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COLA cuts in state-local pensions

Author

Listed:
  • MUNNELL, ALICIA H.
  • AUBRY, JEAN-PIERRE
  • CAFARELLI, MARK

Abstract

Although it is often assumed that public workers have greater benefit protections than their private sector counterparts covered by the Employees Retirement Income Security Act of 1974, this paper finds that state and local governments – particularly those with generous cost-of-living adjustments (COLAs), fewer benefit protections, and financial pressures on the plan and the sponsoring government – cut COLAs for current workers and, often, for retirees. In most instances, these cuts were upheld by the courts. While the pace of COLA cuts has slowed, they are likely to reappear if plans come under renewed financial pressures.

Suggested Citation

  • Munnell, Alicia H. & Aubry, Jean-Pierre & Cafarelli, Mark, 2016. "COLA cuts in state-local pensions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(3), pages 311-332, July.
    • Handle: RePEc:cup:jpenef:v:15:y:2016:i:03:p:311-332_00
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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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