National Association of State Retirement Administrators


Standing Resolutions

The resolutions adopted by NASRA's members are the foundation for legislative priorities and initiatives, and establish the association’s position on issues affecting the public pension industry, including:

Principles of retirement security and plan sustainability

  • Resolution 2016-01Guiding Principles for Public Retirement System Plan Design and Sustainability

  • Resolution 2012-01- Public Employee Retirement System Accounting Standards & Actuarial Methodologies

  • Resolution 2011-01- Funding Discipline in Public Employee Retirement Systems

Sound management of public pension trusts

  • Resolution 2011-02 - Ethics Policies and Disclosure Requirements of State and Local Retirement System Staff, Trustees and Service Providers

  • Resolution 2017-01 - Public Pension Coordinating Council (PPCC)

  • Resolution 2006-03 - Disclosure of Soft Dollar Activities

  • Resolution 2000-01 - Public Pension Systems: Statements of Key Investment Risks and Common Practices to Address those Risks

  • Resolution 2003-05 - Public Pension Systems: Operational Risks of Defined Benefit and Related Plans and Controls to Mitigate those Risks

  • Resolution 1996-06 - Retirement System Investment Policy

 
Federal policies that reinforce public plan financing, administration, and core principles of retirement security

 

RESOLUTION 2017-01 - Public Pension Coordinating Council (PPCC)

WHEREAS:

  • The benefits established under public sector defined benefit plans are adopted by and ultimately subject to the oversight of popularly-elected governmental bodies, the public, and independent boards of trustees.
  • As a result, state and local government retirement systems are subject to state constitutional, statutory and case law and must comply with a vast landscape of requirements at the state and local level.
  • The federal government has attempted to impose ill-fitting federal requirements on state and local pension plans that duplicate, conflict, or preempt state and local pension laws.
  • Following collective efforts, federal policymakers and regulators have come to recognize the level of state and local government oversight and regulation, and the broad coverage, retirement savings opportunities and meaningful benefits provided to the public sector workforce, and have made refinements to federal laws that take into account the unique policy issues affecting public plans.
  • Press reports on troubled retirement systems continue to erode these efforts and will create issues affecting all public plans regardless of size and type.
  • The issues will affect the membership of each of the organizations in the PPCC - National Association of State Retirement Administrators (NASRA), National Council on Teacher Retirement (NCTR) and National Conference on Public Employee Retirement Systems (NCPERS).
  • Constant and open communication among the associations is beneficial to the membership of all.
  • The Public Pension Standards coordinated by the PPCC have considerable value in encouraging member systems to achieve nationally recognized standards of administration, funding and plan design.
  • These standards should continue to evolve as the management of public retirement systems advances.

 
NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports the Public Pension Coordinating Council's Public Pension Standards, and urges the continued evolution of these standards as well as open discussion and coordination among member associations.
 
Amended Resolution 1996-03 on August 9, 2006
Amended 2006-01 on August 8, 2017
[BACK TO TOP]


RESOLUTION 2016-01 - Guiding Principles for Public Retirement System Plan Design and Sustainability 
WHEREAS:
  • State and local government retirement systems must balance multiple stakeholder objectives:

    • For employees, competitive compensation that includes income security in retirement

    • For employers, a management tool to maximize the training and experience invested in their employees and an orderly progression of personnel

    • For taxpayers, public services performed in the most effective and cost-efficient manner

  • The resilience of public retirement systems  is sustained through long-term investment and financing strategies; statutory, contractual, and in some cases constitutional benefit protections; as well as the ability to adjust plan designs, financing structures, and governing statutes to accommodate changing workforce needs and fiscal realities; and

  • Needed periodic modifications, which have a history in state and local government retirement plans, require an open public legislative and regulatory process involving all stakeholders - governments, their plans, their employees (who typically share in the financing of their pension), and other taxpayers; and

  • This open public process requires honest, unbiased and relevant information on public financing and long-term retirement policy objectives that should not be unduly influenced by projections that include unrelated healthcare liabilities or irrelevant corporate sector metrics, or that exclude relevant data regarding the inefficiencies and steep transition costs of closing, rather than adjusting existing plans; and

  • Differing plan designs, financial conditions, and legal frameworks across the country do not lend themselves to one-size-fits all solutions, but rather, require a range of tailored approaches, agreed to by the relevant stakeholders, in order to best secure the viability of each sponsor and its state and local retirement system for the very long-term; and

  • Despite this variability, most state and local governments have retained the core elements of public pension plan design proven to best balance retirement security, workforce management and economic efficiencies, namely:

    • Mandatory participation. Nearly all state and local governments require participation in the retirement program as a condition of employment.

    • Cost sharing between employers and employees. Public employees typically are required to contribute a portion of their wages to their state or local pension.

    • Pooled and professionally managed assets. Public pension trusts can earn higher returns with lower fees through pooled investments that are professionally managed, have greater portfolio diversity and large economies of scale.

    • Targeted income replacement. Most public pension policies aim to replace a certain percentage of pre-retirement wages at a specified age and/or years of public service, to promote orderly progression of personnel and retirement security.

