Welcome to the latest edition 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:
Amid budget challenges, state retirees call for an increase to their pensions by Nick Reynolds. In an article for the Casper Star-Tribune, Reynolds writes about the Wyoming Coalition for a Healthy Retirement’s efforts to secure a cost-of-living adjustment (COLA) for Wyoming’s retired public employees. Reynolds highlights the fact that Wyoming’s retired public employees have not received a COLA in 12 years, despite the rising costs of health care, groceries, and other expenses that negatively impact Wyoming’s public retirees. “These retirees have not had any pay increase, on top of their health insurance going up,” Betty Jo Beardsley, executive director of the Wyoming Public Employees Association, said in the article. “That means they have less funds to spend in their communities.” On Monday, the coalition will sponsor a town hall in Cheyenne, Wyoming to promote the re-introduction of a bill from 2019 that would offer these retirees a COLA.
NCPERS Report Urges States to Strengthen Revenues Before Recession Hits by Ending Loopholes, Subsidies by Business Wire. On Tuesday, the National Conference on Public Employee Retirement Systems (NCPERS) released a new report on how states can strengthen tax revenues ahead of another recession. The report highlights that, following the Great Recession, many state governments didn’t make their scheduled contributions to public pension systems, which threatened retirement security for public employees. NCPERS put together a list of recommendations for state governments to strengthen their tax revenues before another recession hits and to protect the fiscal health of their public pension systems. These recommendations include avoiding tax cuts, being skeptical of tax incentives and special breaks for corporations and reversing previous tax cuts.
The Public Pension Funding Crisis And The First Law of Holes by Elizabeth Bauer. In this article for Forbes, Bauer claims that the state of Illinois should switch its defined benefit system to a defined contribution 401(k)-style system for its public employees. As we’ve covered on Defined Benefit in the past, switching from a defined benefit system to a 401(k)-style system is disastrous for public employees for a number of reasons. In a defined benefit system, the investment risk is collectively pooled among all retirees in the system, whereas in a 401(k)-style plan all of the investment risks fall on the individual retiree. Furthermore, since 401(k)-plans don’t offer a guaranteed benefit for retired workers, retirees often face more financial insecurity in retirement with these types of plans.
Be sure to check back next week for the latest news in the fight for a secure retirement!