The brief’s key findings are:

• Since 2019, financial markets have seen unusual turmoil, most recently a sharp rise in interest rates to curb high inflation.
• Despite volatile asset values, the funded status of state and local pension plans has risen about 2 percentage points since 2023, and 5 points since 2019.
• That is, the strong performance of other asset classes has more than offset the impact of rising interest rates on fixed-income assets.

The brief’s key findings are:

• The inclusion of “legacy debt” – unfunded liabilities from long ago – with current liabilities impedes effective pension policy.
• A new approach would separate legacy debt from other unfunded liabilities in order to:
  • spread the legacy cost over multiple generations; and
  • properly identify fixed vs. variable costs.
• It would also use the municipal bond yield – rather than the assumed return on assets – to calculate liabilities and required contributions.
• This approach, by properly allocating costs, would improve intergenerational fairness, government resource decisions, and public credibility.

The brief’s key findings are:

• About 5 million state and local workers are not covered by Social Security on their current job.
• The law requires that their pension plans provide a benefit equal to what they would have received upon retirement if they were covered by Social Security.
• While all plans meet the letter of the law, a prior study found that 43 percent of them do not provide lifetime benefits equal to Social Security for some workers.
• The workers who lose out are those who leave in mid-career, as their pensions are based on wages when they depart, whose real value erodes over time.
• This new study finds that this group accounts for about 17 percent of current noncovered workers, so hundreds of thousands could fall short.

The brief’s key findings are:

• At the outset of the pandemic recession, many feared it would undermine workers’ employer-sponsored retirement plans.
• State and local employees who are not covered by Social Security would have been particularly vulnerable, as they lack the buffer this program offers.
• Their employer defined benefit plans would have been hurt by a long recession with poor investment returns and reduced contributions due to tax shortfalls.
• Instead, these plans exceeded their return targets; tax revenues held up; and government sponsors got stimulus aid, so plan funded ratios actually improved.
• And long-term structural headwinds such as negative cash flows and aggressive return targets still pose little risk to their ability to pay future benefits.

The brief’s key findings are:

• Whether public teachers are over- or under-paid is a source of lively debate.
• This study sheds new light on the topic by using more accurate estimates of benefit costs.
• The results show that teachers earn roughly the same as similar private sector workers.
• However, given cuts to pension benefits for teachers hired in the past decade, relative compensation is likely to decline over time.
• And uncompetitive compensation may make it harder to recruit high-quality teachers, potentially leading to worse outcomes for students.

The brief’s key findings are:

• The conventional wisdom is that all state and local government workers receive a lifetime annuity in retirement from their employer pension plan.
• The analysis confirms this presumption for most workers, but also finds that a small share will receive some income that is not annuitized.
  • About 6 percent of all state and local workers convert part of their defined benefit annuity into a lump-sum payment.
  • And another 8 percent will potentially enter retirement with un-annuitized assets from a defined contribution plan.

The brief’s key findings are:

• The aggregate funded ratio improved from 73 to 75 percent from FY 2020 to 2021. At the same time, contribution rates rose from 21 to 22 percent of payrolls.
• While initial expectations for public pensions were low due to COVID, financial markets rebounded and municipal tax revenues were quite resilient.
• Yet one other COVID-related factor – cuts to the state and local workforce – impacted public pension finances in FY 2021.
• These cuts had little impact on funded status and required contribution amounts, but they do explain the rise in contribution rates, which are expressed as a share of lower payrolls.

The brief’s key findings are:

• About one quarter of state and local workers are not currently covered by Social Security.
  
• Federal standards require that state and local plans provide their noncovered workers benefits equivalent to Social Security at the full retirement age.
  
• This study explores whether the plans satisfy the federal standards, and whether the standards themselves ensure equivalent benefits.
  
• The results show that public plans do adhere to the standards, and the standards satisfy the letter of the law.
  
• But looking beyond the standards to see if plans also provide equal lifetime benefits suggests that a significant portion fall short for some of their members.
  
• Policy options include updating the standards to a lifetime measure or, more importantly, requiring all public workers to be covered by Social Security.