    • Lifetime benefit payouts. The vast majority of state and local governments do not allow for lump sum distribution of benefits; rather, they require retirees to take most or all of their pensions in installments over their retired lifetimes. Many also make periodic cost-of-living adjustments to curb the effects of inflation.

    • Survivor and disability benefits. Many state and local pensions integrate survivor and disability protections into their retirement programs, a particularly critical feature for positions involved in hazardous duty, or a public safety plan.

    • Supplemental savings. Governments often sponsor a supplemental savings plan in addition to the general retirement plan to allow participants to defer an additional portion of their salary in anticipation of retirement needs, and some governments provide matching contributions and automatic enrollment/escalation features to encourage participation.

  • These core components of public pension plan design are indispensable to sound retirement policy and not only should be retained in current and future benefit designs in the public sector, but also should be cultivated in the design of retirement plans for employees outside the public sector; and

  • Federal policy should be supportive of these central features of public pension design and the flexibility of state and local governments to meet local needs and concerns, and should also encourage the development of similar design characteristics in retirement plans beyond the public sector;

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators supports the following guiding principles to retirement security and public plan sustainability:

  • Participation of all relevant stakeholders, including government employers, their plans, their employees, plan beneficiaries and retirees, and other taxpayers in discussions and processes pertaining to the design and financing arrangements of public retirement plans

  • Policy-driven decision making that recognizes the retirement security and workforce management purposes of public employee retirement systems, and which is based on objective and pertinent information that fairly reflects the long-term time horizon and economic effects of public plan financing, benefit adequacy and benefit distributions

  • Tailored solutions, achieved by affected stakeholders working through the state and local legislative and regulatory processes

  • Retention of core, indispensable elements of public plan design, namely, mandatory participation, shared financing, targeted income replacement, pooled investment and longevity risks, and lifetime benefit payouts

  • Removal of federal policy barriers to the preservation of these central retirement plan design features in the public sector and adoption of federal policies that encourage their inclusion in the private sector. 

Adopted as Resolution 2010-10 on August 11, 2010
Amended June 2016

[BACK TO TOP]


RESOLUTION 2012-01 - Public Employee Retirement System Accounting Standards & Actuarial Methodologies

WHEREAS:

  • Pensions covering the vast majority of public employees comply with accounting and financial reporting standards that make them highly transparent financial operations; and

  • This disciplined model accounts for the specific and unique nature and needs of governmental jurisdictions and their stakeholders, requiring distinctive reporting, disclosure and accounting models, a perspective well-articulated in a 2006 Governmental Accounting Standards Board (GASB) white paper, "Why Governmental Accounting and Financial Reporting Is-And Should Be-Different"; and

  • Government sponsors of retirement systems are going concerns with infinite time horizons and fundamentally different revenue streams and sustainability than other sectors of the economy; and

  • The full faith and credit of the sponsoring government, as well as strong contractual, and in some cases constitutional guarantees in practice virtually rule out any incidence of plan termination in the public sector; and

  • These benefit protections and the long-term sustainability of such plans stand in contrast to other sectors of the U.S. workforce where future benefit levels and accruals enjoy a lower level of legal protection and plan sponsors may more easily terminate their pension plans, or go out of business, be acquired, or file for bankruptcy; and

  • Sound actuarial methodologies and accounting standards have evolved over the years with the objectives of providing information regarding the financial position and condition of public pension plans and the governments that sponsor these plans and of promoting costs that are reasonably stable and predictable; and

  • The utility of such information is directly proportionate to the extent to which it reflects a realistic outcome under ranges of varying circumstances; and

  • The risk of misuse or misinterpretation of the cost of pension benefits based on current interest rates far outweighs any value those costs may have to those who seek to establish an alternative method for measuring and reporting the financial condition and financial position of the retirement system of the plan sponsor; and

  • GASB has issued Statements 67 and 68, which provide guidance on how state and local governments and their pension plans report, recognize and measure their pension obligations; and in so doing has rejected the use of inappropriate interest-rate based plan liability calculations for governmental plans; instead embracing liability calculations that reflect future costs, such as future service credit, salary increases, and automatic cost-of-living adjustments; and

  • GASB Statements 67 and 68, however, also no longer include requirements surrounding the reporting of the Annual Required Contribution, which provided helpful information regarding the effort by government plan sponsors to finance promised benefits, and assisted in better decision making by the government plan sponsor with regard to benefit and contribution levels; and

  • This delinking of public pension accounting from funding is coupled with new requirements that sponsors of governmental pension plans, including those in cost-sharing multiple employer plans, include their unfunded liabilities on their basic financial statements, which will add significant volatility as well as create confusion between the new calculations required for accounting purposes and those needed for funding purposes; and

  • National public sector associations are working together to: i) clarify that the new calculations for accounting purposes will no longer be related to employer funding requirements; and ii) develop guidelines identifying acceptable and recommended practices for the systematic funding of state and local retirement systems and consistent reporting of their funded progress.

