Welcome to March’s final 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:
Kentucky lawmakers agree to fully fund teachers’ pensions without caveats in budget talks by Kevin Wheatley. In this article for WDRB, Wheatley writes about how legislators in the budget conference committee rejected the state Senate’s proposal to withhold more than $1 billion in pension funding from the Kentucky Teachers Retirement System unless benefits were cut for newly hired employees. Lawmakers are currently reconciling the rest of the state House and state Senate’s proposed budgets for the next fiscal year. We applaud this victory for Kentucky’s public employees and are relieved that educators will not be left behind.
Market rout leaves public pension funds nursing a nearly $1 trillion loss for fiscal 2020: Moody’s by Sunny Oh. Oh cites a new report from the pension skeptics at Moody’s Public Finance which claims that pension funds are doomed for the rest of the year as the coronavirus outbreak continues to affect the stock market. As we noted last week, however, the stock market could stabilize and start increasing later this year, cutting current losses. And 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.”
Will Coronavirus tip CalPERS Toward 401ks? By Brian Anderson. As we mentioned earlier, the coronavirus outbreak continues to affect the stock market and virtually every sector of the economy. As a result, pension critics are already gearing up their old, failed arguments for why defined-contribution plans like 401(k)s are the best solution for retirement security for public employees. In this article, Anderson cites the recent downturn in the stock market as evidence that public employees belong in 401(k) plans instead of pensions plans. However, unlike 401(k)s, defined benefit pension funds are not tied to the lifespan of any one individual, allowing them to pool assets and maintain an optimal balance of low-risk and high-risk investments. If public employees solely invested their retirements in 401(k)s, they would face the whims of the market on their own, which could wipe out all of their savings (as was the case for many retirees in the Great Recession). A defined benefit pension also is an economic stimulus for local communities, making them an asset during economic downturns. In California alone, according to the National Institute on Retirement Security, pension spending supported $73.7 billion in total economic output. We should protect pensions for all public employees, instead of threatening public employees’ retirements and local economies.
Kentucky OKs bill to separate county pension plan administration from state system by Rob Kozlowski. In another news story from Kentucky, Kozlowski reports for Pensions & Investments on the Kentucky General Assembly’s approval of a bill that would separate the administration and oversight of the commonwealth’s County Employees Retirement System (CERS) from the Kentucky Retirement Systems (KRS). While both systems would still maintain their separate boards, “they would share staffs to conduct daily business under the oversight of a new eight-member board called the Kentucky Public Pensions Authority consisting of members of both boards.” The bill now heads to Gov. Andy Beshear’s desk, where it’s unknown whether he will sign it into law.
Be sure to check back next week for the latest news in the fight for a secure retirement!