Welcome to this week’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.
Before we dive into our top stories from this week, check out some stories of public employees helping their communities during the coronavirus pandemic:
- Southwest Texas man plans to build ventilators to join fight against COVID-19
- Local teacher uses 3D printer to make face shield visors for medical professionals working through pandemic
- Being part of the solution’: Local seamstresses answer call for masks
- Lunches made with love keep Billings kids fed during school closures
Here are the top stories from this week:
State Workers Should Give Back by Red Jahncke. In this column for the Connecticut Examiner, claims that Connecticut public employees receive supposedly lavish salaries and pensions that should be trimmed back in the face of the coronavirus market downturn. To justify his claims, Jahncke cites research from the American Enterprise Institute (AEI), a notorious conservative think tank which produces biased research to support an anti-worker agenda throughout the country. If anything, during an economic crisis we should protect pensions for public employees since they support jobs and spur economic output. In Connecticut, for example, pension spending supported 43,559 jobs and $7.1 billion in total economic output in 2018, according to the National Institute on Retirement Security (NIRS).
New Research Finds the Number of Local Governments Offering Retirement Benefits Outside of Pension Plans Increased from 11% to 19% from 2001 to 2018 by the Center for State and Local Government Excellence (SLGE). On Tuesday, SLGE released a new research brief that showed 19 percent of large localities offered a defined contribution plan, cash balance, or hybrid plan instead of a traditional defined benefit pension for newly hired employees, an increase of eight percent from 2001. The report sampled 180 major local governments and compared them with changes at the state level with retirement plans. SLGE also found that “the volume and geography of alternative plans at the local level is similar to that of states, but localities are more likely to offer a [defined contribution] plan.” This shift is troubling because defined benefit plans are the best way to guarantee a secure retirement as opposed to defined contribution plans, which place all investment risks on individual workers.
Why National Pension Systems Are a Ticking Time Bomb by Anchalee Worrachate. In this article for Bloomberg, Worrachate misleadingly compares pensions to Social Security to argue that pensions are a “ticking time bomb.” Defined benefit pensions and Social Security are two entirely different retirement systems as pensions are funded by employers, employees, and investment earnings in a workplace, while Social Security is funded through payroll taxes to the federal government. Furthermore, in a dozen states, retired public employees can’t even collect Social Security. Comparing pensions and Social Security in this context is misleading at best. The vast majority of public pensions are on a solid financial footing to withstand a financial crisis and are not ‘ticking time bombs.’
For Workers Over 50, a Job Without Benefits Spells Long-Term Trouble by Tammy La Gorce. Gorce writes for the New York Times about a study from the Center for Retirement Research at Boston College which shows that three-quarters of workers between the ages of 50 to 62 work in jobs without an employer-provided retirement plan, with dire implications for this age group’s retirement outlook. The research found that “depending on how much time workers spent in a job without benefits from ages 50 to 62, they can expect their retirement income to be as much as 26 percent lower than that of people who spent their 50s and early 60s in positions with full benefit packages.” Dan Noonan, the Executive Director of NIRS, said in the article, “It’s important in the later years of your life to be participating in a retirement program, because typically those are the years when accrual is most significant. It’s really your last chance to build up a nest egg.”
Be sure to check back next week for the latest news in the fight for a secure retirement!