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators:
1. Believes the effective liability of a public pension fund must reflect: i) the presumed infinite life of public employee retirement plans and governmental plan sponsors, ii) the guarantee of public pension benefits under State constitutional, statutory, contractual and/or case laws, and iii) the observable past and reasonable future return expectations for capital markets and common public fund portfolio construction.
2.Supports efforts by national public sector organizations to:

a. Further clarify that the new calculations required by GASB for the accounting of state and local pension obligations are now separate and distinct from the calculations needed for the systematic funding of such obligations.
b. Develop guidelines identifying acceptable and recommended practices for the systematic funding of state and local government retirement systems that contain the following policy objectives:

i. Actuarially Determined Contributions. A pension funding plan should be based upon an actuarially determined annual contribution that incorporates both the cost of benefits in the current year and the amortization of the plan’s unfunded actuarial accrued liability.
ii. Funding Discipline. A commitment to make timely, actuarially determined contributions to the retirement system is needed to ensure that sufficient assets are available for all current and future retirees.
iii. Intergenerational Equity. The cost of benefits and required funding should be reasonably allocated to years of service, which means that annual contributions should be reasonably related to the expected and actual cost of each year of service.
iv. Contributions as a Stable Percentage of Payroll. Contributions should be managed and controlled to the maximum extent, consistent with other policy goals, so that costs remain consistent as a percentage of payroll over time.
v. Accountability and Transparency. The funding policy should be sufficiently clear regarding intent and effect for stakeholders to assess whether, how, and when the plan sponsor will meet the funding requirements of the plan.

c. Recognize that the adoption of, or adjustments to, funding policies may need to be phased-in over a reasonable period to provide flexibility and maintain the policy objectives articulated above.

3. Urges state and local government plan sponsors to report (disclose) the degree to which they follow these acceptable and recommended practices for the systematic funding and consistent reporting of funding progress.
 
Amends Resolution 2010-02
Approved on August 7, 2012

[BACK TO TOP]


RESOLUTION 2011-01 - Funding Discipline in Public Employee Retirement Systems

WHEREAS:

  • Public employee retirement plans are designed to meet human resources objectives of recruitment and retention for their sponsoring governmental entity, as well as the public policy goal of providing state and local government employees with balanced, appropriately funded and secure income in retirement, usually through a plan that provides for systematic distribution of benefits over their post-employment lifetime; and

  • State and local government retirement system assets are held in trust and dedicated to the payment of these future retirement income disbursements; and

  • It is a fundamental objective of public employee retirement systems to establish and receive contributions which will remain approximately level as a percent of payroll over time, to ensure affordability and sustainability of benefits, intergenerational cost equity and consistent budgetary operations; and

  • Predictability and stability of required costs are the foundation of public sector budgeting and enable policymakers, and ultimately taxpayers, to assess the underlying true cost of any long-term public program, and the imposition of elements that would cause wide swings in required pension costs would be unnecessarily financially disruptive, confusing and counterproductive; and

  • Disciplined funding of public employee retirement systems is critical to minimize costs, maximize investment returns, and ensure the long-term viability of the trust; and,

  • Established funding policies can benefit retirement plans, participants, employers, and other stakeholders by clearly defining target funding goals, policies to stabilize contributions over time and a commitment to sound financing; and

  • Benefit adjustments should be made only in combination with an analysis of employee and employer needs and a sound plan to finance the cost of adjustments in accordance with the funding policy;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators:
Supports disciplined funding of established benefits and efforts to ensure the financial integrity of public employee retirement systems, and encourages all state and local retirement systems to adopt a clear funding policy that specifies funding goals, target funding levels, commitment to meet actuarially determined contributions, and strategies to maintain predictable and level costs that are aligned with affordable and sustainable plan designs that provide secure lifetime retirement income.
 
Amended Resolutions 1996-02
Amended Resolution 2009-03
Adopted on August 10, 2011
[ BACK TO TOP ]


RESOLUTION 2011-02 - Ethics Policies and Disclosure Requirements of State and Local Retirement System Staff, Trustees and Service Providers

WHEREAS:

  • State and local government retirement systems play a vital role in ensuring the financial security of millions of Americans;

  • It is critical retirement system participants, beneficiaries, taxpayers and sponsoring entities have confidence in the integrity of decisions affecting the assets and financial health of the retirement trust;

  • Retirement system staff, trustees and service providers are entrusted with the management and investment of the trust and are vested with the highest legal and moral responsibilities; and

  • State and local government retirement systems have the power and responsibility to require staff, trustees and service providers to adhere to the highest ethics policies and disclosure standards to ensure fiduciary responsibilities are being upheld.

BE IT RESOLVED, that the National Association of State Retirement Administrators:

1. Encourages state retirement systems to exercise strict adherence to, and enforcement of, applicable disclosure requirements and ethics policies that demand unassailable conduct by system staff, trustees and service providers, including:

  • Undivided Loyalty to the Fund: Public fund fiduciaries should abide by the highest ethical standards, making all decisions in the best interest of system participants, placing those interests above all other interests with uncompromising rigidity.

  • Open and Honest Decision-making: Public fund fiduciaries should act with integrity, objectivity and independence, and make decisions in a fair, honest and open manner, sharing information with fellow fiduciaries and all interested parties to enhance the quality of the system’s decision-making process.

