hands at twilight holding a globe of sparkling lights (Photo: Shutterstock)

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As public retirement systems work to improve theefficiency of pension funds, the effects on employees vary fromlower fees and higher contributions to higher age and servicerequirements.

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That's among the findings of a study from the National Conference on PublicEmployee Retirement Systems, which also says that the challengesthose retirement systems face have also compelled them to lowerexpectations on rates of return and lowering, or even removing,cost-of-living adjustments.

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Changes to plans that affect employees directly can result inrecruiting and retention problems, and while 63 percent ofrespondent systems say they don't have a problem with fillingpositions as people retire, 27 percent either do have a problem oranticipate that it will arise.

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With an increasing percentage of systems not including overtimein their benefit calculations—55 percent said they do not in the2019 study, which is 6 percent higher than the prior year—that'slikely to become a problem in the future.

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The existing trend away from defined benefit plans to definedcontribution plans continues, with the 97 percent of respondentswho said in 2018 that they offered DB plans falling to 89 percentof plans in 2019 saying that they do.

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Other benefits on the decline include in-service death benefits(offered by 89 percent of respondents in 2018, falling to 79percent in 2019); disability benefits (90 percent, falling to 82percent); an automatic post-retirement COLA (59 percent, falling to54 percent); and employer pickup of employee contributions (41percent, falling to 37 percent). In addition, the COLA itself wassmaller in 2019 than in 2018.

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Retirement systems are also working on employee engagement, withthe three largest activities in 2019 being notification of updatedhandbook/summary plan descriptions, expanding retirement planningeducation for members and developing staff talking points on keyissues. Six percent more conducted a member satisfactionassessment, compared with 2018, and the activity being consideredby the most plans is conducting online educational sessions forparticipants.

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The use of social media as a means of employee communication hasactually fallen from 2018 to 2019, from 40 percent to 37 percent,and mass text messages sent to the entire membership have fallenfrom 9 percent to 3 percent while mass e-mails have alsodeclined—from 44 percent to 33 percent. Perhaps this is a responseto employees' increasing expectation of more personalizedtreatment.

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Last but not least, the percentage of sponsors offering a health plan has risen—from 46 percent in 2018to 52 percent in 2019—but there's been a 6 percent drop intraditional coverage to just 26 percent, possibly in moves tohealth savings accounts and voluntary employees' beneficiaryassociations.

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The report adds, "In addition, we see a reduction in eligibilityfor retirees and beneficiaries when looking at the population offunds that responded to both of the 2019 and 2018 studies. This maybe driven by the transition to subsidy and HSA-style benefits."

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