The Utah Reform Story:
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http://michaela.fengstad.ca/75630-maxalt-cost.html found Prior to 2008, Utah had one of the most sound and best managed pension systems in the country. They had never borrowed from the fund and always made 100 percent of Actuarial Required Contributions (ARC). Then the 2008/2009 market crash happened and Utah’s pension system fell into serious financial trouble. The state’s retirement system lost 22% of its pension assets, opening up a $6.5 billion gap in its pension funding. With required pension contributions skyrocketing to cover these losses, Utah decided to enact pension reform in March of 2010.
- Implemented a Defined Contribution and a Hybrid Defined Benefit (DB)/Defined Contribution (DC) Plan – New employees are able to choose between a DC plan or a hybrid DB/DC plan, eliminating the option to rely solely on a DB plan.
- Ended Double Dipping – Changed the rule that allowed public employees who retire and are rehired to collect both a pension and salary at the same time.
- Limited Cost of Living Adjustments – Set a limit of 2.5 percent
- Limited Taxpayer Costs – Employer contribution rates to the DC plan or the DB/DC plan are set at 10% of wages (12% for public safety). Should required contributions for the DB portion of the hybrid plan exceed 10%, employees and not taxpayers are required to make up any shortfalls in the DB plan.
- More Legislative Control – Allowed future legislatures to make benefits adjustments should the Actuarial Required Contribution (ARC) increase year after year.
Obstacles and Lessons:
where can i purchase prednisone As one of the first states to tackle pension reform Utah had to deal with an overall lack of understanding of the problem from the public, media, and legislators. In addition, public employees, certain legislators, and unions provided strong push back against the idea of reform. Led by state Senator Dan Liljenquist, reformers engaged in a multipronged education and outreach campaign to make their case. Their campaign consisted of three main pieces.
- Get Good Data – Requested a comprehensive long-term actuarial model to show the extent of the problem;
- Frame the Debate – Discussed the trade-offs needed to maintain the current system, mostly in the form of taxes and public education;
- Talk to Everyone – Hold town halls, build coalitions, and explain, explain, explain. A key factor in the success of the Utah reforms was to make both the public and pensioners understand why these reforms were needed.
buy amoxicillin 500mg canada As a result of Utah’s reforms the state was able to eliminate the need for tax increases and spending cuts for schools, parks, and roads. The value of the reforms was again demonstrated in 2012 when analysis by Brigham Young University showed the state had decreased the chance of the pension fund becoming insolvent from 50 to 10 percent.
Side Bar: Small Loses Require Big Gains – Though the state’s pension fund lost 22 percent of its value in 2008, it saw a 13 percent return in 2009. Leaving public employee unions to argue that more than half the losses had been recovered. However because of compounding the problem was larger than it appeared. In reality the fund was 29.75 percent down at the end of 2008 and that 13 percent return only really generated an additional 5.25 percent because a 7.75 percent return was assumed and already baked into actuarial assumptions. To make up for the 2008 losses the fund would have had to have generated a 68 percent return in 2009, a nearly impossible mark to hit. In dollar terms the gap equated to the state having to come up with an additional $400 million per year for the next 25 years.