Pensions in the Public Sector

Olivia S. Mitchell is Executive Director of the Pension Research Council and International Foundation of Employee Benefit Plans Professor of Insurance and Risk Management at The Wharton School of the University of Pennsylvania. Edwin C. Hustead is Senior Vice President at The Hay Group, Washington, D.C.

"An essential reference tool for actuaries and others involved in government retirement systems. It also will provide insight to the general public regarding the ways tax dollars are being spent in this important arena." (The Actuarial Digest)

• PrefaceIntroduction—Olivia S. Mitchell and Edwin HusteadI. THE STRUCTURE AND FUNCTION OF PUBLIC PENSION SYSTEMSDevelopments in State and Local Pension Plans—Olivia S. Mitchell, David McCarthy, Stanley C. Wisniewski, and Paul ZornState Employee Pension Plans—Karen SteffenFederal Civilian and Military Retirement Systems—Edwin Hustead and Toni HusteadCanadian Public Sector Employee Pension Plans—Silvana PozzebonII. INVESTMENT POLICIES, REGULATION, AND REPORTINGAsset-Liability Management in the Public Sector—Michael PeskinInvestment Practices of State and Local Pension Funds: Implications for Social Security Reform—Alicia H. Munnell and Annika SundinThe Life and Times of a Public-Sector Pension Plan Before Social Security: The U.S. Navy Pension Plan in the Nineteenth Century—Robert L. Clark, Lee A. Craig, and Jack W. WilsonGovernance and Investments of Public Pensions—Michael Useem and David HessRegulation and Taxation of Public Plans: A History of Increasing Federal Influence—Roderick B. CraneDetermining the Cost of Public Pension Plans—Edwin C. HusteadIII. CHALLENGES TO PUBLIC PENSIONSGoing Private in the Public Sector: The Transition from Defined Benefit to Defined Contribution Pension Plans—Douglas ForePension Governance in the Pennsylvania State Employees' Retirement System—John BrosiusThe New Jersey Pension System—Tom BryanPublic Pensions in Washington, DC—Edwin HusteadOpting Out: The Galveston Plan and Social Security—Theresa M. WilsonThe Outlook for Public-Sector Retirement Plan Design—Cathie Eitelberg About the Contributors—John Brosius is the Executive Director of the Pennsylvania State Employees' Retirement System (SERS), with the responsibility of managing the operations of a $23B retirement fund serving 85,000 retirees and 109,000 active members employed by 110 different employer agencies. Previously Mr. Brosius was Director of the SERS Office of Financial Management; he also taught college level accounting courses and worked at Main LaFrentz & Co. He received the bachelor's degree from Bloomsburg University of Pennsylvania, and the MBA from Bucknell University. He is a Certified Public Accountant.Tom Bryan is Deputy Director, New Jersey Division of Pensions and Benefits. He advises on legal, legislative, policy, and actuarial matters for the New Jersey state retirement systems and health benefits program. He also manages the Legislative and Legal Affairs section of the Director's office, and serves as liaison with the Treasurer's office, the Governor's office, the Legislature, and other state agencies. Previously he served in the New Jersey Office of Legislative Services. Mr. Bryan earned the JD degree from Seton Hall University and the BA and MA in Political Science from Rutgers University.Robert Clark is Professor of Economics and Business Management at North Carolina State University. He has published widely on retirement and pension policy, employee benefit policy, the economic well-being of the elderly, and international pensions. Professor Clark serves as Senior Fellow at the Center for the Study of Aging and Human Development at Duke University and as Senior Research Fellow at the Center for Demographic Studies at Duke University. Previous academic positions include a faculty appointment at the Fuqua School of Business, Duke University, and service as Interim Dean of the College of Management at North Carolina State. Dr. Clark earned the bachelor's degree from Millsaps College and the Ph.D. degree in economics from Duke University.Lee Craig is an Associate Professor of economics at North Carolina State University, where he teaches economic and business history. His research focuses on the history of pensions, productivity growth, and international economic integration. Dr. Craig is a research economist at the National Bureau of Economic Research, and he has previously held appointments at Duke University and Universitat Munchen. He received the bachelor's and master's degree from Ball State University and the MA and PhD from Indiana University.Rod Crane is a Director of the National Government Compliance practice of The Segal Company, and a company Vice President. His interests include the design and administration of public sector retirement and saving plans, including 401(k) and 403(b) plans. Previously he was counsel to the North Dakota Legislative Council's Committee on Public Employee Retirement Programs. Mr. Crane received his bachelor's degree in economics from the University of North Dakota, and his JD from the University of North Dakota School of Law.Cathie Eitelberg is the Director of Government Practice for The Segal Company where she coordinates and participates in the firm's consulting, compliance, and actuarial services provided to the public sector. Her special interests include public employee benefits, industry trends, and federal policy as it affects benefits. Concurrently Ms. Eitelberg serves as an adviser to the Government