  • Due Diligence: Public fund fiduciaries, including those who are under contract to provide services to the system, should be familiar with applicable laws, and take all reasonable steps necessary to ensure a full and accurate understanding of the trust, conflict of interest, financial disclosure and other ethics-related laws applicable to the system.

  • Assessment of Relationships with Others: Public fund fiduciaries should carefully review the trust and conflict of interest laws applicable to the system to ensure that the fiduciaries’ relationships with other parties are not incompatible with the duties to the system, and service providers to the system should divulge pertinent business activities, relationships and alliances including, among other things i) all services the firm, its principals, or any affiliates provide that generate revenue, ii) if the firm is owned in whole or in part by other firms or organizations, or if the firm owns other firms or organizations, that sell services to public pension systems, and iii) if the firm, its principals, or any affiliate has any strategic alliances with firms that sell services to public pension systems.

2. Believes state and local retirement systems should be vigilant in continually monitoring adherence to these standards, ensuring complete transparency in decision-making and eliminating conflicts of interest, both real and perceived.

 
Combined Resolutions 1999-06, 2004-02 and 2005-01
Adopted on August 10, 2011

[ BACK TO TOP ]



RESOLUTION 2009-01 - Investor Protections

WHEREAS:

  • The future viability of the U.S. economy is, in large measure, dependent on investor confidence in capital markets, including the reliability of (i) underlying financial information regarding corporate operations, (ii) credit worthiness, and (iii) regulatory safeguards to protect the investor and stability of the system.

  • Public pension systems collectively invest trillions of dollars for the financial well-being of millions of working and retired citizens and their families, and their broadly diversified portfolios expose them to the global capital markets.

  • In keeping with their fiduciary responsibilities, it is incumbent on all public pension systems to be proactive in the pursuit of reforms designed to provide additional safeguards for investors and dramatically reduce the potential for corporate malfeasance, systemic risk and resulting financial disasters.

 
NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators:
Supports efforts to rebuild and modernize sensible regulatory structures to protect the public interest and restore confidence in the capital market system, by providing for:

  • Improved independence, standards and oversight of credit rating agencies, auditors and accountants.

  • Improved financial disclosure rules that require accurate and understandable financial reports and added transparency regarding financial activity -- including security trading, participant accounting, credit rating activity and counterparty exposure.

  • More effective regulatory oversight, with independence, authority and the financial resources to better execute necessary enforcement measures, preserve and improve shareholder rights, increase access to information and enhance investor confidence in the financial marketplace.

  • A systemic risk monitor with the ability to collect sufficient information across the global capital marketplace to identify potential risks while also protecting proprietary property.

  • Preservation of public pension systems' ability to invest in all capital markets to provide growth and lower risk through the optimum mix of investments to meet their fiduciary obligations.

Believes long-term institutional investors will play a significant role in providing patient, stable capital to the financial marketplace and assisting with the nation's economic recovery efforts.
 
Amended Resolution 2006-02 and Adopted April 6, 2009
Further Amended and Adopted on August 5, 2009
[BACK TO TOP]


RESOLUTION 2007-01 - Governance and Regulation of Public Employee Pension Plans

WHEREAS:

  • State and local government employee pension plans hold over three trillion dollars in trust, prudently investing assets for the exclusive benefit of nearly 20 million employees, retirees and their beneficiaries.

  • The benefits established under public sector defined benefit plans are adopted by and ultimately subject to the oversight of popularly-elected governmental bodies, the public, and independent boards of trustees.

  • There have been efforts over the years to impose ill-fitting Federal requirements on State and local government pension systems that duplicate, conflict or preempt State and local pension laws, as well as consideration of proposals to restrict their investment options or tax their plan contributions, assets or investment gains.

  • During these times, Congress has continued to ultimately recognize the broad coverage, retirement savings opportunities and meaningful benefits provided to the public sector workforce, and, unlike private pension plans that are preempted from State statutes and solely regulated by Federal law, public pension plans are subject to vast State and/or local regulation, and have comprehensive laws, set in statute through an open legislative process, which provide for rigorous regulation of their retirement plans and strong protections for plan participants and assets.

  • Public pension plans are funded on an actuarial basis typically through annual tax-deferred contributions made by both the employer and employee, are audited routinely and have comprehensive reporting and disclosure requirements.

  • Public employee retirement plans are backed by the full faith and credit of their sponsoring governmental jurisdictions, which are permanent institutions that have a strong moral, contractual, and in some cases constitutional commitment to their pension liabilities, which assure State and local employees and retirees will receive the pension benefits to which they are entitled.

  • Such benefit protections and long-term sustainability virtually eliminate the possibility of involuntary asset liquidation in the public sector, and are unequaled in other sectors of the U.S. workforce where future benefit levels and accruals are not guaranteed and plan sponsors may go out of business, be acquired, or file for bankruptcy.

NOW, THEREFORE BE IT RESOLVED that the National Association of State Retirement Administrators:

  1. Supports a Federal legislative and regulatory environment that recognizes and encourages the unique designs and protections inherent in State and local government retirement systems.

  2. Strongly opposes efforts to impose additional Federal regulations on State and local government employee pension plans, restrictions on their plan design flexibility or investment options, or taxation on contributions or earnings.

