Industry News

In November 2025, the National Association of State Retirement Administrators (NASRA) updated its issue brief, Employee Contributions to Public Pension Plans. The brief presents an analysis of employee contribution plan designs, policies and recent trends.

According to the brief, almost all state and local government employees are required to contribute to the cost of their retirement benefits. The report also indicates that about 25% to 30% of state and local government employees do not participate in Social Security. In many cases, those who do not participate in Social Security have a higher pension benefit and higher required contributions as compared with those who do participate in Social Security. 

As reported in the brief, “since 2009, 40 states increased required employee contribution rates. Higher rates in some cases apply only to new hires, and in other cases, the higher rates apply to all active plan participants. As a result of these changes, the median contribution rate paid by employees has increased.” It also added, “the median contribution rate has risen to 6.2 percent of pay for employees who also participate in Social Security, and to 9.0 percent for those who do not participate in Social Security. The most recent changes, reflecting rates in effect in October 2025, are a result of incremental increases in rates for a few plans.”

The legality of increasing employee contributions varies by state. In some states, courts have ruled that legislative efforts to increase employee contributions are a violation of the state constitution or contractual rights. However, in other states, higher employee contributions have either withstood or have not been subject to legal challenges. 

The brief also includes an appendix of employee contribution rates for over 100 public pension plans and identifies whether or not plan members have Social Security coverage.

The brief is available here.