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:
Senate approves state budget that could take $1.13 billion from teacher pensions by John Cheves. In this article for the Lexington Herald-Leader, Cheves writes about the Kentucky state Senate’s approval of a two-year budget that would withhold $1.13 billion million of pension funding from the Kentucky Teachers’ Retirement System unless benefits are cut for newly hired employees. The budget now goes to the state House, and a committee of legislators from the state House and the state Senate will negotiate a final budget that has to be approved before the legislative session adjourns on April 15. Since the state House did not concur with the Senate version before recessing, the budget now goes to a committee of legislators from the state House and the state Senate. They will negotiate a final budget that has to be approved before the legislative session adjourns on April 15. We will continue to ensure that pensions are protected for all of Kentucky’s public employees.
What the Coronavirus Stock Meltdown Could Mean for Pensions by Liz Farmer. With the coronavirus outbreak wreaking havoc on the global economy, Farmer writes for Route Fifty about how public pensions may fare in the near future. Despite the volatility in the stock market, state and local governments will not face a strain in their budgets for a number of reasons, including the idea that “the markets could stabilize and even start inching back upward before the fiscal year ends” which “would help cut the current losses.” Farmer also notes that “In addition, because of the way pension accounting works, any annual losses or gains are smoothed out over several years so that governments don’t get a huge jump in their annual pension bill.” Pensions remain the best way to guarantee retirement security as opposed to defined contribution plans like 401(k)s because defined benefit pensions are not tied to the lifespan of any one individual since assets are pooled.
Yes, we value our schoolteachers — and already pay them pretty well by Jon Caldara. In this column for Colorado Politics, Caldara takes aim at the state’s Public Employees Retirement Association (PERA) and educators who receive pension benefits. In the column, Caldara falsely claims that pension benefits are “extravagant” and that all educators should be switched to a 401(k) style defined contribution plan. However, this couldn’t be further from the truth. According to the National Institute on Retirement Security (NIRS), the average pension benefit in Colorado was $34,817 a year, a modest benefit considering most PERA retirees do not receive Social Security. Retirement experts estimate one should earn at least 80 percent of their yearly salary before retirement to replace their lost income. The notion that that benefit is extravagant is simply not rooted in the reality of retirement planning.
Be sure to check back next week for the latest news in the fight for a secure retirement!