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If you work for the government, your pension and retirement benefits could be very different from those offered to private sector workers. Many local, state and federal public employees enjoy a "defined benefit" plan that provides guaranteed income for life. Some jobs, such as law enforcement and firefighters, often have even more generous benefits including generous pensions. Benefits in the private sector, however, typically involve defined contribution plans such as IRAs or 401(k)s.

Public employees often enjoy much more generous benefits than those found in the private sector. Public pensions typically pay out a set benefit for life typically based on years of service and final salary (in contrast to Social Security). Defined benefit plans typically pay out fixed amounts, regardless of the performance of the investments. Pension benefits are guaranteed by statute or through provisions in contracts with public sector unions. Benefits for government employees may also be based on their final salaries rather than averages over time as is common with private sector pension plans.

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