A new issue brief from EPI provides tools for quantifying the impact of benefit cuts on workers and taxpayers.
In Understanding Cuts to Public Pensions, EPI economist Monique Morrissey provides context and practical help for understanding proposed cuts to employer-provided pension benefits including changes to benefit formulas, increased retirement ages, and reduced cost-of-living adjustments (COLAs).
“Benefit cuts that have already been enacted in many parts of the country would fully offset or more the impact of the 2008 financial crisis, yet state and local policymakers are proposing more cuts that will have a devastating impact on workers,” said Morrissey. “One reason the real impact of COLA cuts in Detroit and elsewhere has been minimized is that they are poorly understood.”
This primer is organized as a series of 10 steps to assess the impact of pension cuts and ends with a specific example of the percentage change in lifetime benefits, measured in real terms, received by a prototypical worker under four different pension plan changes. It provides guidance on using alternative measures as well.