Webinar held June 21, 2012
- Keith Brainard, Research Director, National Association of State Retirement Administrators (NASRA)
- Joshua Franzel, Vice President, Research, Center for State and Local Government Excellence
- Alex Brown, Research & Policy Analyst, Center for State and Local Government Excellence
The process of reforming retirement benefits for public employees is complex, with numerous factors to consider at each step of the negotiation process. This webinar explored the public pension landscape, including lessons for pension reform learned from five government case studies.
Center researchers studied five states and localities that enacted pension reform — Iowa Public Employees’ Retirement System, the Vermont Teachers’ Retirement System, the Oregon Public Employees’ Retirement System, the Houston Municipal Employees Retirement System, and Gwinnett County, Georgia. The resulting report, “Strengthening State and Local Government Finances: Lessons for Negotiating Public Pension Plan Reforms” (September 2011), offers eight lessons policymakers should consider when attempting to enact public pension reforms:
- Use quality data: While most state and local governments believe they have good data, a periodic review or change in independent actuaries can provide a useful new perspective.
- Put pension reforms in the human resource context: Pension benefits are a useful tool in attracting talented workers to the public sector. Their preservation as a desired element of a HR package should be considered when initiating reforms.
- Consider implementation when changing policy: Reforms must be designed to minimize administrative hassles, legal challenges, and unsustainable increases in the number of employees leaving the workforce as a result of the issues.
- Share information with all stakeholders: Fostering an environment of open communication and soliciting feedback can alleviate concerns and ensure that everyone has a voice, even if all desired outcomes are not achievable.
- Plan carefully and evaluate all options: Finding time for comprehensive analyses can be difficult but given the relative difficulties associated with the legislative process, the process should not be rushed.
- Recognize the importance of a strong governing body: A diverse governing body with solid financial expertise and member representation is invaluable to a pension system generally, but even more so if major reforms are being undertaken.
- Fully fund the Annual Required Contribution (ARC): If a system is well funded, lawmakers and system staff can take a long-term view of reforms rather than react to an immediate funding crisis.
- Provide adequate financial education: In three of the cases studied, a greater portion of the investment risk was shifted to employees. An environment of shared risk means employees need access to the tools and information they need to make sound decisions.
Download the PowerPoint presentation