Defined Benefit Program vs 401(k) Plan
For 86 percent of CalSTRS members, retirement benefits from the CalSTRS Defined Benefit Program provide a greater, more secure retirement income than compared to a 401(k)-style plan.
True or false?
A recent study from University of California, Berkeley shows that, for the vast majority of teachers, the CalSTRS Defined Benefit pension provides a higher, more secure retirement income compared to a 401(k)-style plan.
The research, conducted by Nari Rhee, PhD, of the UC Berkeley Center for Labor Research and Education and William Fornia, FSA, of Pension Trustee Advisors, shows that switching to an account-based retirement system—such as a 401(k) or cash balance plan—would sharply reduce the retirement income security of teachers who account for a large majority of the educational workforce in California.