Key Points
  • Pension reform should make sure that commitments and obligations to current employees and retirees are fulfilled.
  • Pension reform should remove the risk that states will go functionally bankrupt due to pension obligations.
  • Pension plans should be predictable and defined.
  • Taxpayers should not bear all the risk of pension plans.
  • Retirement plans should not lock employees into the public sector.

While a large percentage of employees are enrolled in defined-contribution plans in the private sector, the public sector offers unsustainable defined-benefit plans for many of its employees. When the public sector makes pension promises that they cannot afford, state employees, retirees and taxpayers are put at risk. As former Utah State Senator Dan Liljenquist wrote in Keeping the Promise: State Solutions for Government Pension Reform, pension reform is not a partisan issue, but a math problem.

Pension reform is essential in order for states to keep their promises to retirees and current workers.  States such as Utah, Michigan, Alaska, Oklahoma and Rhode Island are all examples of states that have enacted pension reform to protect workers and retirees. The Task Force on Tax and Fiscal Policy has developed solutions that provide a bipartisan approach to reform and also present ways to fulfill existing pension promises.

A defined-contribution 401 (k) retirement plan provides state employees with choice, mobility, and economic security. By giving state employees a private retirement account, just like the vast majority of private sector companies, employees will have a legal right to make sure their pensions are adequately funded and protected.  In order for states to keep their pension promises to state employees, reform is vital.


Pension Reform

State of the State: Illinois

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Task Forces

Tax and Fiscal Policy

The ALEC Tax and Fiscal Policy Task Force is dedicated to researching and promoting sound economic policy aimed at creating …