Welcome to the latest edition of This Week in Pensions! 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 the top stories from this week:
State retirees demand COLA as legislators set to receive pay raises by Carmen Foreman. It has been 12 years since retired public employees in the state of Oklahoma have received a cost-of-living adjustment (COLA). Meanwhile, Oklahoma lawmakers are seeking a 35 percent pay raise. Foreman writes, “In mid-October, Oklahoma’s Legislative Compensation Board granted legislators a 35% pay bump that will take effect on Nov. 18, 2020. The board composed of non-elected officials decided to raise legislators’ annual salaries from $35,021 to $47,500, marking their first pay raise in 20 years.” Since 2008, retired public employees have been left behind as the cost of groceries, healthcare, and housing has increased. “It looks bad, but the thing about it is they keep making those bad decisions,” said Jon Hazell, a retired teacher and 2017 Oklahoma Teacher of the Year. “Once or twice you could say it’s just a lack of thoughtfulness, but after a while, it’s almost overt. You get to wondering if they flat-out don’t care,” he continued.
Amid pension debate, corporate tax breaks remain untouched by Nadia Ramlagan. Next Tuesday, Kentucky voters head to the polls and one of the most fiercely debated topics is the state’s public pension systems. For years, Kentucky lawmakers kicked the can down the road by skipping or partially paying into the state’s pension systems while public employees paid their share each and every paycheck. Additionally, lawmakers have given away roughly $580 million in corporate tax breaks and subsidies each and every year. Ellen Yonts Suetholz, coordinator of the Kentucky Public Pension Coalition, NPPC’s coalition in-state said, “We take in less in revenue every year than we give out in tax breaks. That issue has not been addressed. No one wants to be the one that’s raising taxes or taking away some of these benefits that some of the corporations in our state enjoy.”
Public pension funding does not crowd out education – study by Hazel Bradford. According to a new study by the National Conference on Public Employee Retirement Systems (NCPERS), public pensions are not to be blamed for less public school funding. Bradford writes, “According to the study, the reasons many states and localities feel squeezed when it comes to pension plans and education is because they tend to cut progressive and stable taxes, such as income and property taxes, in good economic times, and then fill the resulting budget gaps with more risky revenue schemes, such as excise taxes and lotteries, instead of building sustainable revenue systems.” Michael Kahn, NCPERS director of research said, “A healthy tax system does not require frequent changes. On the contrary, revenue systems should be designed to help state and local governments steadily weather the ups and downs in the economy and serve as a source of stable funding for a variety of obligations, including education and pensions.”
IPERS, yes; Republicans, no by Linda DeLaughter. In an opinion piece for the Emmetsburg News in Iowa, DeLaughter correctly states that moving newly hired public employees into a defined contribution 401(k) from the state’s pension system is a horrible idea. DeLaughter writes, “Taking current or new employees out of IPERS would severely undermine the system and jeopardize retirement benefits for all public workers today and in the future. This would make it harder to retain and attract highly-qualified workers to the public sector. IPERS is a program proven to benefit all of Iowa. Other states have tried this, with very poor results.” According to the National Institute on Retirement Security’s recent report titled Examining the Experiences of States that Closed Pension Plans, states like Alaska, Kentucky, Michigan, and West Virginia, which closed their plans, have all faced their own set of challenges including increasing unfunded liabilities.
Be sure to check back next week for the latest news in the fight for a secure retirement!