. However, public pensions serve other functions as well. One of these often-overlooked functions is to ease the transition into retirement for long-serving public employees.

When the federal government created the civil service retirement system in the 1920s, one of the explicitly cited reasons was to encourage older civil servants to retire. Before the creation of CSRS, federal employees would often work well into old age because they had no source of retirement income (unless they had any personal savings). The federal Civil Service Commission began recommending the creation of a retirement plan more than two decades before the Civil Service Retirement Act was passed in 1920.

In the present day, we are once again seeing older workers remain in the workforce longer due to an inability to retire. As the private sector has shifted from defined benefit pensions to defined contribution 401(k) plans, older workers are finding it more difficult to retire. 401(k)s are risky and unreliable and provide less income in retirement than defined benefit pensions. Workers are staying in the workforce longer or are rejoining the workforce because they know they can’t survive on their 401(k). One unfortunate reality for some older workers is that they can’t work longer and have to retire earlier than planned, a reality we discussed in a previous blog post.

On average, Americans are living longer than ever. This is a good thing, but it also means that, as a society, we must figure out how to support our older citizens once they can no longer work. Policymakers have a responsibility to offer positive solutions and at this point we have plenty of evidence that 401(k)s are NOT a solution to saving for retirement. Offering public employees a defined benefit pension enables them to retire securely when they need to. This is an important, but often overlooked, function that pensions play in the lives of our hard-working public employees.