Faculty Choice of a Pension Plan: Defined Benefit versus Defined Contribution

Worker preferences between defined‐benefit and defined‐contribution pension plans are estimated using a sample of faculty members at North Carolina State University. Newly hired faculty must decide between the state retirement plan (a final pay, defined‐benefit plan) and one of three defined‐contribution plans (TIAA/CREF, VALIC, Lincoln National). This analysis allows the authors to estimate the choice of a pension plan holding constant the place of employment. The study uses both university employment records and a faculty survey to examine the factors that determine the choice of a pension.