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Employee Contributions to Public Pension Plans
Source: NASRA

Unlike in the private sector, nearly all employees of state and local government are required to share in the
cost of their retirement benefit. Employee contributions typically are set as a percentage of salary by
statute or by the retirement board. Although investment earnings and employer contributions account for a
larger portion of total public pension fund revenues (see Figure 1), by providing a consistent and predictable
stream of revenue to public pension funds, contributions from employees fill a vital role in financing
pension benefits.i Reforms made in the wake of the 2008-09 market decline included higher employee
contribution rates in many states. This issue brief examines employee contribution plan designs, policies
and recent trends.

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