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NASRA Updates Issue Brief on Employee Contributions to Public Pension Plans

In September 2021, the National Association of State Retirement Administrators (NASRA) updated its issue brief, Employee Contributions to Public Pension Plans. The brief analyzes employee contribution plan designs, policies and recent trends.   

According to the brief, almost all state and local government employees are required to contribute to the cost of their retirement benefits. The report also indicates that 25%-30% of state and local government employees do not participate in Social Security. In many cases, those who do not participate in Social Security have a higher pension benefit and higher required contributions as compared with those who do participate in Social Security. The median contribution rates have increased to 6.25% of pay for employees who participate in Social Security and 9.0% for those employees who do not participate in Social Security. 

As reported in the brief, since 2009, 40 state governments increased their employee contribution rates. The legality of increasing employee contributions varies by state. In some states, courts have ruled that legislative efforts to increase employee contributions are a violation of the state constitution or contractual rights. However, in other states, higher employee contributions have either withstood or have not been subject to legal challenges.

The brief also includes an appendix of employee contribution rates for over 120 public pension plans and identifies whether or not plan members have Social Security coverage.

The issue brief is available here.