A Case for Shifting to the Defined Contribution Approach
State and local employee benefits are 69 percent higher than those of employees in the private sector.
Taxpayers want to know: Why are more tax dollars being used to finance pension and health benefits for public sector retirees that are more than those available to private sector employees?
As health care costs rise, the cost of providing health insurance for retirees will continue to increase, accompanied by even greater unfunded liabilities in OPEB plans.
Unfunded Liabilities Per Capita, Selected States
- Alaska has over $9 billion in unfunded liabilities–more than $13,000 per capita–just one example of future burdens imposed by OPEB plans.
- As the cost of health care premiums have increased, employees in the private sector have assumed a greater share of the cost.
- California’s retiree pension plan (CalPERS) include benefits that far exceed most those offered to private sector retirees.
If you would like more information about the issues discussed in this guide, contact Jonathan Williams, the ALEC Tax and Fiscal Policy Task Force Director, at (202) 742-8533 or at [email protected].