Benefits February 24, 2003

COLA's Giving Public Retirees More than Private

February 24, 2003 (PLANSPONSOR.com) - Public-sector workers are getting more each month from their pension, largely because of annual cost-of-living-increases that are rare in private industry.
Reported by

According to the Employee Benefit Research Institute (EBRI), government data from 1998 show a median $549 monthly payment for all retirees – substantially lower than the median monthly pension income of $904 for retired government employees. The reason: The data showed that 55% of retired public employees receive automatic cost-of-living increases in their pensions, while only 17% of those retired from private-sector employment receive a similar benefit.

All in all, according to EBRI, slightly more than half (54.5%) of former workers over 65 are receiving pension income from the firm where they or their spouse once worked. The EBRI research focuses on so-called traditional defined benefit pension plans, typically funded entirely by employers and providing lifetime payments for a retired worker.

Among the report’s other findings:

  • Slightly more than a quarter (26.8 %) of retirees over 54 with pension income opted to reduce their potential benefit to guarantee payments to a survivor after their death. The highest such election rate, 39%, was among married men.
  • Among former working Americans older than 64, 5.3% received pension payments not from a defined benefit plan, such as 401(k)-type plans. None of the figures in the study include Social Security payments.

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