Welcome to the latest edition of This Week in Pensions! As we do each week, we have gathered the top stories on pensions and retirement security from the previous week. This is the news you need to know in the fight for a secure retirement.
Here are this week’s top stories:
- MIT, Yale and NYU sued over charging excessive DC plan fees by James Comtois: this week three class-action lawsuits were filed against three major universities alleging that the universities failed to uphold their fiduciary duties by not curbing excessive fees for their retirement plans. As we know, the excessive fees often charged to manage 401(k)s are one of their major weaknesses, unlike professionally managed defined benefit pension plans.
- N.J. presses for hedge fund savings by Robert Steyer: earlier this month, the New Jersey State Investment Council voted to reduce its investments in hedge funds and also require hedge funds to charge lower fees for managing the pension fund’s investments. This decision follows a trend of public pension funds reducing their investments in hedge funds, which have become notorious for underperforming while also charging exorbitant fees.
- Here’s how Houston can fix its pension problem by Joe Martin: this week the Kinder Institute at Rice University released a report on the underfunding of Houston’s public pension systems. The report examines the causes of the current underfunding and also proposes four potential solutions, while noting that no single change can fix the underfunding of the systems. The report clearly lays out that the city failed to make its full contributions to the pension funds for years and that this was a major contributor to the underfunding of the systems.
Finally, this Sunday, August 14, is the 81st anniversary of the Social Security Act! President Franklin Roosevelt signed the law to protect “against poverty-ridden old age.” While we focus on protecting public pensions here at NPPC, we know that Social Security is an important part of a secure retirement for all working families. We also know that in twelve states and parts of three others, public employees do not participate in Social Security and, therefore, must rely exclusively on their defined benefit pension for their retirement. This makes it all the more important that we continue the fight to protect public pensions across the country.
Be sure to check back next week for the latest news in the fight for a secure retirement!