Have Localities Shifted Away from Traditional Defined Benefit Plans?

As of 2019, 18 states offered something other than the traditional stand-alone defined benefit (DB) plan as their primary retirement plan. In the wake of the 2008 financial crisis, states were more likely to introduce a hybrid and/or cash balance plan rather than a stand-alone defined contribution (DC) plan. But less is known about the adoption of alternative plans among local governments. This brief documents the extent of the shift away from stand-alone DB plans for a sample of 180 major local governments to see how it compares to the changes at the state level. The brief proceeds as follows. The first section describes the alternative plan types that governments introduce when they shift away from a stand-alone DB plan. The second section describes the local government sample and documents the extent and nature of the shift. The third section describes the impact of the shift on government contributions and employee benefits. The final section concludes that the activity at the local level is similar to states in volume and geography, but localities rely more on stand-alone DC plans.