Back to the Future: Hybrid Co-operative Pensions and the TIAA-CREF System
Back to the Future: Hybrid Co-operative Pensions and the TIAA-CREF System
Hybrid retirement plans that combine the best features of defined benefit and defined contribution plans can provide an efficient and equitable method of ensuring retirement security for workers. Co-operative pension structures also enhance retirement security through risk pooling and leveraging economies of scale. Yet most US private sector workers are not covered by these types of plan design. The TIAA-CREF system, which began in 1918 and covers millions of workers in the non-profit sector, provides an example of a plan design with features of a hybrid co-operative pension. This chapter examines the historical performance of the core components, TIAA (a guaranteed fixed annuity) and CREF (a variable annuity), discusses key design features, and analyzes data on contributions, investment returns, risk pooling, and retirement distribution characteristics.
Keywords: hybrid plan, annuity, variable payout, retirement security, cooperative pension
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