  3. Believes State and local government employee retirement systems require distinctive reporting, disclosure and accounting models and an independent standard-setting body representative of and focused specifically on the unique needs of the public sector and its stakeholders.

Amended Resolutions 2002-04 and 1996-04
Adopted August 8, 2007

[BACK TO TOP]


RESOLUTION 2007-02 - Retiree Health Care

WHEREAS:

  • The cost of medical care is increasing at a rate that threatens its affordability for retirees and the ability of employers to assist in funding retiree group health care coverage.

  • The higher costs being assumed by both employers and retirees are necessitating plan design and/or premium changes to protect the long-term viability of employer-based retiree health care plans.

  • Accessibility to affordable health care is critical to the quality of life for everyone, especially retirees who are on a fixed income and in the most expensive age bracket to insure.

  • The nearly seven million retired public employees who receive pension benefits from public retirement systems are spending a larger percentage of their budget on health care.

  • Many public retirement systems have assumed responsibility for providing their retired members with group health care coverage and for funding all or part of the health care expenses of their retired members.

  • States have demonstrated creativity and innovation in their efforts to make health care available for retirees, yet the ability of the states to affect the accessibility and affordability of health care is becoming increasingly limited.

  • The Governmental Accounting Standards Board has adopted accounting changes requiring governmental employers to recognize both the cost of current retirees and the cost of future retirees, which may exacerbate state law constraints on spending and further jeopardize these essential benefits for millions of governmental employees and retirees.

  • Policy options may be considered by the federal government to address access to and affordability of health care for retired workers.

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators:

  1. Supports federal consideration of proposals to assist retirees in paying for increased health care costs by allowing them to exclude premiums and/or medical expenses from their taxable retirement income.

  2. Supports the continued exchange of information between State retirement plans and other State or local governmental agencies responsible for administering and funding retiree health programs in order to share best practices and successful strategies for cost containment.

  3. Recognizes that many of the current federal and State proposals under consideration may represent only temporary solutions, and that a national debate must be initiated to discuss the long-term structure of the health care system and Medicare program in the United States.

Amended Resolutions 2003-03
Adopted August 8, 2007
[BACK TO TOP]


RESOLUTION 2006-03 - Disclosure of Soft Dollar Activities

WHEREAS:

  • Soft dollar practices have historically resulted in substantial amounts of financial activity going undisclosed to and by plan sponsors.

  • The accounting standard-setting bodies and governmental agencies have chosen to essentially ignore this area, resulting in the absence of authoritative guidance regarding the type of information to collect and how and to whom such information should be reported.

  • The clarity and transparency of disclosure of all money management and brokerage arrangements is essential to the responsibilities of plan fiduciaries.

  • Plan sponsors and trustees have the power to assert their authority in these matters through their contractual arrangements with the money management, brokerage, and consulting community.

  • The Council of Institutional Investors has developed recommended practices for the collection and distribution of information by trustees to more fully disclose the cost of doing business, and to facilitate assessments of whether or not all assets (which include their soft dollars) are being properly managed and whether or not there are conflicts of interest between their money managers and asset consultants.

NOW, THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators:

  1. Endorses the Council of Institutional Investors' Suggested Disclosures for Trustees to Request of Money Managers, Suggested Disclosures for Trustees to Request of Investment Consultants, and Suggested Disclosures by Trustees to All Interested Parties.

  2. Encourages state retirement system plan fiduciaries to consider these recommendations in adopting or revising their own disclosure guidelines, with the aim of furthering the confidence public plan participants have in the financial workings of the state retirement systems on which they rely for an important part of their future financial security.

  3. Believes it will be virtually impossible to achieve complete soft dollar transparency in the absence of more comprehensive accounting and regulatory standards for securities transactions, and encourages the accounting standard-setting bodies and federal governmental agencies to issue authoritative guidance in this area.

Amended Resolution 1999-04
Adopted August 9, 2006
[ BACK TO TOP]


RESOLUTION 2006-04 - Supplemental Plans for State and Local Government Employees

WHEREAS:

  • There is continued emphasis on increasing retirement savings nationwide, and state and local governments have been responsible partners in achieving this goal by covering the vast majority of state and local workers in public employee retirement systems that provide sound, secure benefits in retirement.

  • Many governmental entities sponsor a supplemental defined contribution plan in addition to the general retirement plan to allow participants to defer some portion of their salary in anticipation of retirement needs, and some states provide limited matching contributions to encourage supplemental plan participation.

  • Tax favored savings arrangements available to employees of state and local government are valuable in both increasing the attractiveness of public service as a career and encouraging public employees to play a proactive role in providing for their own future financial security.

  • Federal legislation has been enacted over the last decade to simplify participation in, and the administration of, these supplemental arrangements, much of which recognized that arrangements sponsored by governmental entities are unique from those sponsored by other entities.

