Defined Contribution

A defined contribution plan is an employer-sponsored retirement benefit in which the employer provides a retirement savings vehicle for its employees, and also typically makes a contribution to the employee's retirement account. In a DC plan, employees are responsible for managing their retirement assets, including their investment and withdrawal. The 401(k) plan is the most popular form of defined contribution plan, although states and local governments may sponsor other types of DC plans, such as 401(a), 403(b), and 457 plans.

On a statewide basis for broad employee groups (i.e., not including legislators, judges, etc.), four states and the District of Columbia provide only a defined contribution plan to their workers: all newly hired employees in Alaska since July 2006; new state employees in Michigan since March 1997, general employees (not public safety officers or teachers) in North Dakota since 2025, and in Oklahoma since November 2015; and general employees (not teachers or public safety workers) in the District of Columbia, have only a DC plan as their primary retirement benefit.

Employees in many states have access to a DC plan, as part of a hybrid retirement benefit (see Hybrid Plans below), as a supplemental retirement savings plan, or as an optional alternative to the DB plan.

States where broad employee groups may participate in a DC plan as their primary retirement benefit, on an optional basis, include Colorado, Florida, Indiana, Montana, Ohio and South Carolina.

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Become A Member

Becoming a member of NASRA offers a unique opportunity to join a community committed to the sound, efficient, and innovative stewardship of public retirement systems. Membership connects you with a network of professionals and experts, providing valuable insights into managing public retirement systems with a focus on sustainability and risk-averse strategies.

By joining NASRA, you gain the tools and resources to enhance the management of public retirement systems, ensuring their long-term success and reliability for generations to come.


 

What's New at NASRA: Public Pension Investment Return Assumption Brief Updated

NASRA’s latest update to standing issue briefs, Public Pension Plan Investment Return Assumptionunderscores the critical role the investment return assumption plays in the financial health of public pension plans. Of all actuarial assumptions, it has the greatest impact on plan funding levels and cost. This brief traces how a decade of low interest rates and inflation, beginning in 2009, prompted many plans to reduce their long-term expected returns in line with more modest capital market projections. However, since inflation began rising in early 2021, the trend toward lowering return assumptions has largely paused. While reducing a plan’s assumed return can increase both costs and unfunded liabilities, setting this assumption is a careful, thorough process. It draws on expert input from actuaries and investment professionals and is guided by actuarial standards of practice.