Pension Reform Handbook: A Starter Guide for Reformers
Policymakers can implement fiscally sustainable pension reforms that are fair to both taxpayers and government workers. While the policies to do so are complex and difficult to summarize, in general it is necessary to commit to making full pension payments and paying down pension debt as soon as possible, to stop artificially lowering payments into the system using unrealistic return assumptions, and to depoliticize management of pension funds in a way that will increase transparency and accountability. Jurisdictions at every level must adopt a sustainable system with smooth accrual of pension benefits in line with the private labor market, allowing workers to accrue benefits throughout their career that are portable and devoid of perverse incentives. It may even be necessary to change contracts over time with existing employees to bring benefits in line with the labor market, set more realistic retirement ages, and adopt formulas that avoid abuses such as pension spiking.