Guiding Principles for Retirement Security and Plan Sustainability from the National Association of State Retirement Administrators

WHEREAS, state and local government employee retirement systems have demonstrated the ability to thrive in highly volatile market environments; and

WHEREAS, the resilience of public plans during periodic market declines is sustained through long-term investment and financing strategies; statutory, contractual, moral, and in some cases constitutional benefit protections; as well as the ability to adjust plan designs, financing structures, and governing statutes to accommodate changing needs and fiscal realities; and

WHEREAS, needed periodic modifications, which have a history in state and local government retirement plans, require an open public legislative and regulatory process involving all stakeholders - governments, their plans, their employees (who typically share in the financing of their pension), and other taxpayers; and

WHEREAS, this open public process requires honest, unbiased and relevant information on public financing and long-term retirement policy objectives that should not be unduly influenced by projections that include unrelated healthcare liabilities or irrelevant corporate sector metrics, or that exclude relevant data regarding the inefficiencies and steep transition costs of closing, rather than adjusting existing plans; and

WHEREAS, differing plan designs, financial conditions, and fiscal frameworks across the country do not lend themselves to one-size-fits all solutions, but rather, require a range of tailored approaches, agreed to by the relevant stakeholders, in order to best secure the viability of each state and local retirement system for the very long-term; and

WHEREAS, core elements of public pension plan design – which include mandatory participation, benefit adequacy, shared financial responsibility, pooled assets invested by professionals over long time frames, and benefits that cannot be outlived – are the most reliable and economical means of providing retirement security, while also assisting in the retention of qualified workers needed to perform essential public services and providing economic stability to local communities; and

WHEREAS, these core components of public pension plan design are indispensable to sound retirement policy and not only should be retained in current and future benefit designs in the public sector, but also should be cultivated in the design of retirement plans for employees outside the public sector; and

WHEREAS, federal policy should be supportive of these central features of public pension design and the flexibility of state and local governments to meet local needs and concerns, and should also encourage the development of similar design characteristics in retirement plans beyond the public sector;

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators supports the following guiding principles to retirement security and public plan sustainability:

• Participation of all relevant stakeholders, including government employers, their plans, their employees, plan beneficiaries and retirees, and other taxpayers in discussions and processes pertaining to the design and financing arrangements of public retirement plans
• Policy-driven decision making based on objective and pertinent information that fairly reflects the long-term time horizon and economic effects of public plan financing, benefit adequacy and benefit distributions
• Tailored solutions, achieved by affected stakeholders working through the state and local legislative and regulatory processes
• Retention of core, indispensable elements of public plan design, namely mandatory participation, shared financing, benefit adequacy, pooled investment and longevity risks, and lifetime benefit payouts
• Removal of federal policy barriers to the preservation of these central retirement plan design features in the public sector and adoption of federal policies that encourage their inclusion in the private sector.