Effects of a defined‐contribution retirement plan on teacher attrition

Abstract In 2006, Alaska reformed its defined‐benefit (DB) Teacher Retirement System by creating a mandatory 401(k)‐style defined‐contribution (DC) plan for new hires. The new plan increased benefit portability and transferred the investment risk from the employer to the employee. Using individual teacher data for 2005–2017, we show that the reform increased teacher attrition. We also observe, however, that it did not lead to the loss of human capital. The paper contributes to the discussion of the design of DB–DC transitions that can maintain incentives for public‐sector employment.