  • Efforts to simplify rules while keeping these unique characteristics under consideration are encouraged, such as: i) providing for similar tax treatment of employer contributions to governmental 401(k), 401(a), 403(b), and 457 plans by excluding such employer contributions from the Social Security and Medicare covered wage definition and the maximum amount that may be deferred under the plan for the taxable year for all such plans; and ii) allowing "Roth" features to be incorporated in all such salary reduction arrangements.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators:

  1. Encourages federal policy makers and regulators to continue to recognize the distinctive characteristics of state and local governments and their supplemental retirement arrangements and keep these in mind when promulgating regulations or further legislative changes to these plans.

  2. Supports legislation that encourages state and local governments to create and maintain supplemental retirement plans.

  3. Does not support a one-size-fits-all approach to legislation that mandates the replacement of existing plans that may best meet the needs of individual governmental entities and their employees, nor legislation intended to supplant rather than supplement current retirement arrangements and could result in additional cost and complexity for State and local governments as well as plan participants.

Amended Resolutions 2003-07, 2002-03, 1999-05 and 1996-05
Adopted August 9, 2006
[BACK TO TOP]


RESOLUTION 2005-02 - Ensuring Investments Do Not Conflict With U.S. Foreign Policy and Humanitarian Goals

WHEREAS:

  • Public pension systems collectively invest assets in excess of two trillion dollars on behalf of nearly twenty million employees and retirees of state and local governments.

  • Such large pension systems invest in nearly every major corporation and global marketplace.

  • The heightened awareness about national security risks after September 11, 2001 has furthered the need for investors, particularly large investors, to ensure they are not unwittingly supporting terrorist activities or human rights violations through such investments.

  • The U.S. federal government has complex, multi-faceted policies relative to the countries under sanction for sponsoring terrorism or human rights violations, which utilize diplomatic and economic means to encourage nations to act responsibly and permit certain business relationships in these designated countries that are believed to further U.S. foreign policy goals.

  • The federal government's intelligence, military, diplomatic and financial regulatory communities are best positioned to identify, monitor and report on foreign and domestic companies that may be engaging in activities that are in conflict with U.S. foreign policies and humanitarian objectives, and to impose the appropriate sanctions.

  • An uncoordinated approach by the investment community in attempting to influence companies that conduct business in sanctioned nations will result in inconsistent and ineffective actions, and could potentially penalize companies that are acting in the interests of U.S. policy in foreign nations, thus penalizing shareholders and U.S. domiciled employees of those companies.

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators: Supports efforts by the U.S. Departments of State, Treasury and Commerce, in coordination with each other and the U.S. Securities and Exchange Commission, to identify domestic and international companies violating U.S. national security and humanitarian policies, and provide proper guidance to U.S. investors so that such companies may be denied access to the U.S. capital marketplace.
 
Amended Resolution 2003-02
Adopted August 10, 2005
[BACK TO TOP]


RESOLUTION 2003-01 - Phased Retirement

WHEREAS:

  • Phased retirement is an area of great interest to public retirement systems, their sponsoring State and local governments, plan participants, and boards of trustees.

  • State and local governments must meet the challenge of phased retirement earlier than the private sector, because their workforce tends to be several years older than the private workforce and their wages are typically lower than in private industry; and

  • Greater flexibility than is presently available is needed to allow plan sponsors to offer a mix of retirement payments and salary payments in the emerging phased retirement environment; and

  • Individual States are best positioned to look at the cost implications, the human resource needs, and the cultural expectations of the phased retirements programs for their workforce; and

  • Any guidance should be permissive, such that systems and their State Legislatures will have the right to develop plan provisions that are the most appropriate for their participants;

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators: Supports the following six principles with regard to proposed changes in Federal phased retirement policy:

  1. Good retirement planning for some individuals means avoiding an abrupt termination of work and, instead gradually transitioning into a retirement that meets their social and economic needs. These programs are called "phased retirement" or "transitional retirement." They are pre-retirement work arrangements that permit an individual to move from his/her career position to a position of reduced hours, lower compensation, or reduced physical or mental stress. These do not include programs that allow a retiree to return to work.

  2. Every retirement system is different in design. Thus, IRS activity in the area of phased retirement should allow retirement systems to have such programs.

  3. Any IRS activity in the area of phased retirement must recognize that retirement systems have different funding methods and varying levels of funding. Accordingly, the IRS should not adopt any policy that would require retirement systems to assume additional funding obligations.

  4. The IRS should clarify that the definition of such terms as normal retirement age, early retirement age, minimum retirement age, and final or highest average compensation (or whatever terms are used in a particular jurisdiction) should be whatever appears in the applicable state or local laws, regulations, case law, and policies governing the retirement system. Such clarification would serve to recognize that state and local governments have different ways of defining these terms.

  5. Distribution of benefit should only be made after an individual is eligible for a retirement benefit or allowance.

  6. Any phased retirement program should allow state and local governments to protect the value of a participant's retirement benefit during a "bridge job." A "bridge job" is a position that offers reduced hours, lower compensation, or reduced physical or mental stress than career employment and covers the period between career employment and full-time retirement. It is also called a transitional job.

Adopted August 6, 2003
[BACK TO TOP]


RESOLUTION 2003-05 - Public Pension Systems - Operational Risks of Defined Benefit and Related Plans and Controls to Mitigate those Risks

WHEREAS:

  • Much of the emphasis in pension funds is on investment risks, the administrative and benefits (non-investment) side of pension systems face an extraordinary number of risks as well.

