Public Pension Plan Reforms Help Improve Finances, Still Provide Retirement Security For Workers
Center for Excellence update on reforms made by five governments
WASHINGTON, June 28, 2012 /PRNewswire-USNewswire/ — New fact sheets from the Center for State and Local Government Excellence offer updates on the results of pension plan reforms made by five state and local governments — Iowa, Oregon, Vermont, Gwinnett County (GA), and Houston (TX).
A year later, the fact sheets note that:
- Iowa: Reduced its normal costs and unfunded liabilities through strong investment performance, increased contributions, changed projected benefits, among other actions. The amortization period has decreased from infinity to 34 years.
- Oregon: Reduced the annual employer costs for unfunded liabilities to 16.3 percent of payroll. Without reform, employer contribution rates would have been 32 percent for all pension plans combined. Since 2008, its funding ratio has continued to improve.
- Vermont: Adopted a more conservative approach for assumed investment returns.
- Gwinnett County: Added new investment options for DC plan members.
- Houston: While the plan’s funded ratio has declined since 2008, the city expects to pay its full actuarially required contribution by 2015.
View the fact sheets.
The original report, “Strengthening State and Local Government Finances: Lessons for Negotiating Public Pension Plan Reforms” (September 2011), examined how these governments reformed their pension plans to make them more fiscally sustainable while still meeting their obligations to their employees.
Its recommendations included:
- Pensions should be viewed as part of a broader human resources strategy that can affect recruitment and retention.
- Policy makers need high quality data and analyses as they consider benefit changes.
- Strong communication with all stakeholders helps employees, elected officials, and the public understand the need for change.
- Discipline in funding a plan’s annual required contribution is important to achieve full funding.
- Workplace financial education will help public employees learn how to build their retirement savings.
More information on pension plan reforms is available on the Center’s interactive map.
About the Center for State and Local Government Excellence
The Center for State and Local Government Excellence helps state and local governments become knowledgeable and competitive employers so they can attract and retain a talented and committed workforce. The Center identifies best practices and conducts research on competitive employment practices, workforce development, pensions, retiree health security, and financial planning. The Center also brings state and local leaders together with respected researchers and features the latest demographic data on the aging workforce, research studies, and news on health care, recruitment, and succession planning on its website, www.slge.org.
SOURCE Center for State and Local Government Excellence