By Chad Aldeman
Andrew Biggs has an interesting new report for the American Enterprise Institute investigating the generosity of public-sector pension plans.* He finds that, for the average full-career state worker, traditional defined benefit plans are working quite well and many of these workers are de facto “pension millionaires” because of the amount of money they can expect to receive in retirement.
How does this square with reports from some states that the average pension is quite modest? As we’ve written about for teachers in Illinois and California, the “average” pension is skewed by many employees who qualify for only a very small pension. It’s not accurate to use the statistical average as any indicator of actual payments. To find the typical pension payment, it would be better to look at the statistical median (the midpoint) or even the mode (the most common) amount.