Welcome to the latest edition of This Week in Pensions! As we do most weeks, we have gathered the best stories about 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:
- State gives away $13 billion in ’tax expenditures’ by Ronnie Ellis: while Kentucky’s annual General Fund budget is $10.5 billion, the state gives away $13 billion in tax breaks and exemptions every year. As Good Jobs First pointed out in a report released last week, corporate subsidies and tax breaks alone more than cover the annual cost of funding pensions in Kentucky.
- Teachers paid for their pensions; Kentucky failed to do the same by Tim Abrams: the Executive Director of the Kentucky Retired Teachers Association sets the record straight on the cause of Kentucky’s pension funding problems. The state government failed to contribute the full amount they owed to the pension systems for 13 straight years. That is why the pension systems are poorly funded and switching to a 401(k)-style system will make the problem worse, not better.
- The new reality of old age in America by Mary Jordan and Kevin Sullivan: the Washington Post takes a hard look at the reality of aging in America today as part of their series “The Forgotten.” 401(k)s deserve a large part of the blame for the insecurity plaguing older Americans today:
“Employers have gradually shifted from traditional pensions, with guaranteed benefits for life, to 401(k) accounts that run out when the money has been spent. Those accounts work best for the wealthy, who not only have the extra cash to invest but also use 401(k)s to shelter their income from taxes while they are working.
“People with little financial know-how often find 401(k)s confusing. Millions of people opt not to participate, or contribute too little, or take money out at the wrong time and are charged huge fees.”
- Texas Teachers returns 12.9% for year, tops benchmark for all periods ended June 30 by Christine Williamson: the Texas Teachers pension fund earned 12.9 percent investment returns in the last fiscal year. This continues a trend of public pension funds earning double-digit investment returns during the last year. Also, the fund has exceeded its assumed rate of return since the beginning of the fund. Despite the “sky-is-falling” rhetoric of anti-pension ideologues, pension plans can and do achieve their investment goals over the long term.
We’ll be taking off next week, so be sure to check back in two weeks for the latest news in the fight for a secure retirement!