  • Some inherent administrative risks do not change much over time, while other risks and the mitigating controls for all risks are often affected by the constant changes in technology and the environment in which Systems operate.

  • Identifying operational risks that public pension funds face and some of the controls that may be put in place to mitigate these risks could provide a point of reference or a guide to system administrators and other pension fund staff in addressing risks and practices and procedures to address those risks.

  • Representatives of the Association of Public Pension Fund Auditors (APPFA) have developed a document titled, "Public Pension Systems -- Operational Risks of Defined Benefit and Related Plans and Controls to Mitigate those Risks," that identifies key administrative risks associated public pension systems and common practices to address, manage, and, to the extent possible, control those risks, with the understanding that the document is not intended to be an exhaustive checklist of all administrative risks that public pension systems may potentially encounter or a comprehensive checklist of all the procedures a public pension system should incorporate to address the identified risks.

  • APPFA is officially on record as being in support of the risk management concepts identified in "Public Pension Systems -- Operational Risks of Defined Benefit and Related Plans and Controls to Mitigate those Risks;"

NOW THEREFORE BE IT RESOLVED, that the National Association of State Retirement Administrators:

  1. Endorses Public Pension Systems -- Operational Risks of Defined Benefit and Related Plans and Controls to Mitigate those Risks.

  2. Encourages state retirement system plan fiduciaries to consider these practices in adopting or revising their own operational risk guidelines, to address, manage, and, to the extent possible, control those risks, with the aim of furthering the confidence public plan participants have in the financial workings of the state retirement systems on which they rely for an important part of their future financial security.

Adopted August 6, 2003
[BACK TO TOP]


RESOLUTION 2003-06 - Annual Contribution and Benefit Limits

WHEREAS,

  • The federal limits on pension benefits and contributions that were enacted to cap the federal revenue loss associated with the employer's tax-deductible contributions to the employer's pension fund address an aspect inapplicable to tax-exempt state and local governments.

  • The imposition and tightening of these limits on retirement plans in recent years have had an adverse effect on the administration of plans, the improvement of benefits, and on the ability of individuals to effectively contribute toward their retirement savings.

  • The limits on maximum annual benefits, maximum annual dollar contributions, and the amount of compensation that may be taken into account in determining benefits were significantly lowered in the late 1980s and early 1990s and have only recently been moderately restored.

  • Allowable benefits are further curtailed by actuarial reductions in the limit for non-public safety employees retiring before age 62, despite the years of service under the plan and the commensurate benefits to which they are entitled;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators: Supports federal legislation that would simplify the administration of and stimulate increased savings in retirement plans by:

  • Restoring and indexing for inflation the increased annual dollar limits on benefits for defined benefit plans, contributions under defined contribution plans, and the amount of compensation that may be taken into account under qualified retirement plans.

  • Modifying or eliminating the actuarial lowering of the benefit limitations for non-public safety employees.

Amended Resolution 2001-01
Adopted August 6, 2003
[BACK TO TOP]


RESOLUTION 2002-05 - Age Discrimination in Employment Act

WHEREAS:

  • The 3rd U.S. Circuit Court of Appeals has held that the Age Discrimination in Employment Act (ADEA) applies to retirees and their benefits, not just employees and their compensation packages.

  • The 3rd Circuit further found that the ADEA permitted lawsuits against employers who offered lesser benefits to retirees eligible for Medicare than for younger retirees who are not Medicare-eligible, such as those offering extended health care coverage in the form of a Medicare bridge (coverage until Medicare eligibility).

  • The U.S. Equal Employment Opportunity Commission (EEOC), which had pursued suits enforcing the ADEA against employers who provided lesser health care benefits to Medicare-eligible retirees than to their younger retirees, recently reversed its policy in this area.

  • Despite the EEOC’s decision not to pursue suits in this area, retirees may continue to file suits on their own, as there is still no consensus that Medicare can be accepted as a sufficient “safe harbor” for employers offering early retiree packages.

  • The EEOC continues to state its intent to vigorously pursue other types of age discrimination claims involving retirees, such as cash-based early retirement incentives that are reduced or eliminated with advancing age and disability plans that include imputed benefits based on normal retirement age.

NOW, THEREFORE, BE IT RESOLVED, that the National Association of State Retirement Administrators: Supports federal legislative and/or regulatory solutions that are being explored to clarify that extended health care coverage in the form of a Medicare bridge, or voluntary early retirement incentives, or disability plans with benefit limitations based on normal retirement age, offered in conjunction with a defined benefit plan, are not in violation of the ADEA.
 
