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A pension is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments. A pension may be a "defined benefit plan", where a fixed sum is paid regularly to a person, or a "defined contribution plan", under which a fixed sum is invested that then becomes available at retirement age. Pensions should not be confused with severance pay; the former is usually paid in regular amounts for life after retirement, while the latter is typically paid as a fixed amount after involuntary termination of employment before retirement.
A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.
The Canada Pension Plan is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS). Other parts of Canada's retirement system are private pensions, either employer-sponsored or from tax-deferred individual savings. As of September 2017, the CPP Investment Board manages over C$328.2 billion in investment assets for the Canada Pension Plan on behalf of 20 million Canadians. CPPIB is one of the world's biggest pension funds.
A retirement plan is a financial arrangement designed to replace employment income upon retirement. These plans may be set up by employers, insurance companies, trade unions, the government, or other institutions. Congress has expressed a desire to encourage responsible retirement planning by granting favorable tax treatment to a wide variety of plans. Federal tax aspects of retirement plans in the United States are based on provisions of the Internal Revenue Code and the plans are regulated by the Department of Labor under the provisions of the Employee Retirement Income Security Act (ERISA).
The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families". In fiscal year 2019–20, CalPERS paid over $25.8 billion in retirement benefits, and over $9.2 billion in health benefits.
The New Hampshire Retirement System (NHRS) is a contributory, public employee defined benefit pension plan for the state of New Hampshire. The plan is qualified under section 401(a) of the Internal Revenue Code, and provides lifetime pension benefits to eligible members, which are determined at retirement under formulas prescribed by state law. The retirement system is also governed by administrative rules, policies adopted by the Board of Trustees, and the Internal Revenue Code.
In the United States, public sector pensions are offered at the federal, state, and local levels of government. They are available to most, but not all, public sector employees. These employer contributions to these plans typically vest after some period of time, e.g. 5 years of service. These plans may be defined-benefit or defined-contribution pension plans, but the former have been most widely used by public agencies in the U.S. throughout the late twentieth century. Some local governments do not offer defined-benefit pensions but may offer a defined contribution plan. In many states, public employee pension plans are known as Public Employee Retirement Systems (PERS).
The California State Teachers' Retirement System (CalSTRS) provides retirement, disability and survivor benefits for California's 965,000 prekindergarten through community college educators and their families. CalSTRS was established by law in 1913 and is part of the State of California's Government Operations Agency. As of September 2020, CalSTRS is the largest teachers' retirement fund in the United States. CalSTRS is also currently the eleventh largest public pension fund in the world. As of October 31, 2020, CalSTRS managed a portfolio worth $254.7 billion.
OMERS is a Canadian public pension fund, headquartered in Toronto, Ontario, Canada. OMERS is a defined benefit, jointly sponsored, multi-employer public pension plan created in 1962 by Ontario provincial statute to administer retirement benefits and manage pension investment funds of local government employees in the Canadian province of Ontario. "OMERS" stands for the Ontario Municipal Employees Retirement System. As of December 31, 2020, OMERS had C$105 billion of assets under management. OMERS serves over 1,000 participating employers and more than half a million active, deferred and retired employees. OMERS members are employed by municipalities, school boards, transit systems, local electrical distribution companies, police service boards, fire fighting and paramedic services, children's aid societies and associated local agencies, boards and commissions.
Teacher Retirement System of Texas (TRS) is a public pension plan of the State of Texas. Established in 1937, TRS provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas and manages a $180 billion trust fund established to finance member benefits. More than 1.6 million public education and higher education employees and retirees participate in the system. TRS is the largest public retirement system in Texas in both membership and assets and the sixth largest public pension fund in America. The agency is headquartered at 1000 Red River Street in the capital city of Austin.
Defined benefit (DB) pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum or combination thereof on retirement that depends on an employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. Traditionally, many governmental and public entities, as well as a large number of corporations, provide defined benefit plans, sometimes as a means of compensating workers in lieu of increased pay.
The statutory and fiduciary mandate of the State Board of Administration of Florida (SBA) is to invest, manage and safeguard assets of the Florida Retirement System (FRS) Trust Fund as well as the assets of a variety of other funds. The SBA manages 25 different investment funds and trust clients.
