New Research Offers Comprehensive Guide on Public Sector Hybrid Retirement Plans

Full report link: https://www.nirsonline.org/wp-content/uploads/2021/05/Hybrid-Handbook-F8.pdf

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A new report provides a comprehensive  overview of the many aspects of public sector hybrid retirement plan designs. The report finds that some shifts to hybrid designs were made without a proper evaluation of the long-term implications of the plan changes. In contrast, other hybrids are well-thought-out and more likely to provide retirement security to employees, enabling public employers to recruit and retain a qualified workforce.

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A hybrid is not one particular plan design, but instead is an umbrella term capturing a wide range of different plan designs. Some hybrids are defined benefit (DB) pensions with risk-sharing provisions, while others blend attributes of DB and defined contribution (DC) plans. Each of these plan designs offers tradeoffs in terms of retirement benefits, risks, and costs.

Author(s): Dan Doonan, Elizabeth Wiley

Publication Date: 10 May 2021

Publication Site: National Institute on Retirement Security

Pennsylvanians pay extra for public pensions

Link: https://www.inquirer.com/business/psers-teachers-cost-deficit-shared-risk-sers-pension-20210424.html

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Forced to cover the higher pension checks, state and local taxpayer funding for PSERS, the big retirement plan for public-school educators, has risen year after year, soaring from just over $600 million in 2010 to $5 billion this year.

Now a little-noticed provision of a reform passed in 2010, known as the “shared risk” rule, has come back to haunt PSERS officials — and teachers, too.

Under the rule, teachers, not just taxpayers, must pay more into the $64 billion pension system whenever profits fall short on investments.

In an embarrassing admission, its board said on Monday that the policy meant many teachers will face a hike in their payments this year. This was the first time this has happened since the law was adopted.

The board for PSERS — the Public School Employees’ Retirement System — acknowledged it had previously endorsed an inflated number for investment returns, a figure it incorrectly thought was just high enough to spare teachers any increase.

Author(s): Joseph N. DiStefano

Publication Date: 24 April 2021

Publication Site: Philadelphia Inquirer