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 2022-01- Public Employee Retirement System Accounting Standards & Actuarial Methodologies

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

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

Sound management of public pension trusts

  • Resolution 2019-02 - Support for Strong Fiduciary Standards in Retirement System Investments

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

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

  • Resolution 2006-03 - Disclosure of Soft Dollar Activities

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

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

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

 

RESOLUTION 2007-02 - Retiree Health Care

WHEREAS:

  • The cost of medical care threatens its affordability for retirees and the ability of their former employers and/or retirement systems to assist with financing or supplementing insurance coverage options.
  • The Governmental Accounting Standards Board requires 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 health care and insurance challenges for millions of governmental employees and retirees.
  • The ability of states and local governments to affect the accessibility and affordability of retiree health care is increasingly limited absent policy options being implemented at the national level.

NOW, THEREFORE, BE IT RESOLVED that the National Association of State Retirement Administrators supports the continued exchange of information between State retirement plans, other State or local government agencies responsible for administering and funding retiree health programs, and federal lawmakers and regulators, in order to share and collaborate on policies, best practices and successful strategies for access and cost containment.
 
Approved August 8, 2023
Amended Resolution 2007-02
Amended Resolution 2003-03

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RESOLUTION 2023-02 - 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) creditworthiness, and (iii) regulatory safeguards to protect the investor and stability of the system; and
  • ​Public pension systems collectively invest trillions of dollars for the financial well-being of millions of working and retired citizens and their families; are long-term institutional investors that play a significant role in providing patient, stable capital to the financial marketplace; and their broadly diversified portfolios expose them to the global capital markets; and 
  • Safeguards for investors dramatically reduce the potential for 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:

  • Regulatory structures that provide protections for investors and instill confidence in the capital market system, and 
  • ​Preservation of public pension systems' ability to invest in all capital markets to provide growth and lower risk through optimum diversification of investments to meet their fiduciary obligations. 

Approved on August 8, 2023 
Amended Resolution 2009-01
Amended Resolution 2006-02 

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RESOLUTION 2022-01 - Public Employee Retirement System Accounting Standards & Actuarial Methodologies

WHEREAS:

