Employee Contributions

Introduction


Nearly all employees of state and local government are required to share in the cost of their retirement benefit, a requirement that contrasts with pension plans in the private sector, whose participants do not contribute to their pension benefit. Employee contributions to public pensions typically are set as a percentage of salary either by statute or by the board that oversees the pension plan. By providing a consistent and predictable stream of revenue to public pension funds, contributions from employees fill a vital role in financing pension benefits.  Reforms made in the wake of the 2008-09 market decline included higher employee contribution rates for many public pension plans. This issue brief examines employee contribution plan designs, policies and recent trends. 

Date  Published

November 2025

Contact

Keith Brainard, Research Director
Alex Brown, Research Manager

Download Issue Brief


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Becoming a member of NASRA offers a unique opportunity to join a community committed to the sound, efficient, and innovative stewardship of public retirement systems. Membership connects you with a network of professionals and experts, providing valuable insights into managing public retirement systems with a focus on sustainability and risk-averse strategies.

By joining NASRA, you gain the tools and resources to enhance the management of public retirement systems, ensuring their long-term success and reliability for generations to come.

What's New at NASRA: Updated Cost of Living Issue Brief

Cost-of-Living Adjustments (COLAs) play a significant role in public pensions. They help retirees keep up with rising prices, but they also add costs to pension plans. Policymakers and plan sponsors are tasked with balancing three things: benefits adequacy, plan sustainability, and affordability for members and plan sponsors.
The recent increase in inflation caused many policymakers and, in some cases pension trustees, to review how benefits are designed and paid for, including the way COLAs are granted and funded. NASRA’s recently updated issue brief on the lates trends in COLAs is available in the NASRA Research Center.