2018 Crystal Ball for State and Local Government Plans
There is no time of year like this one for peering into the future. Accordingly, the Center for State and Local Government Excellence has gazed into its crystal ball and reflects on trends to watch in 2018 regarding state and local governments’ retirement plans.
In “State and Local Government Trends to Watch in 2018
,” PRNewswire reports that broadly, the expectations of the Center for State and Local Government Excellence concern the cost of pension plans, plans’ funded status and the general need to increase retirement savings. The Center also emphasizes that reporting about pensions in a timely and complete fashion is “more important than ever” and that public officials need to be informed to help ensure that plans are designed and funded well.
The Center identifies the following the trends to watch in the new year.
Effect of the Cost of Pension Plans.
The Center observes that during the 10 years between 2006 to 2016, state and local government employees’ wages and salaries went from comprising 67% of their total compensation to 63%. At the same time, it notes, the costs of running pension and health plans have risen.
The Center observes that there is great variation among the states regarding the funded status of pension plans — and that there can even be variation within single state. And funded status affects more than plan participants, the Center argues; for instance, a poor funded status can result in a downgrade by the rating agencies, which in turn can make it more expensive for a jurisdiction to borrow money.
Increasing Retirement Savings.
The Center notes that state and local governments are making it easier not only for their employees, but also private sector employees, to save more for retirement.