Welcome to this week’s edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement.
Before you dive into our top stories from this week, check out some stories of public employees helping their communities during the coronavirus pandemic.
Here are the top stories from this week:
Medicaid, Schools, Pregnancy, Opioids: Here’s Where Colorado’s Cuts May Hurt by Andrew Kenney. Kenney reports for Colorado Public Radio on how the Colorado legislature has “almost finished up work on a drastically slashed budget to keep Colorado’s state finances in the black.” The proposed budget from lawmakers includes skipping the state’s annual contribution to the Colorado Public Employees Retirement Association (PERA), which would likely lead to “higher costs for employees and slower benefits growth.” Karen Wick, the program manager for our coalition in Colorado, was quoted in this article about the impact the proposed budget would have on public employees, saying, “In 2022, PERA participants and employers will see an increase to their PERA contributions, and retirees may see a suspension of the increase to (the cost of living factor).”
As COVID-19 Cases Rise in Many States, State and Local Government Employees Have Serious Concerns About Their Safety, Finances and Job Outlook by the Center for State & Local Government Excellence (SLGE). A new survey from SLGE finds that public employees have concerns about safety and finances in their jobs during the coronavirus pandemic. According to the survey, “83 percent of state and local public employees are concerned about keeping their family safe from contracting the virus, while 80 percent are concerned about contracting the virus at work.” The public employees surveyed also expressed trepidation about their finances. According to SLGE, “about half of public employees are concerned about furloughs, pay and benefit reductions,” and another “40 percent are concerned about losing their jobs at a time when state and local governments already were facing steep workforce challenges.” However, despite these concerns, 61 percent of public employees surveyed agreed “that they value serving their community during this difficult time.”
Oregon Supreme Court Considers Whether To Allow PERS Pension Cuts by Jeff Mapes. On Tuesday, public employees went before the Oregon Supreme Court to challenge a 2019 state law that diverted employee contributions from the Public Employees Retirement System (PERS) to pay down debt from PERS. According to this article from Oregon Public Broadcasting, the law was brokered last year by an agreement between legislators and the state’s business community, “which wanted PERS reforms in exchange for not fighting new taxes on business for schools.” There is “no deadline for deciding the case” from the court. We have previously highlighted some of the issues with this law, writing last year that it would result “in a weakened retirement, especially for low-wage workers.” We also covered some of the potential legal issues with this plan, citing the fact that “according to the 2016 Legislative Counsel analysis, it is unconstitutional to require current employees to pay for PERS’s unfunded liability.”
Recent Wirepoints Report Offers Flawed Analysis of Public Pensions by the National Institute on Retirement Security (NIRS). NIRS recently took a look at a report from the pension skeptical Wirepoints that analyzed 148 pension plans in all 50 states and found that many of its claims were simply inaccurate. Wirepoints based its analysis on the asset-to-payout ratio of these plans but did not include important metrics like “future employee contributions, future employer contributions, investment returns, and contribution discipline” in its evaluation of these plans’ fiscal health. The reality, according to NIRS, is that “out of 148 pension systems studied by Wirepoints, all but 13 pension systems have at least eight years of expenses already professionally invested to meet future obligations. Moreover, 118 plans have ten years of funding on hand. In comparison to other government programs, these pre-funded programs are in a strong financial position, and this pre-funding substantially reduces costs to taxpayers.” NIRS goes on to note that this isn’t the first time pension funding has been misrepresented. Citing a 2010 report called “The Crisis in Local Government Pensions in the United States,” predictions were made that both Philadelphia and Boston’s pension system would run out of money by 2015 and 2019 respectively. In reality, the Philadelphia system now has $6 billion for future benefits and Boston’s system is now at 77.4 percent funded.
Recession Slams Millennials – Again by Kim Blanton. In this blog for the Center for Retirement Research at Boston College, Blanton covers how the coronavirus-driven recession is impacting Millennials. Blanton writes that “going into this pandemic, people in their 20s and 30s already had lower wages, more student debt, and less wealth than previous generations at the same age,” already putting them at a great disadvantage when it comes to saving for retirement. The current recession will be another obstacle to a secure retirement for this generation because “young adults were over-represented in the food service, hospitality, and leisure industries slammed by state shutdowns to control the pandemic. And as the recession plays out, Millennials, with their shorter tenures in the labor market, will continue to be vulnerable to layoffs.” Lawmakers can ensure Millennial public employees receive a guaranteed and secure retirement by protecting their pensions.
Be sure to check back next week for the latest news in the fight for a secure retirement!