Sustainability Provisions for Public Pension Plans with Fixed Employer Contributions

Introduction

Most public pension plan contribution policies are set in statute and fall into one of two broad types: variable or fixed rate. Under variable rate policies, the employer’s contribution rate generally fluctuates with the actuarially determined contribution rate, which changes based on the plan’s actuarial experience. As the name suggests, fixed-rate policies feature an employer contribution that is fixed in statute as a percentage of payroll. This rate is stable and changes rarely or incrementally, typically through legislation or in some cases, automatic adjustment provision.

Date published

July 2025

Contact

Keith Brainard, Research Director
Alex Brown, Research Manager
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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.