Finance Officers Association Committee on Retirement Benefits Administration. Previously she worked at the National Conference of State Legislatures and the Government Finance Officers Association. She earned the bachelor's in business management from the University of Maryland.Douglas Fore is manager of Pension and Economic research at TIAA-CREF. His research interests include the determinants of pension type. Dr. Fore earned the PhD from the University of Colorado.James Francis is Chief Economist for the Florida State Board of Administration. He is responsible for the FRS and Chiles Endowment investment plans, asset allocation, risk management, performance measurement, and total fund investment research, as well as for the SBA Information Center, an internal library and research services unit. He has been vice-president and consulting economist for the consulting firm CFF Associates, Inc., Director of Research and Analysis for the Florida Department of Revenue, and House Economist for the Florida House of Representatives. He holds a Ph.D. in economics from the Florida State University.David Hess is a doctoral candidate in the Management Department at the Wharton School of the University of Pennsylvania. His research focuses on corporate governance and corporate social responsibility. He earned the bachelor's in economics from Grinnell College and the JD from the University of Iowa College of Law.Edwin C. Hustead is Senior Vice President in charge of the Hay/Huggins Washington, DC office and governmental actuarial and benefits consulting. He is also the practice leader of the Hay Group for governmental consulting. His interests focus on health insurance, social insurance, pension reform, and policy analysis. Previously he served as Chief Actuary of the Federal Office of Personnel Management, charged with responsibility for the actuarial analysis of the Civil Service Retirement System and the Federal Employees Health Benefits System. Mr. Hustead is a Member and Director of the American Academy of Actuaries, a Fellow of the Society of Actuaries, and an Enrolled Actuary.Toni Hustead is Chief of the Veterans Affairs Branch of the US Office of Management and Budget. She oversees the development of veterans' programs and policies, and their integration with other Federal benefits. Previously she was an international benefits consultant for the Hay Group, serving as the European Director of Benefits Consulting, and served as Chief Actuary for the Department of Defense. She is a Member of the American Academy of Actuaries, and an Associate of the Society of Actuaries.David McCarthy is a doctoral candidate in the Insurance and Risk Management Department at the Wharton School of the University of Pennsylvania. His research focuses on the economics, econometrics, and finance of pensions. Previously he worked in a South African life insurance firm where he initiated the examination process for the Faculty of Actuaries, Edinburgh and expects to qualify this year. He earned a BS in economic science and also in mathematical statistics from the University of the Witwatersrand, Johannesburg.Olivia S. Mitchell is the International Foundation of Employee Benefit Plans Professor of Insurance and Risk Management, and Executive Director of the Pension Research Council, of the Wharton School at the University of Pennsylvania. Her research focuses on the economics of retirement and benefits, social security and pensions, and public as well as private insurance. Dr. Mitchell currently serves on the Board of the National Academy of Social Insurance, the Steering Committee for the University of Michigan's HRS/AHEAD projects, and she is a Research Associate at the National Bureau of Economic Research. Previously Dr. Mitchell served on the Board of Directors for Alexander and Alexander Services Inc., and she has held academic appointments at Cornell University and Harvard University. Dr. Mitchell earned the BS in economics from Harvard University, and the MS and PhD in economics from the University of Wisconsin.Alicia Munnell is the Peter F. Drucker Professor of Management Sciences at Boston College's Carroll School of Management and Director of the Boston College Center for Retirement Research. Her research interests include pension and social security policy, and the determinants of productivity; in addition she has analyzed bank mergers and tax policy. Previously Dr. Munnell was a Member of the President's Council of Economic Advisers and Assistant Secretary of the Treasury for Economic Policy. She also was Director of Research and Senior Vice President at the Boston Federal Reserve Bank. Among other affiliations, Dr. Munnell is on the Board of the Pension Research Council, and she cofounded the National Academy of Social Insurance. She earned the bachelor's from Wellesley College, the MA from Boston University, and the PhD from Harvard University.Michael Peskin is a principal in Morgan Stanley's Global Pension Group where he heads the unit responsible for helping insurers, corporate plan sponsors, and others, with investment strategy and asset/liability studies in a corporate financial framework. His widely published research includes strategic asset allocation and benefit financial theory and he has published widely on pension finance. He is an Associate of the Society of Actuaries and the Institute of Actuaries, a Fellow of the Conference on Consulting Actuaries, and a Member of the American Academy of Actuaries. Previously he worked at Buck Consultants