Pension Reform: Local Governments Face Tough Choices
Pension programs for government employees are in the midst of an era of unprecedented reform. While most of the attention has focused on the state retirement systems, the nation’s local governments are addressing their retirement programs as well.
SLGE researchers have been tracking state and local reforms since October 2010. Reforms have run the spectrum from contribution and eligibility increases to plan design changes, and have affected different group of employees depending on the date they were hired.
Examples of pension reforms by large local governments include:
- In March 2013, Phoenix voters passed a proposition that increased employee contributions and eligibility requirements for new city workers.
- In February 2011, the Cincinnati city council approved changes to the Cincinnati Retirement System that decreased cost-of-living adjustments and made benefit changes including reduced pension accruals and increased retirement eligibility for some members.
- In 2010, Atlanta closed its defined benefit plan for new employees and replaced it with a hybrid (combination defined benefit and defined contribution plan) for newly hired workers.
County governments have been active in reforming their retirement programs as well. A 2011 SLGE report on negotiated pension reforms highlighted the case of Gwinnett County, GA, which, in 2007, closed its defined benefit plan to new employees and replaced it with a defined contribution plan. Another Georgia county — Cobb County — closed its defined benefit plan and replaced it with a combination hybrid plan for new and non-vested employees hired after January 1, 2010.
Pension reform is not strictly the domain of state governments. Local governments across the country face similar challenges in administering their retirement programs, forcing them to make the same types of tough choices as states over the past five years. (7/11)
