Department of Economics
North Carolina State University
Raleigh, NC 27695
Institutional Affiliation: North Carolina State University
NBER Working Papers and Publications
|December 2018||Annuity Pricing in Public Pension Plans: Importance of Interest Rates|
with Robert L. Clark, Beth Ritter, David Vanderweide: w25343
There is little systematic information on the distribution options in public sector retirement plans and how annuity options are priced relative to the standard single life annuity. This study examines the distribution options of 85 large public retirement plans covering general state employees, teachers, and local government employees. An important component of the analysis is the construction of a data set presenting the annuity options offered by each of these plans and how the monthly benefits for these distribution options are priced. The analysis shows that interest rates used to price annuities vary considerably across the plans. As a result, retirees with the same monthly benefit if a single life benefit is chosen will have substantially different monthly benefits if they select...