National Association of State Retirement Administrators


As the name implies, a hybrid pension plan contains elements of both defined benefit and defined contribution plans. Some hybrid plans have been in place among states for many years; others have been created in recent years. The Internal Revenue Code considers any defined benefit pension plan that accounts for employee contributions, to be a hybrid plan. Because nearly all state and local governments require employee pension contributions, most meet the federal government’s definition of a hybrid.

Among retirement plans sponsored by state and local government, plans typically referred to as hybrids take one of two forms. One type is a combination of DB and DC plans; the other type is a cash balance plan.

  Combination Hybrids

Combination hybrids feature a DB component usually providing a more modest pension benefit than the typical public plan, combined with a DC component that usually is mandatory. Combination hybrids are in place, either on an optional or mandatory basis, at the following statewide retirement systems:

  • Georgia Employees' Retirement System

  • Indiana Public Employee Retirement Systems (PERS and TRF)

  • Michigan Public School Employees' Retirement System

  • Ohio Public Employees' Retirement System

  • Ohio State Teachers' Retirement System

  • Oregon Public Employees Retirement System

  • Rhode Island Employees' Retirement System

  • Tennessee Consolidated Retirement System (effective 7/1/14)

  • Utah Retirement Systems

  • Virginia Employees Retirement System (effective 1/1/14)

  • Washington Department of Retirement Systems 

In addition, federal employees hired since 1983 participate in a "combination" DB-DC hybrid retirement plan.

In its April 2011 paper, A Role for Defined Contribution Plans in the Public Sector, the Center for Retirement Research discusses the idea of a so-called "stacked" plan, featuring a traditional pension on a limited salary base, with a defined contribution plan applying to the salary above the base.


Cash Balance Hybrids

According to the U.S. Department of Labor, "A cash balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account balance." As with other types of retirement plans, cash balance plans vary in terms of required employee and employer contributions, benefit accrual rates, vesting periods, normal retirement eligibility requirements, etc. Cash balance hybrids are in place at the following statewide retirement systems:

  • California State Teachers Retirement System (for part-time workers)

  • Kansas Public Employees Retirement System (effective 1/1/15)

  • Kentucky Public Employees Retirement System (effective 1/1/14)

  • Nebraska Public Employees' Retirement System (for state and county workers)

  • Texas County & District Retirement System

  • Employees' Retirement System of Texas (effective 9/1/22)

  • Texas Municipal Retirement System

The benefit provided by these plans reflects a combination of market experience (like a defined contribution plan) and a guaranteed minimum return on participants' cash balances (akin to a defined benefit plan).

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