The combined January/February PM magazine's cover story “Retirement: Why the Next Generation Needs a Plan” by Elizabeth Kellar, president and CEO, Center for State and Local Government Excellence (SLGE), Washington, D.C., and Joshua Franzel, vice president of research, SLGE, report that with local governments making changes to their pension plans to make them more financially sustainable, new employees are experiencing the impact.

Among other changes, in 2012 and 2013, local government human resource directors who responded to SLGE’s annual workforce survey reported that their government had increased employee contributions for new hires over the past year. They also reported that their local government had increased the age and service requirements for normal retirement for new hires and/or decreased pension benefits for new hires.

Not such good news for those new hires, who can be younger professionals, since their retirement benefits will be less generous. They may need to take more responsibility for their own retirement savings.

Not such good news for local governments either because it could be harder to fill vacant jobs.

Kellar and Franzel write that a Pension Funding Task Force, with representatives from major state and local government associations, has these recommendations for well-funded pension plans:

• Base the funding plan on an actuarially determined annual required contribution (ADC).
• Pay the ADC consistently.
• Maintain intergenerational equity.
• Manage employer costs so they are a consistent percentage of payroll.
• Report clearly how and when plans will be fully funded.

For more information from the cover story authors, as well as other information in the issue, read the January/February PM.