Goverment Pension Plans Essay

Submitted By anakarmassey
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Pages: 4

Pension and health care benefits provider to states and local government

employees are emsiderally broader in coverage and more geneous compared

with those for private sector emp;oyes. According to the bureau of labor

statistic’s employee compensation survey (March 2010), 84 percent of all

state and local government employees had access to a defined retirement

plan, 29 percent to a defined contribution retirement plan, and 23 percent to

both types of plans during 2009. 59 percent with access to defined

amtribution plans 14 with accees to both private sector workers and 14 with

access to booth types of plans. Using employer cost per households worked

as an indictcator generosity of defined benefits pension plans at the state and

local government cost are $3.32 per household worked of which $3.00 is

accounted for by defined benefit plans. State and local government,have

opted to continue provding defined benefit retirement plans to employees.

Although a small minority of state and local governments also offer defined

contributions retirement plans.

The continued predominance of defined benefit plans amoung state

and local government entities means that those agwncies continue to assume

the responibilites and risk associated with funding and managing retirement

plans for their employees.Those responsibilites and risk however coexist and

sometimes run counter economic imperatives facing state and local

government, moreoney state and local government pension boards may be

inherned by the political refernces of their elected represntatives. The desion

of poliy makers to allocate government revenues primarily to projects that

immediately and directly benefit their taxpayers and residents. Education,

healthcare infrastructures,community development and makes ensuring

adequate funding of state and local government defined benefit retirement

plans.

Asset price declines during recessions (2001-2002 and 2007-2009)

and the slow economic rebound since the latter recession ended home

exacurbuted the funding problem of state and local government retirement

plans. However beyond the difficulities of ensuring adequate contributions

into those plans many pension boards also appear to have made questionable

decisions about valuing their future pension plan liabilites, managing the risk

exposures of pension plan assets, and community information about pension

shortfalls to state and local government employees and taxpayers in a timely

manner. This is a continuing defiriencies in pension plan management may

soon force a wrenching transformation of state and local governments

pension plans in a direction similar to that which has already occurred in the

private sector. As a result, current and new state and local government

employees in a several states may soon be forced to assume the

responibilties and risks associated with providing retirement security for

themselves, their dependents, and their surviors.

This report contains a detailed description of the funding erosion in

state and local government employee pension plans during the last decade,

controlling for the decsions in pension plan asset values during the recent

recessions it also analyse wheather atleast some of the blame for the current

poor funding condition of state and local government pension plans can be

assigned to insufficant contributions by both employees and employees.

Finally because the pension plans are operated by government entities that

are unlikely to be shut down it is useful to examine how their pension

funding conditions would change if future contributions and benefits are

taken into account.

The pension crisis is a predictr difficulty in paying for

corporate,state and federal pension in the Unitied States due to a differences

between…