Closing the Gap: The Role of Public Pensions in Reducing Retirement Inequality finds that defined benefit pensions play a critical role in delivering adequate retirement income for older Americans while providing a key buffer against economic hardship for women, Blacks, Latinos, and those without a four-year college degree. The report also finds that the wealth value of lifetime pension income, particularly from public pensions, is distributed more equitably by race and gender than other private financial assets, thereby narrowing the wealth gap among older families.

This report, from National Institute on Retirement Security (NIRS) and the UC Berkeley Labor Center, offers a unique look at the race, gender, and class equity impacts of public sector defined benefit pensions in the U.S.

Authored by Nari Rhee, PhD., director of the Retirement Security Program at the UC Berkeley Labor Center, the report is supplemented by 51 fact sheets that detail the retirement equity impact of pensions in each U.S. state and the District of Columbia.

The report finds:

  • Pensions reduce retiree poverty and near-poverty across race, sex, and educational attainment. The anti-poverty impact of pensions is largest for Black and Latino retirees, as well as for retirees without a four-year college degree.
  • Pension income is distributed relatively evenly among recipients by race, while public pension income is distributed more equally by gender than private pension and 401(k) income. For instance, Black pensioners have virtually the same pension wealth as white pensioners, and women hold just over half of public pension wealth.
  • Pension benefits currently in payment to 23.2 million adults aged 55 and older in the U.S. represent $5.6 trillion in household wealth, boosting middle-class family net worth by 36 percent and narrowing racial and gender wealth gaps among older families.