Describe the types of pension plans most often found in governmental entities and the differences between them. Do you expect that most governmental employers sponsor a “single-employer plan” or participate in a public employee retirement system (PERS)
To determine the types of pension plans most often found in governmental entities and the differences between them, we can start by researching the subject matter.
1. Search for governmental pension plans: Begin by conducting a search on reliable sources like official government websites, pension plan providers, or financial research institutions. Look for specific information on the types of pension plans found in governmental entities.
2. Identify the common types of pension plans: Based on the research, you will likely come across the following types of pension plans commonly found in government entities:
a. Defined Benefit (DB) Plan: This type of plan provides a specified retirement benefit based on factors like years of service and final salary. The employer is responsible for funding the plan, and the benefit amount is predetermined.
b. Defined Contribution (DC) Plan: In a DC plan, contributions are made by both the employer and the employee. These contributions are then invested, and the final benefit amount depends on the investment performance. Examples include 401(k) plans or similar arrangements.
c. Hybrid Plans: Hybrid plans combine features of both DB and DC plans. They may have a guaranteed benefit component (similar to a DB plan) and an individual account component (similar to a DC plan). Examples include cash balance plans or money purchase plans.
3. Understand the differences between the pension plan types: Once you have identified the common pension plan types, dive deeper into each plan to understand their key characteristics, funding mechanisms, and how benefits are calculated. Look for information on factors like contribution structure, investment responsibilities, and retirement benefit guarantees.
Regarding whether most governmental employers sponsor a "single-employer plan" or participate in a Public Employee Retirement System (PERS), this would depend on the specific jurisdiction and its applicable laws or regulations. You can look for data or reports related to governmental pension plans to gain insight into the prevalence of single-employer plans versus participation in PERS. Additionally, checking official government websites or consulting with experts in the field could provide more accurate information for a particular jurisdiction.