June 28, 2012 (PLANSPONSOR.com) - The Center for State and Local Government Excellence’s review of pension plan reforms made by five state and local governments finds improved pension costs.
Iowa reduced its normal costs and unfunded liabilities through strong investment performance, increased contributions, and 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% of payroll. Without reform, employer contribution rates would have been 32% for all pension plans combined. Since 2008, its funding ratio has continued to improve.
While Houston’s pension funded ratio has declined since 2008, the city expects to pay its full actuarially required contribution by 2015.
The original report, "Strengthening State and Local Government Finances: Lessons for Negotiating Public Pension Plan Reforms" (see“New Report Highlights Lessons for Negotiating Public Pension Plan Reforms”), examined how Iowa, Oregon, Vermont, Gwinnett County (Georgia), and Houston (Texas) reformed their pension plans to make them more fiscally sustainable while still meeting their obligations to their employees. Fact sheets about each of the governments’ pensions and their progress over time can be viewed here.