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:
- Osage teacher Brent Jennings finds quick way to make masks for healthcare workers
- Coronavirus: SF teachers pledge stimulus checks to undocumented immigrants left out of federal aid
- Local first responders rise to the occasion
- Highland County educators spearheading coalition to provide face shields for health care workers
Here are the top stories from this week:
Recap of the Coronavirus-Shortened Legislative Session by Tom Kenny. On Wednesday, the Kentucky legislature wrapped up its legislative session. The legislature passed a one-year spending plan that included fully funding the commonwealth’s public pension systems. This is a great victory for all of Kentucky’s hard-working public employees.
Despite the news stories above highlighting how public employees are keeping our communities safe, healthy, and fed, anti-pension opponents are taking advantage of the crisis to spread false information:
Level retiree playing field by Ted Bathurst. In this letter to the editor for the Dallas Morning News, Bathurst falsely claims that due to the COVID-19 crisis “state and local governments will request a… bailout for their pension plans” to argue that public employees should all switch to defined-contribution retirement plans. First, no pension system in the country has made this request. Second, switching to 401(k)s will only exacerbate the state’s financial problems. As we have noted before, closing systems have come at a great cost to municipalities. Additionally, without an adequate retirement benefit, retirees are put at a higher risk of experiencing poverty, needing to rely on government aid to make ends meet. These defined-contribution plans all put all of the market risks on the individual worker. Pensions, on the other hand, are pooled collectively among its members, leaving them less vulnerable to market downturns and guaranteeing a secure retirement for its members after they have served the public.
Don’t use coronavirus as excuse to bail out state, local governments that have mismanaged finances for decades by Joshua Rauh. In this article for Fox Business, Rauh misleadingly uses the term unfunded liability to argue why state and local governments shouldn’t receive any funding in a coronavirus relief package from the federal government. First, any state aid in the CARES Act passed by Congress has been earmarked for states to handle the extraordinary expense incurred during this crisis. Rauh writes that we should “consider the colossal gaps between the retirement pensions that states promise public employees like teachers and police, and the money they set aside to meet those promises. These unfunded liabilities grew from $2.6 trillion at the end of 2009 to $4.1 trillion at the end of 2019, despite a historic bull market.” However, as we’ve previously written, an unfunded liability means that at “a specific point in time, the pension plan does not have the full amount of money it will need to pay out ALL of the retirement benefits it will owe in the future to ALL of its current and former employees.” This complete payout of benefits is something that has never happened before. It’s misleading to use this to justify slashing earned benefits for the public employees who put themselves at great risk to protect us and our communities each and every day.
Be sure to check back next week for the latest news in the fight for a secure retirement!