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.
