November 2013

Are Pension Reforms Helping States Attract and Retain the Best Workers?

This paper uses New Jersey as an example to show that the actuarial assumptions underlying some state pension reforms rely on contributions from new and younger employees to pay off unfunded liabilities owed to workers hired before the reform. Thus, rather than benefiting from any state contribution to their pensions, many new workers are scheduled to be net contributors over their careers. That is, they will get back only their own contributions plus interest, but compounded at a lower rate of return than the state assumes it will earn on plan assets.

The Retirement Savings Crisis: Is It Worse Than We Think?

This report examines the readiness of working-age households, based primarily on an analysis of the 2010 Survey of Consumer Finances (SCF) from the U.S. Federal Reserve. It found that more than 38 million working-age households (45 percent) do not own any retirement account assets, and the average working household has virtually no retirement savings. When all households are included, the median retirement account balance is only $3,000 for all working-age households and $12,000 for near-retirement households.

Creating a Combined Approach to Retirement Security

One of the most well-known transformations of a pension system occurred when President Ronald Reagan signed the Federal Employees’ Retirement System Act into law on June 6, 1986. This law moved federal employees from the Civil Service Retirement System (CSRS), to a retirement system that integrated Social Security, a DB pension, and a DC savings plan.

Is Nebraska's Cash Balance Pension a Model?

Nebraska state employees hired since 2003 join what public pension analysts call a "cash balance" retirement plan , which includes features of both a traditional defined benefit pension and a 401(k)-style system. The hybrid plan is getting new attention from other states searching for alternatives to the decades-old defined benefit system whose cost is rising as Baby Boomers retire and pension portfolios recover from record losses during the Great Recession.

Are Cash Balance Plans the Answer?

Nebraska presents what could be a model for public sector pension reform, the so-called “cash balance” plan that offers some of the better aspects of both traditional defined benefit pensions and the defined contribution, 401(k)-type plans that dominate in the private sector.

Employee Benefits and Their Relationship to School Levy Referenda

This study found that employee benefits as a percentage of the district's budget were negatively associated with levy outcomes, while salaries were positively associated with levy outcomes, suggesting that voters may be more sensitive to retirement and healthcare benefits than salaries when voting.

The “California Rule” and Its Impact on Public Pension Reform

Many states are actively considering how best to address the problem of state and local pension plan underfunding. In many states, however, courts have held that the statutes establishing state retirement systems created contracts between the state and employees that prohibit the state from making any detrimental changes to the benefits provided to current employees within such systems, even on a prospective basis.

The Legal Framework for Public Pensions

There is significant interest in reforming retirement plans for public school employees, particularly in light of current market conditions. This paper presents an overview of the various types of state regulation of public pension plans that affect possibilities for reform.

Retirement Security Across Generations

This report tracks the wealth of age cohorts over the last two decades to assess the Great Recession's impact on each group’s financial security. The downturn heightened concerns about retirement planning—or lack of planning—by younger generations. Many younger Americans were already behind in saving for retirement, and suddenly millions of them were out of work or owned homes worth far less than they had been just a few years earlier.

Better Benefits

States can take steps to modernize teacher pension systems. Some address the technical aspects or basic structure of plans; others tackle the political obstacles or legal limitations. Some are short term; others are more permanent. They all must be crafted with an eye toward simultaneously creating a sustainable cost structure and improving the quality of the teaching work force.

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November 2013