Posted 10:13 a.m. Tuesday, Feb. 6, 2024
Wisconsin Pensions Reduce Poverty Across Retiree Demographics.
A recent study found that Wisconsin retirees with pension income are less likely to experience economic hardships, with public pensions significantly narrowing the racial, gender, and education wealth gap among older families compared to private pensions.
The study, “Closing the Gap: The Role of Public Pensions in Reducing Retirement Inequality,” looked at the equity impacts of public sector pensions across the U.S.
“Public sector retirement benefits form a pillar of middle-class retirement security, especially for economically marginalized groups,” the study said.
It revealed that “in Wisconsin, overall participation in any type of workplace retirement plan was significantly higher in the public sector than in the private sector (87% vs. 62%) in 2018-2021.”
While data limitations prevented a Wisconsin-specific analysis of poverty outcomes by race, the study noted that across the country “pensioners of color held an average of $295,000 in pension wealth, the same as the average of $295,000 among white pensioners in 2013–2021.”
In terms of gender, Wisconsin women retirees under pension plans, whether private or public, were more likely to have incomes above the 200% Federal Poverty Level (FPL) threshold than those without pension benefits (87% vs. 51% from 2013 to 2021). The threshold was estimated at $26,000 for singles and $32,800 for couples in 2021.
It also found that Wisconsin retirees without a four-year college degree are more likely to receive retirement benefits if they come from the public sector than private sector (77% vs. 53%).
“Higher and more equitable coverage in the public sector is due to a high rate of retirement plan sponsorship among governmental employers and the fact that they tend to offer defined-benefit pensions that automatically cover eligible employees,” the report said.
The study concluded that “public pensions will remain one of the last bulwarks of wealth equity in the U.S., alongside Social Security.”
The September 2023 report is authored by Dr. Nari Rhee of the Retirement Security Program at the UC Berkeley Labor Center, in collaboration with the National Institute on Retirement Security (NIRS).
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