Evolving workforce demographics and long-term budget pressures present challenges for public sector pension reform
TIAA-CREF Institute and Rockefeller Institute of Government convene state and local officials, union leaders, and public policy analysts, among others to discuss
New York, June 13, 2013 - A report released today by the TIAA-CREF Institute and the Rockefeller Institute of Government shares expert considerations for public sector pension reform. The new report – Public Sector Pension Reform: Addressing Pressing Fiscal Realities from a Long-Term Perspective – is a culmination of insights and experiences from state and local officials and researchers from across the nation that highlights the issues and considerations impacting public sector pension reform.
While 99 percent of full-time public sector employees have access to an employment-based retirement plan – primarily through a defined benefit pension plan – budgetary pressures, evolving workforce demographics, and longer-term pension plan finance and benefit trends have led almost all states and many local governments to consider and implement various reforms of the plans they sponsor. States and localities, however, continue to grapple with pension reform.
Against this backdrop, the TIAA-CREF Institute and the Rockefeller Institute of Government convened state and local officials, union leaders, and researchers from across the nation to share their own insights and experiences, shedding light on many of the issues impacting public pension plan reform.
The report highlights several key considerations for public pension reform, including:
- Pension reform should evaluate individual defined benefit and defined contribution plan elements and consider hybrid arrangements of both plan designs that leverage complementary characteristics of each;
- Pension reform must take into consideration changing lifestyle and workforce patterns and should be designed to enable the public sector to compete with private employers for top talent;
- Plan reform must consider both short-term fiscal challenges as well as long-term human resource trends and objectives. While underfunding issues must be addressed on a state-by-state basis, reform also needs to be considered from a national perspective.
“This convening provided an opportunity to source the best minds for considering public pension reform strategies in hopes of gaining insight and sparking actionable debate,” said TIAA-CREF Institute Senior Managing Director Stephanie Bell-Rose. “The TIAA-CREF Institute is committed to fostering further dialogue as this national conversation continues to unfold.”
“Plan design is a critical component of reform discussions,” said TIAA-CREF Institute Senior Economist Paul Yakoboski. “While many older defined benefit plans were premised on a career employment model in the public sector, that model no longer fits the experience of many current employees and is even less likely to apply in the future. Future plan design must take into account changing lifestyle and workforce patterns.”
“Public pensions and their financing have been divisive issues in many state and local governments in recent years, and meeting pension obligations will continue to be a challenge in many state and local governments for years to come,” said Rockefeller Institute Director Thomas Gais. “Our forum was distinctive in that it went well beyond the immediate fiscal crisis and considered the wide range of values and options involved in designing affordable pensions for the very important people who teach our children, police our streets, oversee public health, and maintain our infrastructure.”
The report can be downloaded from the TIAA-CREF Institute website and from the Rockefeller Institute website.
About the TIAA-CREF Institute
The TIAA-CREF Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in-depth research, provides access to a network of thought leaders, and enables those we serve to anticipate trends, plan future strategies and maximize opportunities for success.
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $520 billion in assets under management (as of 3/31/2013) and is the leading provider of retirement services in the academic, research, medical and cultural fields.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
About the Rockefeller Institute of Government
The Nelson A. Rockefeller Institute of Government is a national, independent organization that researches and publishes on public policy issues, with a particular focus on the 50 states and the local governments within them. A public policy “think tank” that seeks to educate rather than advocate, the Institute focuses on: state fiscal issues, education, federalism, intergovernmental relations, urban issues, health care reform and social welfare policies. The Institute operates under the aegis of the University at Albany within the State University of New York system. The primary goal of the Institute is to develop findings that state and local governments can use to become more effective.
About The State University of New York
The State University of New York (SUNY) was officially established in 1948 with the consolidation of 29 unaffiliated institutions. Today, SUNY's 64 campuses comprise the nation’s largest comprehensive system of public higher education. SUNY’s mission is to provide to the people of New York educational services of the highest quality, with the broadest possible access, fully representative of all segments of the population in a complete range of academic, professional, and vocational postsecondary programs including such additional activities in pursuit of these objectives as are necessary or customary. SUNY provides access to almost every field of academic or professional study via over 7,000 degree and certificate programs.