What defines a Cost Sharing pension plan?

A cost-sharing pension plan is characterized as a statewide plan that pools contributions and benefits across multiple participating employers without maintaining separate accounts for each entity. This structure allows for a collective management of assets and liabilities, which can provide some administrative efficiencies and risk-sharing benefits among the employers involved.

In such a framework, all contributions from participating employers are combined into a single pool, and benefits are funded from this pooled resource. This approach contrasts with plans that might require individualized accounts or are exclusive to one employer, which could result in a lack of the cooperative financial management seen in cost-sharing plans. By not keeping separate accounts, a cost-sharing plan simplifies the management of the pension fund, streamlining processes for accounting and reporting.

Thus, the defining characteristic of a cost-sharing pension plan is its nature of being a statewide plan that functions without separate accounts for each employer, making it an efficient option for managing retirement benefits across various participating entities.