The Public Employee Retirement System of Idaho models excellence in several key areas critical to the long-term financial health of public pension funds, according to a new study issued by the National Institute on Retirement Security.

The study, "Lessons from Well-Funded Public Pensions: An Analysis of Six Plans that Weathered the Financial Storm" was led by Jun Peng, associate professor at the University of Arizona, and co-authored by Ilana Boivie, an economist and NIRS director of programs.

The study examined PERSI, among other selected statewide defined benefit public pension plans, to identify common elements of plans that remained well funded despite two severe economic downturns.

The study identifies six features that enabled the plans studied to remain sustainable and affordable:

* employer pension contributions that pay the full amount of the annual required contribution (ARC), and that maintain stability in the contribution rate over time;

* employee contributions to help share in the cost of the plan;

* benefit improvements, such as multiplier increases, that are actuarially valued before adoption and properly funded upon adoption;

* cost of living adjustments (COLAs) that are granted responsibly, for example through an ad hoc COLA that is amortized quickly, or an automatic COLA that is capped at a modest level;

* "anti-spiking" measures that ensure actuarial integrity and transparency in pension benefit determination; and

* economic actuarial assumptions, including both the discount rate and inflation rate that can reasonably be expected to be achieved over the long term.

Characteristics specific to PERSI that are noteworthy: employer and employees share the risk by both making contributions; contributions are collected on time and are current; and any benefit enhancements are tied to revenue streams.

"This report focuses attention on public pension plans like PERSI that are structured in ways that enabled them to weather severe market turmoil," said Diane Oakley, NIRS executive director. We hope this new study contributes to a productive, pragmatic examination of pension plans like PERSI that remained strong, sustainable and affordable even after a decade of unprecedented financial market ups and downs," Oakley said.

"Across the nation, Americans are highly concerned about their retirement prospects. A wide body of research shows that Americans with access to defined benefit pension plans have the best chance of being financially independent in their elder years.

Oakley said states such as Idaho with strong sustainable pension plans are wise to ensure their workforce is well-positioned for retirement. Otherwise, it could become a financial risk or burden to Idaho taxpayers should its older workers find they are unable to retire or must turn back to the state for assistance to make ends meet.

The full report is available at www.nirsonline.org.

NIRS is a not-for-profit, non-partisan organization.