Pension Reform and Transition Costs
North Dakota Interim Retirement Committee
8
Bottom Line on Transition Costs
How to fund existing NDPERS unfunded liabilities is a distinct policy matter on its own
terms that should not constrain responsible, prospective pension reform:
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■ Other states such as Oklahoma, Arizona, and Utah - have faced the same
concerns and found ways to design around any contribution rate increase that was
unaffordable in the given climate.
■ The question of transition costs is entirely a political, not an accounting or actuarial,
question. It is up to legislators and state departments to determine how they want to
pay down unfunded liabilities.
Legacy unfunded pension liabilities cost what they cost, reform or not. Reform does
not make your current pensions more expensive since those are formula-driven
benefits.
■ Public pensions are not Ponzi schemes, and by design, pension contributions under
a prudent funding policy are not affected by whether or not there are new entrants
every year.
■ The key is to ensure that after reform, legacy unfunded liabilities are paid
down at the same or faster rate than they are today.
May 23, 2022View entire presentation