It turns out the secret to a strong public pension system isn’t a secret at all: fully funding the pension every year is the most important thing cities and states can do to have a strong public pension system. Today NPPC released a new report entitled Public Pensions Work – And These Three Systems Prove It. This report examines three of the more successful public pension systems in the nation to find the keys to their success.

The report focuses on three well-funded public pension systems: the District of Columbia Retirement Board, the Illinois Municipal Retirement Fund and North Carolina’s Local and State pension systems. Though each system is unique, the common trait is this: the state governments and participating employers are keeping their promises and making their annual contributions to the pension funds.

  • The DC Police Officers and Firefighters’ Retirement Plan is a “young” fund. The DC government has made its full annual contribution each year and this has kept the pension plan fully funded.
  • The Illinois Municipal Retirement Fund (IMRF) – which is separate from Illinois’ state-run pension funds – is faring well because municipalities are required by state law to pay their annual contributions.
  • North Carolina’s state government has been committed to fully funding its pension systems each year and this allowed it to avoid making benefit cuts during the recession.

The three public pension systems identified in the report are some of the strongest pension plans in the country but are not isolated in their success. Most states properly fund their pensions each year and, therefore, have reasonably well-funded public pensions. This report provides further evidence that the state of public pension plans in the U.S. is often misunderstood.

You can read the full report here: Public Pensions Work – And These Three Systems Prove It.