Publication Date: February 2013
Publisher: Center for Retirement Research at Boston College
Author(s): Alicia H. Munnell; Jean-Pierre Aubry; Joshua Hurwitz
Research Area: Economics; Labor
Keywords: state and local pensions; public pensions
Coverage: United States
Most of the attention in the wake of the financial crisis and ensuing recession has focused on state-administered pension plans. But cities often administer their own plans, and stories circulate about the perils facing Chicago, Philadelphia, Providence, and others. To assess the status of locally administered plans, this Issue in Brief reports on a survey of 128 locally-administered plans in 43 states.
The sample is limited to local entities with plans of their own, because the goal is to compare the effect of local versus state administration. Such a focus, however, leaves out an important component of the local story. For example, the sample includes no city or town in Mississippi, Montana, or Nevada, because cities and towns in those states do not sponsor their own plans but rather participate in state plans. In fact, for the nation as a whole, only 42 percent of local pension contributions go to locally-administered plans, while 58 percent go to state-administered plans. Thus, an equally, or perhaps more, important question is the burden of local pension contributions – to both local and state plans – on local budgets. Because of the many dimensions of the local story, this brief, which reports just on localities with pension plans, is the first of three that will assess pensions from a local perspective. The second brief will analyze the burden of pensions on localities by doubling the sample to include localities without plans and calculating the impact of pension contributions on local budgets. The third brief will explore the bankruptcies that have occurred at the local level and see whether it is possible to identify the role of pensions among other common contributing factors.