Public Sector Pensions

Public Sector Pensions

Research

Marc Joffe, Jesse Martinez | Apr 12, 2016
Puerto Rico is facing a severe fiscal crisis, and new crises will be almost inevitable in the absence of major institutional changes in the commonwealth. History has bequeathed the island inefficient state-run enterprises and a government unable to balance its budget, but Puerto Rico could have a bright future if it undertakes the right reforms.
John A. Dove, Daniel J. Smith | Mar 22, 2016
Alabama currently lags behind its regional neighbors and the nation in economic growth and performance. This study undertakes a comprehensive analysis of Alabama's current fiscal situation as well as the reforms necessary to put Alabama on the road to economic prosperity.
Mark J. Warshawsky, Ross Marchand | Jan 07, 2016
A new study for the Mercatus Center at George Mason University examines both the overall financial condition of state and local pension plans and the legal impediments to pension reform. It argues that reform proposals that assume the federal government will bail out state and local pen- sions are politically and economically unworkable and unfair. Instead, it presents a two-pronged reform proposal: (1) require state and local authorities to disclose the financial condition of their pension plans to beneficiaries in plain language and using standardized conservative accounting assumptions, and (2) allow state and local governments to offer beneficiaries a choice between accepting the uncertain and risky future benefits originally promised or receiving a discounted lump-sum benefit right away.
Erick M. Elder, Gary A. Wagner | Apr 15, 2015
A new study for the Mercatus Center at George Mason University is the first to examine whether public pensions that are funded at various levels will have sufficient assets to pay all promised future benefits. The study also looks at the distribution of the potential accumulation of assets for pensions that do have sufficient assets. Examining PSERS and SERS using financial modeling over a period of years, the study presents two conclusions applicable to all public pensions.
Andrew G. Biggs | Feb 10, 2015
A new study for the Mercatus Center at George Mason University explores investment-based transition costs and calculates optimal investment portfolios for pension plans, both those that remain open to new participants and those that have been closed.
George R. Crowley, Scott Beaulier | Nov 18, 2014
We find that union political contributions and collective bargaining are associated with higher incomes for state and local employees and with higher public employment, both across state and local government overall as well as within the education sector. We also find little to no evidence that union activity influences total spending.

Testimony & Comments

Research Summaries & Toolkits

Speeches & Presentations

Expert Commentary

Jun 01, 2016

In a new Mercatus Center study that ranks each of the 50 states and Puerto Rico according to their fiscal condition, one common theme among the worst performing states is their drastically under-funded public pension systems.
Jun 01, 2016

The information is right in front of us, but if we don’t pay attention, we risk missing the warning signs of the next state or territorial fiscal crisis.
May 23, 2016

Defenders of Alabama's tenuous pension status quo accurately point out that we have not yet seen the full effects of the 2011 and 2012 reforms to the Retirement System of Alabama. Unfortunately, that is not an excuse to avoid further action.
Jan 10, 2016

Poor decisions by state and local officials, and the politically charged collective-bargaining environment they work within, are to blame for the crisis. It's up to these policymakers to work with pension-plan beneficiaries and their representatives to solve it. The following plan would alleviate some of the financial pressure on public pension plans and satisfy retirees who are willing to opt-in - and it is politically viable.
Apr 30, 2015

The Pennsylvania legislature is again debating reforms to avert a potential pension funding crisis. Every taxpayer should be concerned, but the people who bear the most risk are current and future retirees. More than 325,000 retired Pennsylvanians and 370,000 active workers rely on the commonwealth’s two largest pension plans, the Public Schools Employee Retirement System (PSERS) and State Employee Retirement System (SERS). According to our new research, it’s statistically unlikely those plans will be able to keep their promises to these workers over the long term if changes aren’t made.
Mar 25, 2015

Shifting public employees to defined-contribution retirement plans won’t magically make unfunded liabilities go away. Pension liabilities must be paid, regardless of what plan new employees participate in. But defined-contribution plans, which cannot generate unfunded liabilities for the taxpayer, at least put public pensions on a more sustainable track.

Charts

Experts

Podcasts

Eileen Norcross | April 09, 2015
With all the talk about pension reform in Pennsylvania, Eileen Norcross discusses whether existing guidelines are enforced this with Keystone Crossroads.

Recent Events

Mercatus Center budget scholars will share their academic research and practical knowledge with local thought leaders in a half-day seminar hosted by the Bluegrass Institute in Lexington, Kentucky.

Media Clippings

Eileen Norcross, Matthew Mitchell, | Jul 23, 2013
Detroit reports an unfunded pension liability of $634 million, but using more accurate accounting methods it's closer to $3.5 billion.
Eileen Norcross, Jerry Brito | Oct 01, 2012
Eileen Norcross and Jerry Brito cited on Virginia Watchdog discussing public pensions.
Eileen Norcross | Aug 30, 2012
Eileen Norcross cited discussing high risk financing.
Eileen Norcross | Jul 11, 2012
Eileen Norcross is quoted in the guardian discussing the straining budgets of state and local governments in the U.S.
Eileen Norcross | Jun 15, 2012
Eileen Norcross explains the effect changes will have on New Jersey's pension liability.
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