Welcome to today’s 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:
House passes bills to help health departments on pensions; may mean increased public-health taxes by Melissa Patrick. Patrick writes about House Bill 171 in Kentucky, which passed the state House of Representatives on February 13. The bill stems from a law that was passed during a special legislative session last summer which gave “health departments, regional universities, and quasi-governmental agencies the choice of staying in the Kentucky Retirement System (KRS) and paying the full obligations or leaving the system, either by paying a lump sum or buying their way out over time. Those that choose to leave would need to move employees to a 401(k)-type plan.” Under House Bill 171, these groups would only pay what they owe KRS divided evenly over the next 27 years, resulting in some district and county health departments owing more money. Additionally, employees whose employers leave KRS would see their retirement devastated, especially if their pension accounts are frozen and they are switched to a defined contribution 401(k)-style plan.
Governor’s office concerned about proposed solutions to state pension crisis by Nick Reynolds. In this article for the Casper Star-Tribune, Reynolds covers Senate File 108, a bill in Wyoming that would raise all current mandatory retirement contributions from state employees. Wyoming Governor Mark Gordon has expressed concern about the proposal, and his chief of staff argued that the increased contributions would actually decrease benefits for current state employees. We will continue monitoring Senate File 108 and other bills in Wyoming that would impact the retirement security of the state’s current and retired public employees.
The truth about ‘greedy’ seniors and the ‘war’ between generations by Mark Miller. In this article for Reuters, Miller writes about the financial distress some older households face and dispels a myth about retirees being greedy by sapping financial resources from younger people. According to a new survey from AARP, about one-third of midlife adults with at least one living parent provide financial support to them, usually by helping to pay for groceries and medical bills. The survey also found that “more than half of midlife adults (54%) provided $1,000 or more to their parents in the last year; within that group, 34% provided help ranging as high as $5,000, and 13% provided help as high as $10,000.” So the notion that retirees are selfishly hoarding money for trips to the Bahamas is simply not true; many of them rely on younger adults to help pay for everyday necessities.
Alabama House okays proposed teacher retirement change by Kim Chandler. Just across the Georgia border, the Alabama House of Representatives on Tuesday unanimously approved a bill that would change the state’s Teachers’ Retirement System in an effort to recruit more educators. There are currently two tiers in the state’s Teachers’ Retirement System: one for employees hired before 2013 and another for employees if they were hired on or after Jan. 1, 2013. Under the bill, a new third tier would be created which would allow newly hired educators to retire at any age after working for 30 years with up to 80 percent of their final salary. All employees in Tier 2 would also be switched to the proposed Tier 3 unless they opted out of it. While this bill still has to clear the state Senate and the governor’s office, we’re encouraged to see that members of the Alabama House of Representatives understand the value pensions play in recruiting and retaining public servants.
Pension overhaul wins legislative OK by Dan McKay. In this article for the Albuquerque Journal, McKay writes about the New Mexico legislature’s passing of Senate Bill 72, which would reduce the unfunded liability of the Public Employees Retirement Association of New Mexico by $700 million, eventually eliminating it within 25 years. The legislation would also preserve COLAs for current and future retirees, with a minimum of .5% and a maximum of 3%. Even though both houses of the state legislature have passed the bill, it must go back to the state Senate before it can become law due to a technical change made by the state House of Representatives.
Be sure to check back next week for the latest news in the fight for a secure retirement!