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TO NATIONAL EDITORS:
Work Longer, Save More: How Changes In State Pension Plans Affect
Retirement Income Of Public Employees
WASHINGTON, April 25, 2014 /PRNewswire-USNewswire/ -- A new report
from the Center for State and Local Government Excellence and the
National Association of State Retirement Administrators gauges the
effects of changes in state pension plans on the retirement income of
retirees.
Effects of Pension Plan Changes on Retirement Security calculates the
projected initial retirement benefit of state and local employees
before and after recent modifications were made to pension design and
financing. The report was produced with financial support from AARP.
Since 2009, nearly all states have responded to fiscal constraints by
making changes to their retirement plans, including increasing
employee contributions, reducing benefits, or both. Other states have
modified their plan design, choosing to transfer more of the risk
associated with providing retirement benefits from the state and its
political subdivisions to its employees.
The report also summarizes interviews conducted with public sector
human resource executives and retirement experts from 10 states that
have made significant pension plan changes (Alabama, California,
Colorado, Hawaii, Missouri, Ohio, Pennsylvania, South Carolina,
Tennessee and Virginia).
The report's key findings include:
-- Pension reforms reduced the amount of the initial retirement
benefit new employees can expect to receive compared with that of
existing employees. Reductions ranged from less than 1 percent to 20
percent and do not account for inflation or cost-of-living adjustments
that have been reduced or eliminated in many states.
-- New employees can expect to work longer and save more to reach the
benefit level of previously hired employees.
-- Hybrid plans adopted in five states produce a wide range of
estimated retirement incomes. Holding investment returns constant, the
determining factor in the size of the hybrid benefit is employee and
employer contributions. For this analysis those states with higher
required contributions produce a higher benefit than those whose
statutory contribution rates are lower.
-- Changes to retirement plans include an increase in the number of
years included in the final average salary calculation (21 states); a
reduction in the multiplier (12 states); and a change to both of these
variables (nine states).
Although newly hired employees will need to work longer or save more
to have the level of retirement benefit that employees previously
earned, state human resource officials say that wage stagnation and
the increased cost of benefits for employees is a more immediate
concern. To address the savings gap, many plan administrators are
providing enhanced financial education and sponsoring and promoting
supplemental savings opportunities.
Read the full report on the Center's website
(http://slge.org/publications/effects-of-pension-plan-changes-on-retirement-security)
or on NASRA's website
(http://www.nasra.org/Files/JointPublications/Effects of Pension Plans
on Retirement Income.pdf).
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.
About the National Association of State Retirement Administrators The
National Association of State Retirement Administrators is a
nonprofit, nonpartisan association for the directors of the nation's
largest public retirement systems. NASRA members oversee systems
holding nearly $4 trillion in assets to fund pension and other
benefits for nearly two-thirds of the state and local government
workforce. To learn more, visit www.nasra.org.
SOURCE Center for State and Local Government Excellence
-0- 04/25/2014
/CONTACT: Amy Mayers, for SLGE, 202-682-6102, amayers@slge.org; or Ady Dewey, for NASRA, 301-933-4441, communications@nasra.org
/Web Site: http://www.slge.org
CO: Center for State and Local Government Excellence; National Association of State Retirement Administrators
ST: District of Columbia
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0000 04/25/2014 18:54:00 EDT http://www.prnewswire.com
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