  • Accounting standards and actuarial methods pertaining to state and local government pension plans have evolved over the years, each with the objective of providing relevant information for distinct purposes: 1) standardized reporting of the financial position and condition of public pension plans and the governments that sponsor them, and 2) valuations that inform and provide for the systematic funding of pensions in a sufficient, reasonably stable and predictable manner; and
  • The utility of such public pension calculations is directly proportionate to the extent to which it reflects a realistic outcome under relevant and applicable circumstances; and
  • Information that is not based on the pertinent legal and financial constructs of the plan is not decision-useful and poses a risk of misuse or misinterpretation regarding the cost, financial condition and financial position of the pension plan; and
  • NASRA has consistently engaged on public pension accounting and actuarial standards, as well as proposed changes to those standards, including participating in advisory councils; hosting educational forums with standard setters and industry professionals; seeking input and building consensus positions across the membership and other national associations; and communicating such positions in testimony, comment letters and publications to standards setters, professionals, stakeholders, the media and others; and
  • The Governmental Accounting Standards Board (GASB) is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments; and  
  • Within this purview, GASB promulgates financial reporting and disclosure standards for how state and local governments and their pension plans report, recognize and measure their pension obligations, and in 2012 completed a multi-year process of reviewing and significantly revising these standards; and 
  • In issuing these new public pension accounting standards, GASB considered and rejected the use of market-based liability calculations for governmental plans whose assets are projected to be sufficient to meet projected benefit payments, instead approving liability calculations based on expected investment returns and ongoing benefit accruals for most plans; and
  • These standards also delinked public pension accounting from funding, requiring sponsors of governmental pension plans to place unfunded liabilities on their financial statements, and moving actuarially determined contributions and the assumptions that underlie them to the financial notes, along with a government’s 10-year pension contribution history; and
  • National associations representing the nation’s governors, state legislatures, state and local officials, and public finance professionals jointly issued guidelines urging state and local policymakers to ensure their pension funding is actuarially determined within sound parameters; and the Actuarial Standards Board (ASB) establishes Actuarial Standards of Practice (ASOP) that identify the factors U.S. actuaries should consider, document, and disclose; and 
  • Although the ASB in 2018 established ASOP No. 51, Assessment and Disclosure of Risk Associated Pension Plan Contributions, which contains principles-based guidance on evaluating pension plans’ investment risks, the ASB in 2021 also approved a requirement that professional actuaries calculate a “low-default risk obligation measure,” (LDROM) as part of ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions; and
  • Such a measure departs both from ASOP No. 4’s stated purpose of measuring a plan’s condition and cost and from ASB’s principles-based approach with regard to ASOPs; and instead prescribes a one-size-fits all calculation for all pensions, including state and local government retirement systems that have varying legal constructs affecting benefit accrual, risk, financing and adjustability; and 
  • Public plans are not only unique from each other, but they also have distinct differences from pensions in other sectors, including: 
    • Government sponsors of retirement systems are going concerns with perdurable time horizons and fundamentally different revenue streams and sustainability features than entities in other sectors of the economy;
    • Legal constraints forbid many governmental plan sponsors from withdrawing from a plan and virtually preclude plan termination; and 
    • A large and growing number of state and local governments have embedded risk-sharing or variable benefit elements into their pension plan designs; and
  • NASRA and other organizations representing the public pension community formally relayed concerns and objections regarding the proposed changes to ASOP No. 4, including that guidance on the examination and assessment of investment risk belongs in ASOP 51, which already contains principles-based standards for evaluating pension plans’ investment risks; and 
  • Requiring public plans to produce and pay for such calculations that have been misinterpreted, misused, and added confusion in the past is in contradiction to the laws governing the plan and a waste of limited public resources; and
  • Notwithstanding the ASB’s retention of a prescriptive market-based calculation in the final version of ASOP No. 4, that standard also included both an affirmation that the LDROM is not the “one true value” of measuring pension obligations and invited actuaries to provide “related commentary to help the intended user understand the significance of the low‐default‐risk obligation measure with respect to the funded status of the plan, plan contributions, and the security of participant benefits.”

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

  1. Supports decision-useful measurements that reflect the unique and varying legal and financial constructs governing public plans, including 
    1. the perdurable nature of plans and their sponsors, 
    2. applicable benefit protections, and 
    3. reasonable expectations for future asset growth and accrual of benefits.
  2. Opposes the imposition of one-size-fits-all market-based calculations that conflict with the pertinent legal and financial framework of governmental retirement plans.
  3. Supports efforts to minimize misunderstanding and misuse by clarifying the presumed purpose of the LDROM, including that the LDROM is intended to represent the funding liability were the plan actually invested entirely in low-default-risk bonds, and that the difference between the LDROM and the actual funding liability provides a measure of the expected cost savings of a prudent level of investment risk; and that the LDROM is not a measure of the funded status of state and local government retirement systems, required contributions, or the security of participant benefits. 
  4. Encourages governmental retirement systems and their actuaries to ensure such clarifying language is included in actuarial valuations and other relevant reports. 

Amends Resolutions 2018-01, 2012-01, and 2010-02
Approved on August 9, 2022
 
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RESOLUTION 2021-01 - 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 years 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 continue to be under consideration.

