The end of the defined pension paradigm in government: More than fiscal sustainability Book Chapter

Cong, Y, Neshkova, MI, Frank, HA. (2014). The end of the defined pension paradigm in government: More than fiscal sustainability . 199-226.

cited authors

  • Cong, Y; Neshkova, MI; Frank, HA


  • The "pension tension" in the public sector is couched as a "trillion dollar deficit" or generally speaking, a question of affordability or intergenerational equity. We argue that the inevitable switch out of the defined benefit (DB) model to a defined contribution (DC) model is more than just a "fiscal sustainability" issue; it is a paradigm shift that will impact our vision of public organizations in terms of staffing and structure. Empirical evidence suggests different pension types have significant impact on who is hired. Moreover, the job mobility engendered by DC adoption may call into question the public sector as a lifetime career, particularly for the millennial generation which is characterized by limited public sector motivation and desired or expected job tenure. For the first time, public organizations are likely to face "two-tier" workforce issues, where younger and older workers under the same roof will have substantially different retirement benefits, with possible negative spillovers for morale and climate. Workforce literacy issue that has plagued private employers will come to the fore in public organizations, pressuring HR staff into unaccustomed roles for which they may not be prepared. And pension changes are not only going to raise questions in regard to public- private comparability of wages and benefits: They may also make the public sector less attractive relative to the nonprofit sector.

publication date

  • January 1, 2014

International Standard Book Number (ISBN) 13

start page

  • 199

end page

  • 226