NCPERS research identifies policy-driven solutions to pension funding challenges
10 Ways to Close Public Pension Funding Gaps
NCPERS research identifies policy-driven solutions to pension funding challenges
10 Ways to Close Public Pension Funding GapsNCPERS research identifies policy-driven solutions to pension funding challenges
When public pension funding shortfalls occur, the conversation often quickly turns to cutting benefits or switching to 401(k)-style plans. But there are better options. NCPERS has identified 10 policy alternatives that pension trustees, administrators, and advocates should understand when facing funding challenges. These approaches address structural fiscal issues rather than simply dismantling retirement security for public employees.
Why This Matters
Cutting pension benefits doesn't just hurt workers—it damages entire communities. A single negative pension change can increase income inequality by 15%, which in turn slows economic growth by 18%. Public pensions are actually net revenue generators, contributing $179 billion more to state and local budgets than they cost taxpayers.
10 Policy-Driven Solutions Worth Exploring
This report examines practical policy options including:
- Exploring a New Approach to Limited Pension Obligation Bonds with enhanced safeguards and state guarantees
- Exploring Actions of the Federal Reserve Bank including municipal liquidity facilities and asset purchasing programs
- Exploring Bridge Loans to Increase Liquidity through commercial bank credit facilities
- Securitizing Public Assets by leasing revenue-generating government assets
- Exploring Dedicated Revenue Streams from lotteries, casinos, or insurance premium taxes
- Establishing a Stabilization Fund to cushion economic ups and downs
- Exploring Monthly Employer Contributions that could generate billions in additional investment returns
- Exploring Consolidation to achieve economies of scale
- Exploring Auto-Triggers to adjust contributions and benefits based on market performance
- Reforming Revenue Systems and Closing Tax Loopholes to strengthen state and local fiscal capacity
Protecting Retirement Security
These options aren't one-size-fits-all recommendations. Each pension system is unique and must explore solutions that fit its specific circumstances. But understanding these alternatives gives pension advocates the tools to push back against shortsighted "reforms" that undermine retirement security.
The report provides pension stewards with actionable information they can bring to budget hearings, legislative discussions, and policy debates—helping ensure that funding solutions protect both workers and communities.
Download the full report to explore detailed analysis of each policy option, including practical examples of how these approaches have worked in different states.