A new report by the Public Retirement Research Lab and JP Morgan demonstrated that public-sector workers whose primary retirement account is a defined benefit account tend to spend a higher ratio of their earnings than those with a defined contribution account.

The PRRL is a collaboration of the Employee Benefit Research Institute and National Association of Government Defined Contribution Administrators. They combined their datasets on public employees with defined contribution, defined benefit, and hybrid plans with JP Morgan’s data on their customer’s income and savings collected by monitoring cash flows in and out of their JP Morgan accounts.

When they limited their combined data to household participants aged 25 to 64, so they could focus in on those of working age, they ended up with 36,690 households. Members of the household measured had to have a JP Morgan bank account to be included in the study, so if one member of the household had an account, but other members banked elsewhere, the total household size would be counted as one.

The study, written by Craig Copeland of EBRI; Kelly Hahn, of J.P. Morgan Asset Management; and Matt Petersen of NAGDCA, found that across all income quartiles, defined benefit plan participants spend a higher ratio of their income than defined contribution or hybrid plans. At the lowest quartile, defined benefit participants spent 117% of their income vs 108% for non-defined benefit, and at the highest quartile, defined benefit participants spent 90%, vs 83% for non-defined benefit participants.

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