The National Association of State Retirement Administrators (NASRA) recently completed a comprehensive review and compilation of public pension reforms since the Great Recession and the global financial crisis. According to their report, Significant Reforms to State Retirement Systems, the period from 2009 to 2014 marked the greatest period of change in the history of public pensions.
Key points of the paper include:
- States overwhelmingly retained core features known to balance the objectives of retirement security, workforce management, and cost containment sought by stakeholders, namely:
- Mandatory participation
- Employee/employer shared financing
- Pooled investments
- Lifetime benefit payouts
- Integrated survivor and disability benefits, and
- Supplemental savings.
- Nearly every state reduced benefits, increased contributions, or both. Most did so while retaining the traditional pension plan:
- Thirty-six states increased the amount that employees are required to contribute to the pension plan.
- Twenty-nine states increased eligibility requirements for retirement, which typically took the form of an increase in age, years of employment, or a combination of both to qualify for retirement.
- Most of the reforms transferred a higher share of the risk associated with providing retirement benefits from the state or local government to its employees.
- A number of state plans engaged self-adjusting features that did not require legislative changes, but nevertheless altered financing and benefit levels. In some cases, these automatic adjustments were more significant than legislative pension reforms.
- Reforms enacted in one state were not necessarily appropriate for another. Generally, states made modifications to their pension plans commensurate with the extent of their fiscal issues, to ensure the long-term sustainability of the plan.
You can directly access the report, “Significant Reforms to State Retirement Systems here.
The report also is available on NASRA’s website at www.nasra.org/pensionreform.