Public Workers With Nontraditional Career Paths May Face Insufficient Retirement Benefits

Although the five-day, 40-hour workweek and steady full-time employment remain the standards throughout the U.S., in practice, millions of Americans diverge from that formula each year, temporarily leaving the workforce or shifting to part-time work. In 2025, roughly 11% of the employed population ages 25 to 54 worked part time, mostly because of caregiving or family obligations. 

However, in the public sector, worker retirement systems are still largely built around uninterrupted, full-time careers, and new research from The Pew Charitable Trusts finds that public employees who move in and out of the workforce or work part time can face sharply curtailed retirement security. Pew’s analysis indicates that, depending on the type of plan their retirement system offers, these workers can face reductions in their annual retirement income of up to 75% and often far in excess of their work hours lost.

To assess how these alternative career paths affect retirement security, Pew modeled outcomes for three representative public sector plans—a defined benefit (DB) plan, a defined contribution (DC) plan, and a hybrid of the two. (See Table 1.) These plans were analyzed for a traditional full-time, full-employment career; for three part-time career trajectories—working part time for five years from ages 35 to 39, for 10 years from 35 to 44, and for a full career—and for two employment-gap scenarios: five years away from work from ages 35 to 39 and 10 years from 35 to 44. 

As a baseline, Pew modeled a full-career, full-time public sector worker who participates in Social Security and remains continuously employed until retirement, as well as “alternative” career paths, including workers engaging in part-time employment and taking temporary employment gaps. For comparison, the researchers converted the value of DC accounts at retirement to estimated annuities.

This analysis measures how these alternative paths affect these workers’ employer-sponsored retirement benefits and whether those effects align with the changes to their work schedules. Across almost all the plan types and scenarios examined, reductions in work led to large and frequently disproportionate declines in retirement benefits. (See Table 2.)

Part-time work effects

Retirement benefits drop most prominently for workers who spend their entire careers working part time. Although this is particularly true for the DB plan—a 50% reduction in total hours worked results in a 75% drop in annual benefits— hybrid plan benefits also fall disproportionately, by about two-thirds. Only the DC plan benefit declines were in line with the reduction in hours worked. 

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In DB plans, benefits are based on final average salary multiplied by years of service, both of which are affected by reducing the overall time spent working. Employees who spend their entire careers working part time have lower final salaries and service years than those who adhere to traditional full-time careers, which combine to produce the disproportionately large benefit declines. For workers who cut their hours only temporarily, the effect is much smaller because their final average salaries are in line with a traditional career path.

DB benefits for part-time workers also depend on how retirement plans credit that work. For this analysis, Pew assumes that workers earn service credit in proportion to the hours they work, so an employee working half time receives half a year of service credit for each year worked. (This approach is consistent with several public plans, though practices vary, and more or less generous crediting for part-time work would produce different outcomes.)

Unlike the DB plan, DC plan benefit changes tend to align more closely with reductions in work hours because benefits are tied directly to employee and employer contributions, which are a fixed share of pay. Workers who spend less time employed have lower earnings and therefore reduced contributions. However, benefit reductions are not always perfectly proportional because forgone contributions also cost years of potential investment growth. For instance, a part-time worker who cuts total work by 14% over 10 years has benefit declines of about 17%, with the difference resulting from missed investment earnings.

Because hybrid plans include DB and DC components, their results fall between the two. For example, employees who spend their entire careers working part time see their benefits fall by 67%, compared with 75% in the DB plan and 50% in the DC plan.

Employment gap effects

Although smaller than the losses seen under full-career part-time work, taking time out of the workforce also leads to disproportionate declines in benefits. For example, workers who step away for five years from ages 35 to 39—a 14% reduction in total time worked—see their benefits reduced by roughly 18% in the DB plan, 21% in the DC plan, and 19% in the hybrid plan.

In these scenarios, the DB plan produces relatively smaller benefit reductions because workers return to full-time employment and therefore realize final average salaries that are in line with what they would have earned without any interruption in work.

By contrast, workers with DC and hybrid plans lose contributions and the associated years of investment growth during periods out of the workforce, resulting in larger benefit reductions. These results are also sensitive to assumptions about when work reductions occur. This analysis models periods of part-time work and workforce exits midcareer, but cutting hours earlier or later would produce different outcomes. Interruptions earlier in a career would lead to larger benefit reductions because forgone contributions cost more years of investment growth, while those later in a career would have smaller effects because accumulated assets have less time remaining to compound.

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Taken together, the results of this analysis suggest that the effects of nontraditional career paths on retirement security depend not only on the amount of work lost, but also on the retirement plan design. Years of service and final average salary are the main drivers of DB results, while the timing of missed contributions primarily influences DC and hybrid outcomes. By informing plan sponsors and policymakers about how benefit reductions apply across the workforce, this analysis can help them to avoid disproportionate penalties for alternative career paths.

Further, plan administrators can use these findings—along with other tools for retirement readiness outlined in the next section—to ensure that workers have the information necessary to assess how different choices and career paths will affect their benefits. A review of several public sector retirement plans conducted to identify inputs for this analysis found that most do not clearly explain how benefits are calculated for workers who shift to part-time schedules or take breaks from employment.

Providing more guidance on these calculations and the factors that affect benefit calculations would help workers better understand the trade-offs they face and make more informed decisions when balancing employment with caregiving or other life priorities. Research suggests that this may be especially important for women who report lower levels of retirement knowledge and confidence than men and are more likely to leave the workforce for extended periods.

Retirement readiness tools

To help support public employees in reaching a secure and dignified retirement, particularly workers with nonlinear career paths, Pew recommends that plans adopt four key components and resources for their workers:

1. A strong core plan design that delivers adequate retirement income.
2. Access to supplemental savings options.
3. Clear and accessible online tools that help workers understand their benefits, such as personalized benefit calculators.
4. Opportunities for personalized financial guidance.

Strengthening these plan elements can help workers maintain progress toward retirement security even when their employment is interrupted.

Mollie Mills is an officer, Aleena Oberthur is a project director, and David Draine is a principal officer with The Pew Charitable Trusts' state fiscal policy project.