Iowa teachers’, public safety officers’, and public workers’ pension benefits are entitled to certain protections under state law and affirmed by court rulings. At the same time, the state does have some legal precedent that allows them to change particular aspects of retirement benefits.
In other words, Iowa pension laws allow parts of public pension benefits to be changed by future state laws, but only certain parts of those benefits.
Equable Institute partnered with Columbia Law School’s Center for Public Research and Leadership to create infographics that map states’ pension governance. Understanding the legal environment for pension policies can be confusing for both lawmakers and public workers, but illuminating legally permissible policy pathways to improve funding sustainability and ensure adequate retirement income security for states’ workforces is essential.
In the case of Iowa, state law allows the legislature to increase employee contributions. In 2010, they did just that. The Iowa Legislature increased the total employee contribution rate from 11.4% to 13.45% of employee salaries.
Changes to workers’ vesting periods, retirement age, and benefit calculations are also allowed for active employees according to Iowa law.
The legal environment is favorable for these shifts – meaning that state law and legal precedent allows for changes to these aspects of pension policy.
What’s unclear is whether Iowa can shift workers’ cost-of-living adjustments, because this issue has not been brought to court and there have not been any attempts to do so. However, existing state law indicates that this is likely legal to do so for active employees and retirees of the Municipal Fire and Police Retirement System of Iowa
It is important to note that current retirees’ benefits have greater legal protection than those of active employees. Apart from reduced or eliminated COLAs, current retirees’ benefits cannot be taken away or reduced under Iowa pension law.
Disclaimer: The information here doesn’t constitute legal advice or representation. Equable is not necessarily recommending any of the policies discussed in the infographic. Some may not work for certain states, others may not be desirable policy. Ultimately, any pension policy change should honor promises made to public workers and put them on a path to retirement security, while ensuring sustainable funding measures.