Public Pension Cash Balance Plans
A Primer
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.
Spotlight on Mental Health
MORE FROM PEW
Explore Pew’s new and improved
Fiscal 50 interactive
Your state's stats are more accessible than ever with our new and improved Fiscal 50 interactive:
- Maps, trends, and customizable charts
- 50-state rankings
- Analysis of what it all means
- Shareable graphics and downloadable data
- Proven fiscal policy strategies
Welcome to the new Fiscal 50
Key changes include:
- State pages that help you keep track of trends in your home state and provide national and regional context.
- Interactive indicator pages with highly customizable and shareable data visualizations.
- A Budget Threads feature that offers Pew’s read on the latest state fiscal news.