By the mid-1970s, civil servants in all 50 states were covered by a pension plan. For the most part, the process of consolidating retirement plans covering general state employees, teachers and, in some cases, local employees had ended. As noted in Chapter 4, the extension of Social Security to public employees on a voluntary basis, which had begun in 1951, had resulted in a wave of states deciding to allow their employees to be covered by Social Security. However, by the mid-1970s, these structural changes in public retirement systems appeared to have run their course. Still, over the last quarter of the twentieth century, public sector pension plans continued to evolve in other ways. This evolution typically resulted in an increase in their generosity, as measured by higher replacement ratios for retiring workers. In addition, under many plans, workers were allowed to retire with unreduced benefits at younger ages. This chapter examines the changes in state pension plans over the final quarter of the twentieth century and provides a comprehensive assessment of the benefits currently provided by them. TRENDS IN PUBLIC AND PRIVATE PENSION PLANS Despite the long-run trend among private sector employers away from defined benefit plans and towards a greater emphasis on defined contribution plans, by the end of the twentieth century, defined benefit plans remained the dominant type of retirement plan in the public sector. In 2007, the US General Accounting Office reported that, with the exception of Alaska and Michigan, all states offered defined benefit plans...
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