Defined Benefit vs. Defined Contribution — the Continuing Challenge of State Pensions

Source: Mary Branham, Council of State Governments, e-newsletter, no. 142, August 14, 2014

While public pension plans still face problems, the situation isn’t as bleak as the headlines report, according to Dana Bilyeu, executive director of the National Association of State Retirement Administrators. In fact, public pension plans across the country are 80 percent funded, on aggregate; that’s down from 101 percent funded in 2001, Bilyeu said. … In addition, she said, about 87 percent of the public pension plans—covering state and local governments, as well as teachers, police and firefighters—make their annual required contribution, or ARC. Popular media, she said, focus on the plans in distress. …

…Hank Kim, executive director and counsel for the National Conference on Public Employee Retirement Systems, said defined benefit plans are definitely sustainable if:
Sponsors make contributions consistently and fully;
Employees make their contributions;
Investments are well managed and have low fees; and
Benefits are appropriate and funded…..
Related:
Employees Need to be Involved in Pension Changes
Source: Mary Branham, Council of State Governments, e-newsletter, no. 142, August 14, 2014