Does a Defined Contribution Pension Plan Reduce the Financial Burden of Local Governments? Evidence from Macomb County, Michigan

This study examines the financial sustainability of a defined contribution (DC) pension plan compared to a defined benefit (DB) pension plan through a case study of Macomb County, Michigan, a local government that transitioned from a DB plan to a DC plan in 2016. By analyzing changes in the county’s financial burden and administrative costs following the shift, the study provides evidence that adopting a DC plan can reduce the fiscal pressures associated with pension liabilities. Additionally, the findings suggest that administrative costs remained largely unchanged after the transition. This case-based analysis contributes to the public pension literature by offering practical insights into the fiscal impacts of pension reform at the local government level.