Industry News

On December 7, 2020, the National Institute on Retirement Security (NIRS) published its report, Beyond the ARC: Innovative Funding Strategies from the Public Sector. The report examines innovative funding strategies utilized for public pension plans in California, Colorado, Indiana, Kentucky, Louisiana, Maine, Montana, New York, North Carolina, Oklahoma, Oregon, Pennsylvania and West Virginia.

While state and local governments may be challenged with budget shortfalls due to the COVID-19 pandemic and recession, the study reports on some case studies of pension funding strategies to address legacy pension costs and may help to stabilize costs over time. Some strategies used include:  1) separate funding strategies for existing liabilities and on-going plan costs; 2) employer side accounts; 3) pension obligation bonds; 4) withdrawal liabilities; and 5) dedicated revenue streams from other sources.

The report concludes, “Given the potential for renewed funding debates, these case studies can serve as a tool for policymakers and stakeholders interested in exploring funding strategies that have been utilized to address funding challenges. These case studies illustrate how different goals were achieved and can help frame funding policy discussions. And, these funding strategies could serve as a model to craft customized funding goals and strategies for pension plans facing similar obstacles.”

The report is available here.