Welcome to the latest edition of This Week in Pensions! As we do each week, we have gathered the best stories about pensions and retirement security. This is the news you need to know in the fight for a secure retirement.
Here are this week’s top stories:
- The truth behind the big money efforts to change pensions in Alabama by Tom Krebs: a Securities lawyer offers a devastating critique of the effort to turn Alabama’s public pensions into a defined contribution plan. He calls out John Arnold, the Pew Charitable Trusts, and the Alabama Policy Institute for their “hatchet job on RSA.” As he says: “Not a single one of these… reports acknowledges that before the 2008 Financial Crisis RSA was over 100 percent funded and, but for Wall Street’s gross violations of law, a relaxed securities regulatory scheme and the Alabama Legislature’s unfunded cost of living adjustment increases, RSA would be 100 percent funded today.”
- New Jersey Pension to Cut $9 Billion Hedge Fund Bet in Half by Terrence Dopp, Katia Porzecanski, and Stacie Sherman: this week the New Jersey Investment Council voted to reduce its investment in hedge funds after hedge funds delivered another year of weak returns. The decision in New Jersey follows similar decisions in New York and California as hedge funds have failed to live up to their hype, while charging exorbitant fees.
- CalPERS is well prepared for market’s ups and downs by Rob Feckner: the current president of the CalPERS board of administration cautions against overreacting to low investment returns this year. Pensions require long-term thinking and that’s why “That’s why we don’t overreact when our investment returns soar to 18 percent, as they did just two years ago, or when they fall, as they did this year. We invest for decades, not one year, not even 10.”
- How Not to Die Hungry: Turn Your 401(k) Into a Pension by Ben Steverman: one of the advantages of defined benefit pensions is that they pay a guaranteed monthly benefit for life. Retirees do not have to worry about outliving their pension benefits. 401(k) participants don’t have this guarantee and this article examines some of the challenges facing retirees deciding how to use their 401(k) savings.
Be sure to check back next week for the latest news in the fight for a secure retirement!