In their June 2013 paper, Are Public Pensions Keeping Up with the Times?, Matthew M. Chingos, Grover J. Whitehurst, and Richard W. Johnson reported a $2.7 trillion nationwide funding gap in states’ public pension systems. In two new follow-up papers, Chingos, Whitehurst and colleagues seek to answer the inevitable question provoked by their initial work: What can be done about the rampant underfunding of public pension systems?
Improving Public Pensions: Balancing Competing Priorities by Patten Priestley Mahler, Chingos, and Whitehurst makes a significant contribution to the public pension discourse by providing policymakers and stakeholders with a framework for evaluating proposed reforms to pension systems – even in light of the frequently competing objectives of such systems. The authors begin by defining three essential goals of a pension system: to provide adequate retirement security; to ensure fiscal sustainability; and to maintain/improve public-sector workforce productivity. By analyzing the performance of various pension system designs against these three goals, the authors conclude that a collective defined-contribution plan is best suited to meet the complex objectives of a pension system.
The collective defined-contribution approach to pension reform combines many of the advantages of the defined-benefit plan currently favored in the public sector with those of the defined-contribution plan prevalent in the private sector.
Whereas Improving Public Pensions provides a means by which to evaluate proposed reforms, and identifies an ideal pension plan, Pension Politics: Public Employee Retirement System Reform in Four States by Patrick McGuinn provides actionable policy recommendations for those states that are looking to enact such reforms. McGuinn