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COLA cuts in state-local pensions

Published online by Cambridge University Press:  08 December 2015

ALICIA H. MUNNELL ,
JEAN-PIERRE AUBRY  and
MARK CAFARELLI
ALICIA H. MUNNELL
Affiliation:
Center for Retirement Research at Boston College, Hovey House, 258 Hammond Street, Chestnut Hill, MA 02467, USA (e-mail: [email protected])
JEAN-PIERRE AUBRY
Affiliation:
Center for Retirement Research at Boston College, Hovey House, 258 Hammond Street, Chestnut Hill, MA 02467, USA (e-mail: [email protected])
MARK CAFARELLI
Affiliation:
Center for Retirement Research at Boston College, Hovey House, 258 Hammond Street, Chestnut Hill, MA 02467, USA (e-mail: [email protected])
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Abstract

Although it is often assumed that public workers have greater benefit protections than their private sector counterparts covered by the Employees Retirement Income Security Act of 1974, this paper finds that state and local governments – particularly those with generous cost-of-living adjustments (COLAs), fewer benefit protections, and financial pressures on the plan and the sponsoring government – cut COLAs for current workers and, often, for retirees. In most instances, these cuts were upheld by the courts. While the pace of COLA cuts has slowed, they are likely to reappear if plans come under renewed financial pressures.

Keywords

H70H75H79COLApublic sector pensionspension reformstate and local governmentcost-of-livingpublic sector employees
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 15 , Special Issue 3: The Impact of Reforms of State Retirement Plans , July 2016 , pp. 311 - 332
Copyright
Copyright © Cambridge University Press 2015 

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