Adopted August 7, 2002
[BACK TO TOP]


RESOLUTION 2000-01 - Public Pension Systems: Statements of Key Investment Risks and Common Practices to Address those Risks

WHEREAS:

  • public pension systems face an increasing number of risks in undertaking necessary investment activities; and,

  • controlling or eliminating these risks has become a topic of great interest as well-publicized errors by investment funds have captured public and professional attention; and,

  • in response, a number of organizations have discussed or promulgated risk principles, guidelines, standards, and other directives for various professional organizations, but very few have been specifically oriented to the public pension fund community, or have approached the issue from the perspective of the basic disciplines and purposes of public pension funds; and,

  • the public pension community has expressed a desire for general guidance in identifying key investment risks and common practices and procedures used to address those risks; and,

  • a number of public pension system chief investment officers and representatives of the Association of Public Pension Fund Auditors (APPFA) have developed a document titled, “Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks,” that identifies key investment risks associated with public pension funds and common practices to address, manage, and to the extent possible, control those risks, with the understanding that the document is not intended to be an exhaustive checklist of all risks that public pension systems may potentially encounter or a comprehensive checklist of all the procedures a public pension system should incorporate to address the identified risks; and,

  • APPFA and several public pension system chief investment officers are officially on record as being in support of the risk management concepts identified in “Public Pension Systems – Statements of Key Investment Risks and Common Practices to Address those Risks;”

NOW THEREFORE BE IT RESOLVED that the National Association of State Retirement Administrators:

Adopted August 9, 2000 

[BACK TO TOP]


RESOLUTION 1998-01 - States' Rights and Unfunded Mandates

WHEREAS:

  • The United States Constitution assigns certain responsibilities to the federal government and reserves the balance to the States.

  • Federal intervention into or preemption of the legitimate role of State authorities would be a drastic departure from the principles of federalism and would be an encroachment on State sovereignty.

  • New challenges to federalism continue to surface in both the congressional and executive branches of the federal government that either impose unfunded mandates or preempt traditional State and local authority.

NOW, THEREFORE BE IT RESOLVED that the National Association of State Retirement Administrators: Supports efforts to work with the national government as partners in our federal system, but opposes federal intervention in areas that rightfully belong to the States, efforts of the federal government to unduly limit States’ autonomy, efforts to usurp State governments’ and their political subdivisions’ authority to perform their responsibilities and meet the needs of their citizens, and the imposition of costly or unwarranted federal mandates on States and their political subdivisions.
 
Adopted August 12, 1998
[BACK TO TOP]


RESOLUTION 1998-03 - Social Security Resolution

WHEREAS:

  • The United States Constitution assigns certain responsibilities to the federal government and reserves the balance to the States.

  • Beginning in the 1930’s when Social Security was established, public employees were excluded from participation.

  • Beginning in the 1950’s, state and local government pension plans were given the option to elect Social Security coverage.

  • Many state and local government pension have elected to complement their own pension programs through coverage under Social Security.

  • Other public pension plans decided not to participate in Social Security but rather provide their own independent programs of retirement benefits.

  • Mandatory coverage of newly hired state and local government employees will seriously disrupt the financial standing of these systems, to include reduction in benefits or increased contributions.

  • There is no evidence to support that mandatory coverage of newly hired public employees will solve the funding problems of the Social Security system.

  • There are serious constitutional and administrative problems with mandatory coverage;

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators: Supports the affiliation of public pension plans with Social Security on a voluntary basis; however, opposes mandatory coverage of public employees under Social Security.
 
Adopted August 12, 1998
[BACK TO TOP]


RESOLUTION 1996-01 - Federal Taxation of Public Employee Retirement Systems

WHEREAS:

  • Public employee retirement systems are designed to provide state and local government employees with a secure savings for retirement, most frequently through a defined benefit plan, and these retirement systems now provide a significant part of the capital necessary for continuous economic growth in the U.S.

  • Federal taxes on earnings and contributions of retirement systems are being deferred rather than exempted as the employee will pay taxes on these amounts during retirement.

  • Taxation of the earnings, transactions, and contributions to public employee retirement systems is counter productive to the national interests of increasing retirement savings and, further, could result in double taxation as the employees of state and local governments pay taxes on their pension benefit payments after their years of public service.

  • Many public employee retirement systems are legally prohibited from reducing pension benefits and, therefore, the state or local government would need to increase contributions to the plan if any amount were diverted such as to pay federal taxes.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators: Continues to oppose the taxation of public employee retirement system earnings, transactions, and contributions.
 
Adopted August 7, 1996
[BACK TO TOP]


RESOLUTION 1996-06 - Retirement System Fiduciary Investment Standards

WHEREAS:

  • State and local public employee retirement systems manage assets to provide retirement income to millions of workers and retirees and those participants rely on the trustees and other fiduciaries to invest these assets for the exclusive benefit of the plan members, retirees, and beneficiaries.

  • The vast majority of public employee retirement systems follow prudent investment standard or state statutes.

  • Employers generally bear the cost of investment under-performance in a defined benefit plan, the most popular type of plan in the public sector.

  • Several proposals that have come before Congress have stipulated acceptance of below market rates of return for defined benefit plans, which would violate fiduciary duties, compromise the plans' risk-return standards, and produce less than competitive rates of return.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators:

  1. Supports strong fiduciary standards set in law by state and local governments and supports investment strategies for which the paramount goal is the financial security of pension fund assets.

  2. Opposes any attempt, either implicitly or explicitly, to direct or influence state and local government retirement systems to make investments that circumvent the trustees' fiduciary responsibility.

Adopted August 7, 1996
[BACK TO TOP]