State and local governments and public pension systems are interested in how today’s high inflation might affect their DB plans.
This article addresses the likely impact on:
The article, which was published in the Fall 2022 issue of PERSist, the newsletter of National Conference on Public Employee Retirement Systems (NCPERS), can be downloaded here with permission from NCPERS.
Except for some COLA designs and potential investment impacts, periods of high inflation generally do not have a direct, immediate impact on public pensions.
Typically, the effect is delayed and is based on other factors related to inflation; and may not have as great an impact on plan costs as the prices of goods and services.
To understand the potential impact, plan sponsors and their actuaries could thoughtfully model projection scenarios where these factors are considered.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.