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COLA Cuts in State/Local Pensions

Author

Listed:
  • Alicia H. Munnell
  • Jean-Pierre Aubry
  • Mark Cafarelli

Abstract

The brief’s key findings are: The brief’s key findings are: *Since the financial crisis, 17 states have reduced, suspended, or eliminated cost-of-living-adjustments (COLAs) for public employee pensions. *This response was surprising as current employees and retirees tend to be legally shielded from benefit cuts. *But the COLA cuts have largely been upheld in the courts under the rationale that – unlike core benefits – they are not part of a contractual right. *In short, defined benefit promises in the public sector are not as secure as many thought.

Suggested Citation

  • Alicia H. Munnell & Jean-Pierre Aubry & Mark Cafarelli, 2014. "COLA Cuts in State/Local Pensions," State and Local Pension Plans Briefs ibslp38, Center for Retirement Research.
    • Handle: RePEc:crr:slpbrf:ibslp38
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    File URL: http://crr.bc.edu/briefs/cola-cuts-in-statelocal-pensions/
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    Cited by:

    1. Quinby, Laura D. & Wettstein, Gal, 2021. "Do deferred benefit cuts for current employees increase separation?," Labour Economics, Elsevier, vol. 73(C).

    More about this item

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H79 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other

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