Pension plans in the public sector are still predominantly defined benefit. However, a transition to defined contribution pension plans appears to be beginning. This paper analyzes some of the reasons why this transition may become widespread. Features of defined benefit pension plans, in particular their impact on labor supply, are discussed first. This is followed by an examination of defined contribution pension plans. Simulations are used to examine the transition to a defined contribution pension plan from the standpoint of an individual employee. The simulations illustrate some of the conditions under which an employee might choose to switch to a defined contribution pension plan when currently enrolled and vested in a defined benefit plan. The paper ends with a brief discussion of the option value of switching to a defined contribution pension plan