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

  1. Encourages federal policymakers 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
Updated May 1, 2021

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RESOLUTION 2020-01 - Ensuring Investments Do Not Conflict With U.S. Foreign Policy and Humanitarian Goals

WHEREAS:
  • Public pension systems collectively hold in trust several trillion dollars in assets on behalf of more than twenty million working and retired employees of state and local governments that are invested in nearly every major corporation and global marketplace.
  • U.S. investors, particularly state and local governmental entities, desire and are legally required to ensure their investments are not unwittingly supporting threats to national security or human rights violations.
  • The Office of Foreign Assets Control of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes identified as threats to the national security, foreign policy or the economy of the United​ States, and publishes lists of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries, as well as individuals, groups, and entities that are not country-specific.
  • The U.S. federal government has additional, complex, and multi-faceted policies relative to the countries that pose national security risks, including those under sanction for sponsoring terrorism or human rights violations, which use diplomatic and economic means to encourage nations to act responsibly and that 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 are domiciled or that conduct business in sanctioned nations will result in inconsistent and ineffective actions, could be an unconstitutional infringement on federal powers concerning foreign and domestic commerce, capital markets, and foreign affairs, 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 that are in violation of U.S. national security or humanitarian policies, and to 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
Updated on November 19, 2020 ​
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RESOLUTION 2019-01 - Public Retirement System Risk Assessment


WHEREAS:

  • Risk is inherent in any retirement system, regardless of how it is structured and funded; and
  • Public retirement systems manage many types of risk, including those related to investments, contributions, operations, demographics, benefits, litigation, and political and economic conditions; and
  • Understanding these risks, their tradeoffs, the opportunities they present, and their potential consequences is essential to effective plan administration and governance; and
  • Proper management of risk promotes not only the prudent investment of pension assets, but also the development and maintenance of an appropriate benefits framework, a suitable pension funding policy, and operational controls; and
  • Public pension systems, industry professionals, and the organizations representing them have developed and implemented long-standing guidelines, controls, and management practices to manage key investment and operational risks; and
  • Public retirement systems evaluate funding risks on a periodic basis through actuarial analyses, asset-liability modeling studies, scenario and stress testing, sensitivity analysis and other forms of assessment; and
  • Actuarial Standards of Practice also require that actuarial valuations and related actuarial analyses identify and assess the risks that may affect the future financial condition of public pension plans; and
  • Public retirement systems are inherently unique to each governing jurisdiction, with individual governance arrangements, benefit structures, funding policies, demographic composition, employer participation, fiscal condition, tolerance for risk, political environment, and other distinctive characteristics; and
  • Assessments of funding risk must account for these distinct features and focus on both positive and negative outcomes in order to present stakeholders and policymakers with a complete and accurate assessment of the system’s potential condition.

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

  1. Retirement systems should conduct funding risk assessments at periodic intervals and as circumstances warrant; and
  2. The factors and methods used in public pension funding risk assessments should be relevant to the actual conditions facing individual public pension systems and therefore should be decision-useful to the system’s fiduciaries and informative to stakeholders, specific to each system, consistent with each system’s funding policy and practices and the legal framework of the system’s sponsoring government(s), and should fairly reflect their likelihood of actually occurring.

Approved August 6, 2019

RESOLUTION 2019-02 - Support for Strong Fiduciary Standards in Retirement System Investments

WHEREAS:

  • State and local public employee retirement systems manage assets to provide retirement income to millions of workers, retirees and their beneficiaries, who rely on system trustees and other fiduciaries to invest these assets for their exclusive benefit.

  • The vast majority of public employee retirement systems follow fiduciary principles including the prudent investment standard or other fiduciary standards set in state statutes.

  • Employers, employees, and retirees bear the cost of investment under-performance in state and local government retirement systems.

  • Federal or state proposals to direct or restrict investments, including those that attempt to produce economic or social benefits other than investment return to the plan, which necessitates acceptance of below market rates of return, would violate fiduciary duties, and compromise the plans' risk-return standards and investment policies.

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 system investments that circumvent the trustees' fiduciary responsibility.

Amended Resolution 1996-06
Adopted August 6, 2019

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 levels.
  • 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
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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 August 11, 2010
Amended June 2016

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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 August 10, 2011
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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.

NOW, THEREFORE, 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 August 10, 2011
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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 are 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
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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
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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
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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
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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
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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 

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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
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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
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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
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