Public Pension Plan Reforms Help Improve Finances, Still Provide Retirement Security for Workers
This collection of fact sheets updates the case studies featured in Strengthening State and Local Government Finances: Lessons for Negotiating Public Pension Plan Reforms (September 2011). That earlier SLGE report offered lessons from five governments — Iowa, Oregon, Vermont, Gwinnett County (GA), and Houston (TX) — that had made changes to their pension plans to make them more fiscally sustainable while still providing retirement security to their employees.
These fact sheets provide updated information on those five governments and add a new one (Denver, CO). Key findings for each pension plan include:
- 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.
- Denver: Began reforms in 2004, lowering the formula multiplier, and in 2011, creating a second tier of benefits for new hires. While the plan’s funded ratio has declined since 2008, the goal is to achieve 100 percent funding by earning assumed rate of return long-term; prudently managing liabilities; and consistently paying the ARC.