Defined Benefit Plans: Best Practices in Incorporating Risk Sharing

For public sector pension systems across the United States, the past 20 years have seen a steady increase in unfunded liabilitiesdifference between promised pension benefits and the assets in hand needed to pay those benefitsting in rising taxpayer costs and ultimately harming public employees'...

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Bibliographic Details
Published in:Policy File 2020
Main Author: Frost, Ryan
Format: Report
Language:English
Subjects:
Reason Foundation
Retirement Plans
Online Access:Request full text
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Summary:For public sector pension systems across the United States, the past 20 years have seen a steady increase in unfunded liabilitiesdifference between promised pension benefits and the assets in hand needed to pay those benefitsting in rising taxpayer costs and ultimately harming public employees' take-home pay and benefits. The most popular public pension plan design, the defined benefit (DB) pension plan, tends to be exposed to various forms of risk. Managing that risk and future costs is critical for the solvency of U.S public DB pensions, given that entering 2020, states were carrying over $1.2 trillion in public pension debt.