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Is it Enough to Offset Unpredictable Earnings?

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Contributions to public pensions have been on a steady rise since 2005, after being relatively flat for a decade.

Earnings from those pensions, however, have vacillated up and down.

“Variability in earnings seems to have increased since 2001, and systems are turning towards contributions to steady revenue flows,” said Phillip Vidal, chief of the Census Bureau's Pensions Statistics Branch. “In three of the last five years, contributions have exceeded earnings. Employees and employers have had to contribute more.

The chart below shows the trend in public pension contributions and revenue since 1993.

Public Pensions Graph

In 2016, earnings were lower than they were in 1993 while contributions were nearly three times higher.

The increased volatility of earnings could in theory be caused partly by pensions systems shifting larger portions of their holdings into assets subject to market fluctuations, such as corporate stocks, international securities and alternative investments.

“Earnings have experienced higher highs and lower lows since 2002, but contributions have steadily marched upwards,” Vidal said.

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Page Last Revised - October 8, 2021
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