and was President of Michael Peskin Associates, Inc.Silvana Pozzebon is Associate Professor of Industrial Relations at the Ecole des Hautes Etudes Commerciales, the business school at the University of Montreal. Her areas of interest include union-management relations, as well as private and public benefits including workers' compensation, health and safety management, and pensions. She earned the bachelor's degree in economics from Concordia University in Montreal, and both the MS and PhD degrees from Cornell University.Kevin SigRist is the Assistant Chief Economist at the Florida State Board of Administration. His principal research responsibilities are in investment policy and performance measurement. Previously, he was responsible for assessing foreign country risk and preparing economic forecasts at Wells Fargo Company. He has worked as an econometrician and tax analyst at the Missouri State Budget Office and a research assistant at the Center for the Study of American Business at Washington University in St. Louis. He holds the BS in economics from the University of Wisconsin-Oshkosh and MA in economics from Washington University in St. LouisKaren Steffen is a Principal with the Seattle office of Milliman & Robertson, Inc. Her primary practice is in the area of public employee benefit systems, with a focus on retirement and employee benefit plans, actuarial valuation and funding strategies, and post-retirement benefits. She also consults on pension calculations in marital dissolution cases. She is a Fellow of the Society of Actuaries, a Member of the Conference of Consulting Actuaries, a Member of the American Academy of Actuaries, and an Enrolled Actuary. Ms Steffen earned the bachelor's degree in mathematics from the University of Michigan.Annika Sunden is the Associate Director for Research at Boston College's Center for Retirement Research. Her research interests include the economics of retirement, pensions, and social security, and the determinants of savings behavior. She previously worked at the Federal Reserve Board on the Survey of Consumer Finance. Dr. Sunden received the Ph.D. degree in labor economics from Cornell University.Kenneth Trager is the Total Fund Research Manager at the Florida State Board of Administration. His research interests include applied business cycle theory, regional economic development, tax incidence, and political economy. Previously Dr. Trager served as a Senior Economist in the Florida Legislature's Joint Legislative Management Committee and as the Florida Statistical Analysis Center Director. He earned a PhD in economics from the New School for Social Research.Michael Useem is the William and Jacalyn Egan Professor of Management and Director of the Center for Leadership and Change Management at the Wharton School, University of Pennsylvania. His research interests focus on corporate organization, corporate ownership, and governance, as well as leadership in both the private and public sectors. He has consulted with numerous private institutions as well as government agencies, and he offers programs for managers throughout Latin America and Asia as well as Europe. Among other affiliations Dr. Useem serves on the Board for the Pension Research Council. He earned the bachelor's degree from the University of Michigan, and the M.A. and Ph.D. from Harvard University.Jack Wilson is Head of the Department of Business Management in the North Carolina State University's College of Management. His research concentrates on financial markets, with a focus on market volatility and market panics. Dr. Wilson's academic career has included appointments at Duke and Princeton Universities as well as the Universities of Maryland, Oklahoma, and Bowling Green. He earned the bachelor's degree in finance, as well as the M.A. and Ph.D. in economics, from the University of Oklahoma.Theresa M. Wilson is a policy analyst with the Office of Retirement Policy at the Social Security Administration. Her research interests include Social Security solvency, women's retirement policy and women's labor force participation. She has a master of Public Administration from the University of Washington Graduate School of Public Affairs.Stan Wisniewksi is a senior professional associate at the National Education Association where he specializes in pension, health care, and other benefits policy. His research interests include public pension plans with a special focus on teacher pensions, compensation policy, labor market trends and collective bargaining, and healthcare issues. He previously served on the faculty at American University and Howard University; was research director for the Service Employees International Union; held the position of President of Workplace Economics Inc.; and has been a practicing attorney and expert witness. Dr. Wisniewski earned the bachelor's degree from Allentown College of St. Francis de Sales, and his M.A. and Ph.D. in economics from the Catholic University of America. He also holds the J.D. degree from the University of Maryland School of Law.Paul Zorn is Director of Governmental Research at Gabriel, Roeder, Smith and Co. in the firm's Southfield, Michigan office. He specializes in research on public retirement systems and employee benefit plans, and he advises on federal/state accounting standards, benefit policies, and social security. Previously he managed the Research Center at the Government Finance Officers Association where he was instrumental in developing the PENDAT database.