Stock market volatility has dragged down the performance of some pension plans this year, although LASERS has been the exception.
Some states are raising the amount that employers and employees contribute to traditional pensions, which guarantee a set monthly payment — based on employees' salary and job tenure — in retirement. Others are freezing benefits or scaling back cost-of-living adjustments.
How states are shoring up plans:
· Wisconsin recently notified participants in its state and local employees' plan — which combines features of a traditional pension and a 401(k) — that it may have to reduce monthly payments for the first time ever if stock market losses continue.
· The Arizona State Retirement System will likely raise contributions for employees and employers next year because of poor investment performance in the fiscal year ended June 30, says David Cannella, a spokesman for the system.
· The Iowa Public Employees' Retirement System has boosted its cash position to $200 million from $25 million by holding onto employer contributions and cash from maturing bonds. The cash cushion means the pension fund won't be forced to sell assets in a distressed market, CEO Donna Mueller says.