IDEAS home Printed from
   My bibliography  Save this paper

Legal Constraints on Changes in State and Local Pensions


  • Alicia H. Munnell
  • Laura Quinby


State and local government pension reform has become a front-burner issue in the wake of the economic crisis, which sharply reduced funded ratios for most plans. Policymakers have responded primarily by raising employee contributions for all workers and/or reducing benefits for new workers. One option that has largely been off the table is reducing future benefits for current workers. The reason is that many states face legal constraints on their ability to make such changes. These constraints not only tie the hands of pension reformers but also accord public employees greater protections than their private sector counterparts. This brief provides a comprehensive overview of the legal environment in which state and local plans operate with respect to benefit protections for current workers. The analysis relies on a thorough review of secondary sources and consultations with plan legal counsels. The brief is organized as follows. The first section covers the major types of legal protections that apply to public pension benefits. The second section suggests an approach for increasing the flexibility of plan sponsors to alter benefits. The final section concludes that it may be less difficult to make such changes than the conventional wisdom suggests.

Suggested Citation

  • Alicia H. Munnell & Laura Quinby, 2012. "Legal Constraints on Changes in State and Local Pensions," Issues in Brief ibslp25, Center for Retirement Research, revised Aug 2012.
  • Handle: RePEc:crr:issbrf:ibslp25

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Sen, Elif, 2016. "Pension Gap Perils," Regional Spotlight, Federal Reserve Bank of Philadelphia, issue Q2, pages 15-19.
    2. Novy-Marx, Robert & Rauh, Joshua D., 2014. "Linking benefits to investment performance in US public pension systems," Journal of Public Economics, Elsevier, vol. 116(C), pages 47-61.
    3. Sen, Elif, 2016. "Regional Spotlight: Pension Gap Perils," Economic Insights, Federal Reserve Bank of Philadelphia, vol. 1(2), pages 15-19, Q2.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crr:issbrf:ibslp25. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Grzybowski) or (Christopher F Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.