Public Pension Cash Balance Plans

A Primer

Public Pension Cash Balance Plans

More than $1 trillion in unfunded pension promises made to current and retired government employees are placing a strain on state and local budgets, prompting policymakers across the country to take a closer look at alternative ways to design a retirement plan.

A number of states and municipalities have made the move to a pension design called a cash balance plan.

Well-designed cash balance plans, like traditional defined benefit or defined contribution plans, can help government employers meet their recruitment and retention goals.

They offer the following key elements needed to help employees achieve a secure retirement:

  • Fully funded retirement benefits;
  • Access to professionally managed, low-fee, pooled investments with appropriate asset allocations; and
  • Access to lifetime income options, or annuities.

All public employees deserve a secure retirement. States need a fair set of solutions that will make their retirement system financially sustainable in the long run.

This brief will provide an overview of cash balance plan designs and discuss related policy issues. Other types of retirement plans will be discussed in subsequent briefs.

The front facade of the Supreme Court of the United States in Washington, DC.
ian-hutchinson-U8WfiRpsQ7Y-unsplash.jpg_master

Agenda for America

Resources for federal, state, and local decision-makers

Quick View

Data-driven policymaking is not just a tool for finding new solutions for emerging challenges, it makes government more effective and better able to serve the public interest.

Lightbulbs
Lightbulbs

States of Innovation

Data-driven state policy innovations across America

Quick View

Data-driven policymaking is not just a tool for finding new solutions for difficult challenges. When states serve their traditional role as laboratories of innovation, they increase the American people’s confidence that the government they choose—no matter the size—can be effective, responsive, and in the public interest.