Thursday, March 28, 2024
Hawai'i Free Press

Current Articles | Archives

Wednesday, April 30, 2014
Effects of Pension Plan Changes on Retirement Security
By News Release @ 1:40 PM :: 5455 Views :: National News, Hawaii Statistics

Effects of Pension Plan Changes on Retirement Security

April, 2014

This report was prepared by the research teams of the:

Center for State and Local Government Excellence: Danielle Miller Wagner, Joshua Franzel, Elizabeth Kellar, Amy Mayers, and Bonnie Faulk

National Association of State Retirement Administrators: Alex Brown, Keith Brainard, Jeannine Markoe Raymond, Dana Bilyeu, and Ady Dewey

Introduction

Since 2009, fiscal constraints have forced state governments to reduce costs, often by laying off or furloughing employees, imposing salary freezes and/or reducing benefits. In fact, according to the National Conference of State Legislatures, since 2009, more than 45 states have made significant 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.

While we know a great deal about the unfunded liabilities of public pension plans, we know little about the effects pension plan changes will have on the retirement income of public employees.

This report calculates the retirement income state and participating local employees hired under the new benefit conditions may expect, and compares it with the retirement income they would have earned before the plan was changed. The report also summarizes interviews conducted with state human resource executives and retirement experts from 10 states that have made significant pension plan changes.

Key findings

• Pension reforms reduced the amount of retirement income new employees can expect to receive compared with that of existing employees. Reductions ranged from less than 1 percent to 20 percent.

• 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 retirement incomes. The Rhode Island, Tennessee, and Utah plans may increase retirement income, a fact that can be partially attributed to higher required contributions to their defined contribution plan. Georgia and Virginia have lower statutory contribution rates and their hybrid plans may produce lower retirement incomes.

• 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.

Reasons for the recent wave of state pension reforms are numerous and usually are unique to each state, its finances, and its workforce. In most cases, the primary objectives have been to reduce the costs of providing retirement benefits and to transfer a greater portion of the associated risks from employers to employees. This study does not address the rationale for modifications, but instead analyzes the effects of the resulting changes at the individual employee level by

1) measuring how recent reforms affect the retirement income that will be provided to state employees who are hired under new benefit conditions; and

2) looking at human resource measures states have taken to directly or indirectly address the impacts of pension reform.

The Center for State and Local Government Excellence gratefully acknowledges the financial support from AARP to undertake this research project.

Read ... Full Report Including Hawaii Analysis

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT