February 8, 2011
The Facts on Public Pension Plans
National state and local governmental organizations clarify facts on public pension plans.
The National Conference of State Legislatures (NCSL), has released a joint fact sheet on state and local government pensions regarding the operations and funding of public pensions, the degree to which they fit in the overall budget picture at the state and local levels, and the steps state and local governments are taking to bring their pension plans into long-term solvency.
The fact sheet underscores that state and local governments have already pre-funded the majority of their pension costs and have more than $2.7 trillion in assets held in trust for current and future retirees. For the vast majority of state and local pension plans, these funds are sufficient to continue paying promised benefits well into the future. Continued contributions of employers and employees (who typically share in the financing of pensions) ensure trusts can continue to do so for the very long-term.
Retirement systems remain a small portion of state and local government budgets; the portion of spending dedicated to contributions to retirement systems amounts to about 3 percent.
Other key facts include the following:
State and local governments are taking steps to secure their pensions for the long term.
Public employees share in the financing of pensions, which in many cases is in lieu of Social Security.
Pension dollars help the economy of every jurisdiction.
Long-term investment returns of public funds continue to exceed expectations.
State and local government retirement systems do not require, nor are they seeking, federal financial assistance. One-size-fits-all federal regulation is neither needed nor warranted and would only inhibit recovery efforts already underway at the state and local levels.
State and local retirement systems have substantial assets to weather the economic crisis and are taking steps to strengthen funding for the very long-term. In fact, more state and local governments enacted significant modifications to improve their retirement plan funding in 2010 than in any other year in recent history.
NCSL worked alongside the National Association of Counties (NACo), United States Conference of Mayors (USCM), National League of Cities (NLC), International City/County Management Association (ICMA), National Association of State Auditors Comptrollers and Treasurers (NASACT), Government Finance Officers Association (GFOA), International Personnel Management Association for Human Resources (IPMA-HR), National Council on Teacher Retirement (NCTR) and the National Association of State Retirement Administrators (NASRA) to create this factsheet.
For media questions or inquiries, please contact our press room.
NCSL is a bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.