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Defined Contribution

A defined contribution plan is an employer-sponsored retirement benefit in which the employer provides a retirement savings vehicle for its employees, and also typically makes a contribution to the employee's retirement account. In a DC plan, employees are responsible for managing their retirement assets, including their investment and withdrawal. The 401(k) plan is the most popular form of defined contribution plan, although states and local governments may sponsor other types of DC plans, such as 401(a), 403(b), and 457 plans.

On a statewide basis for broad employee groups (i.e., not including legislators, judges, etc.), four states and the District of Columbia provide only a defined contribution plan to their workers: all newly hired employees in Alaska since July 2006; new state employees in Michigan since March 1997, general employees (not public safety officers or teachers) in North Dakota since 2025, and in Oklahoma since November 2015; and general employees (not teachers or public safety workers) in the District of Columbia, have only a DC plan as their primary retirement benefit.

Employees in many states have access to a DC plan, as part of a hybrid retirement benefit (see Hybrid Plans below), as a supplemental retirement savings plan, or as an optional alternative to the DB plan.

States where broad employee groups may participate in a DC plan as their primary retirement benefit, on an optional basis, include Colorado, Florida, Indiana, Montana, Ohio and South Carolina.

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Become A Member

Becoming a member of NASRA offers a unique opportunity to join a community committed to the sound, efficient, and innovative stewardship of public retirement systems. Membership connects you with a network of professionals and experts, providing valuable insights into managing public retirement systems with a focus on sustainability and risk-averse strategies.

By joining NASRA, you gain the tools and resources to enhance the management of public retirement systems, ensuring their long-term success and reliability for generations to come.

What's New at NASRA: Government Spending Issue Brief

NASRA’s March 2026 update on government spending makes a basic but important point: public pension benefits are not paid out of a government’s day-to-day operating budget. They are paid from trust funds that employees and employers contribute to during an employee’s working years. Those trusts distribute more than $400 billion each year to retirees and beneficiaries in communities across the country. On a national basis, employer contributions to pension trusts in FY 2023 equaled 5.16 percent of direct general spending by state and local governments, which shows that pension contributions remain a limited share of overall public spending even though the level varies from one state to another. 
The brief also shows that pension costs should be viewed in the context of the changes governments have made over the past 15 years to strengthen plan funding. Following the 2008–09 market decline, nearly every state and many local governments adjusted contributions, benefits, or both to improve pension sustainability. More recent data show that employer contributions increased from FY 2022 to FY 2023, but pension spending as a share of total government spending remained broadly stable. The updated brief provides FY 2023 figures and also projects the aggregate pension spending rate for FY 2024, offering a useful snapshot of both current costs and the longer funding trend.