WASHINGTON The Center for State and Local Government Excellence has issued the first in a series of briefs, primers and data sheets studying public pension plans, retiree health care and financial planning. The series will run through May 2009 as part of a $1.5 million grant to the Center for Retirement Research at Boston College.
The goal of these studies is to highlight for policy-makers, public employees and taxpayers this important component of the nations retirement income system, according to the brief.
Part of the effort is the creation, already under way, of a clearinghouse for public pension plan data.
We will be using that data to inform our briefs in the future, said Joshua Franzel, research associate at the Center for State and Local Government Excellence, Washington. Briefs will be released every couple of months, with about a dozen total in the two-year contract.
The database will include more than a decade of plan information, representing a primary source of data for public pension plan coverage, funding and costs for researchers, Mr. Franzel said.
Annual aggregate reports will be made public to highlight trends of the underlying up-to-date data. The database will also be used to respond to specific queries from the specialized public practitioners, plan participants, and the press, Mr. Franzel said.
The first brief, released Nov. 13, looked at differences between public and private plans.
The study found that state and local government plans tend to provide defined benefit plans, while private companies tend to offer defined contribution plans. More public employees (76%) have pension coverage than private employees (43%). Public plans tend to offer larger benefits, with yearly cost-of-living increases, but also demand higher contributions from employees. And private pension plans tend to invest slightly more aggressively than their public sector counterparts.
Plans in both sectors are 80% to 90% funded, according to the brief. The perfect storm of low interest rates and the stock market slump reduced funding levels in both the public and private sectors.
State and local government plans represented $3 trillion in assets and 22% of all U.S. retirement plan assets in 2006, while private sector plans composed 40%, or $5.5 trillion, of the total. Defined benefit assets in the private sector totaled $2.2 trillion in 2006 and defined contribution plans, $3.3 trillion.
The study looked at data from the U.S. Census, U.S. Department of Labor and other published sources. The topic set the stage for the series, Mr. Franzel said. Future briefs will look at possible reasons for the different mix of pension types in the public and private sectors, the move toward higher-risk, higher-return asset classes and the shift to DC plans in some states.