The contributions which state and local employees contribute to their pension plans have increased in 41 states, due to substantial reform that followed the 2007-2009 Great Recession and its aftermath.

In its Employee Contributions to Pension Plans issue brief, the National Association of Retirement Administrators (NASRA) shows that the median contribution from employees, which is generally deducted from salaries,  has escalated from a flat 5 percent in the early years of this century to  6.2 percent.  For the 25 to 30 percent of employees whose states and local governments do not participate in Social Security, the median contribution has increased from 8 percent to 9 percent. 

While employee pension contribution rates may be set through collective bargaining in states with a strong union presence, contribution rates are most often established by legislatures, or sometimes by retirement boards. Employee contributions covered 12 percent of public pension revenues from 1995-2024, as shown in the NASRA chart directly below. Investment earnings during that period covered 59 percent of pension revenue sources, with employers contributing 30 percent.

As with all pension information, individual plans and state policies differ greatly. In some cases, increased contribution rates fall on newer employees, while those with more tenure are kept at previous contribution rates. For example, in Arizona, a legal ruling in 2012 halted a legislative effort to impose a higher contribution level on existing employees. Other states, like New Hampshire, New Mexico and Oregon have “withstood legal challenges,” according to the brief.

NASRA also points to a growing number of states in which employees are asked to share risk, with the potential for a rise—or fall-- in the contribution rate “depending on the pension plan’s actuarial condition or other factors.”  An increase or decrease in contribution rate might be tied to a pension plan’s investment performance, for example, or to the employer contribution exceeding – or falling short of -- its actuarially determined contribution.

The following map, taken from the brief, shows that all but nine states experienced a rise in employee contributions. One other difference from now and past practice is that almost all pension plans now require some employee contribution. According to Alex Brown, NASRA research manager, in the past, there were more plans in which employees were not asked to contribute. For example, Florida was non-contributory until 2011, when it established a 3 percent employee contribution. Virginia went from non-contributory status to a 5 percent employee contribution in 2010.

An appendix to the brief provides details on multiple plans, including information on both state and municipal systems that include general employees, teachers and public safety employees. Contribution rates vary, even within the same systems, and depend on such factors as hiring date, legal issues, pension actuarial status, state and local policies, and the existence of hybrid and other retirement plan options that provide employee choice in balancing payroll contributions with plan structure and benefits. 

The brief also provides links to related NASRA research, including its January 2019 report “In-depth: Risk Sharing in Public Retirement Plans” and its September 2025 Issue Brief on “State Hybrid Retirement Plans.”

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