As we explained last week, 2016 has been a good year so far for pensions in state legislatures across the country. However, states aren’t the only ones choosing to protect their workers’ retirement security by protecting pensions. Cities are also protecting and expanding access to pensions.
In Lincoln, NE, a pension review committee examined different options for shoring up the city’s public safety pension plan. The board then offered recommendations to the mayor and city council. In February, former San Jose mayor Chuck Reed testified before the pension review committee and recommended abandoning the pension and moving employees into a risky 401(k)-style plan. You may remember Reed, who took John Arnold’s money and led a campaign to gut pensions for San Jose’s workers. His efforts to gut pensions were rejected in San Jose and they were rejected in Lincoln too. The Lincoln pension review committee unanimously recommended the city maintain its defined benefit pension plan. Specifically, they cited the high cost associated with 401(k)-style plans. The committee did offer several recommendations on how to strengthen the pension plan, including requiring funding the pension plan at the recommended level each year.
Even better news came out of Florida this month. The Palm Beach town council decided to move back to a defined benefit pension after a failed experiment with a hybrid retirement plan. Palm Beach created the hybrid (a combo of a pension and a 401(k)-style plan) in 2012. They quickly realized they were losing workers to other municipalities that offered better retirement security to their employees. The new pension plan will be available to employees later this year.
What’s happened in Lincoln and Palm Beach continues a trend throughout the country this year. Indiana and Oklahoma both rejected efforts to undermine their teacher pension plans. Wisconsin expanded pensions by allowing new municipalities to join the Wisconsin Retirement System. Similarly, Missouri legislators created a way for municipalities to bring their pension plans into the statewide system. Alabama stuck with its pensions in the face of intense pressure from national anti-pension organizations to move to an ineffective cash balance plan. Municipal and state leaders across the country are realizing that defined benefit pensions continue to be the best retirement plan for their teachers, firefighters, and other public employees.