The Oklahoma Public Employees Retirement System (OPERS) is an agency of the government of Oklahoma that manages the public pension system for majority of Oklahoma state employees. 74 Okla.Statutes §§901 et seq. The System provides pension benefits such as normal retirement, disability retirement, surviving spouse benefits and a death benefit.
The State Universities Retirement System or SURS is an agency in the U.S. state of Illinois government that administers retirement, disability, death, and survivor benefits to eligible SURS participants and annuitants. Membership in SURS is attained through employment with 61 employing agencies, including public universities, community colleges, and other qualified state agencies. Eligible employees are automatically enrolled in SURS when employment begins.
Oklahoma Teacher's Retirement System (OTRS) is the pension program for public education employees in the State of Oklahoma. As of June 30, 2014, the program had nearly 168,000 members. Public education teachers and administrators are required to be OTRS members; support staff can join voluntarily. State law established OTRS in 1943 to manage retirement funds and provide financial security for public education employees. Its first checks to retirees were sent out in 1947. It is administered by a staff and 14-member board of trustees. Its current Executive Director is Tom Spencer who started in that position on November 1, 2014.
The Texas Municipal Retirement System (TMRS) is a statewide retirement system that provides retirement, disability, and death benefits for employees of participating Texas municipalities. TMRS was established in 1947 by Texas state law and is administered in accordance with the Texas Municipal Retirement System Act. Although established under state law, TMRS receives no state funding. The System offers a choice of benefits so that each participating city can design a plan to suit its needs and budget. Each city's plan is funded independently by that city. Retirement benefits for employees of participating cities are paid from the employees’ contributions, city contributions, and the System's investment income.
Utah Retirement Systems administers pension plans and retirement savings plans for public employees in the U.S. state of Utah. There are eight separate defined-benefit pension plans administered by URS, as well as various retirement savings plans. As of December 31, 2014, the URS was managing over $31 billion in its pension trust funds, for nearly 200,000 members. Besides the pension trust funds, the URS manages a 401(k), 457(b), a traditional IRA and Roth IRA with around $4.5 billion in assets combined at the end of 2014.
The Michigan Office of Retirement Services (ORS) administers retirement programs for Michigan's state employees, public school employees, judges, state police, and National Guard. ORS also provides various retiree healthcare benefits, including traditional insurance plans, Personal Healthcare Funds, and Health Reimbursement Accounts. ORS serves over 530,000 customers, representing one out of every fourteen Michigan adults. ORS customers live in approximately one out of every nine Michigan households. The state employee system and the public school employee system administered by ORS make up 95 percent of all active plan membership in Michigan. ORS is responsible for the 18th largest public pension system in the United States and the 47th largest pension system in the world, managing combined net assets of nearly $67.8 billion. In fiscal year 2017, ORS paid out over $7.3 billion in pension and health benefits. According to the Pensionomics 2016 report from the National Institute on Retirement Security, pensions paid to Michigan retirees generated $11.1 billion in total spending in the state of Michigan. A Pew study ranks ORS in the top ten state pension systems for paying the highest percentage of their annual required contribution for pension plans, which demonstrates a commitment to fiscal responsibility. ORS is a division of Michigan's Department of Technology, Management, and Budget (DTMB).
The Los Angeles County Employees Retirement Association (LACERA) is an independent Los Angeles County agency that administers and manages the retirement fund for the County and outside Districts. In 2012, it managed defined benefit pension plans for 156,563 civil servants (members), including 56,752 retirees, making it the largest county retirement system in the United States. In 2018, LACERA's net assets were worth US$55.8billion.
The Illinois pension crisis refers to the rising gap between the pension benefits owed to eligible state employees and the amount of funding set aside by the state to make these future pension payments. The size of Illinois' pension obligation is $214B, but the state's pension funds have only $85B available for payouts to retirees. Illinois has the second highest unfunded pension ratio, after New Jersey. Illinois state budget contributions have fallen short of the increases in pension liabilities for 12 of the past 15 years, resulting in a three-fold increase in the funding gap.
References
- 1 2 3 "Indiana Public Retirement System Annual Comprehensive Financial Report" (PDF). Indiana Public Retirement System. June 30, 2021. pp. 8–29, 127. Retrieved April 19, 2022.