The majority of public pension plans made several reforms following the financial crisis. A new brief by the Center for State and Local Government Excellence examines how, why, and to what extent state and local governments have enacted these changes.
According to the report, 74% of state plans and 57% of large local plans have cut benefits or raised employee contributions to curb rising costs. States with the strongest legal protections for current workers were more likely to limit such cuts to new hires.
New employees most commonly experienced increases in the age and tenure required to claim benefits. They also were likely to see reductions in the benefit multiplier, and increases in the number of years used to calculate final average salary.
Higher employee contributions were the most common benefit cut for current employees followed by reductions to the cost-of-living adjustment (COLA).
Authors Jean-Pierre Aubry and Caroline Crawford from the Center for Retirement Research at Boston College examined data from 2009 to 2014 for all 114 state plans and 46 local plans in the Public Plans Database, along with an additional 86 local plans.
The full brief “State and Local Pension Reform Since the Financial Crisis” can be found here.