Lessons from well-funded pension plans.

• Position: News & Numbers

A new research report from the National Institute on Retirement identifies six common elements that allowed public-sector defined benefit pension plans to remain well-funded despite two severe economic downturns. According to the report, Lessons from Well-Funded Public Pensions: An Analysis of Plans that Weathered the Financial Storm, the following features enabled those plans to remain sustainable and affordable:

* Employer pension contributions that pay the full amount of the annual required contribution, and that maintain stability in the contribution rate over time.

* Employee contributions to help share in the cost of the plan.

* Benefit improvements such as multiplier increases that are actuarially valued before adoption and properly funded upon adoption.

* Cost of living adjustments (COLAs) that are granted responsibly, for example through an ad hoc COLA that is amortized quickly, or an automatic COLA that is capped at a modest level;

* Anti-spiking measures that ensure actuarial integrity and transparency in...