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 educators helping their communities during the coronavirus pandemic.
Here are the top stories from this week:
Before coronavirus, PERA had one of its best years in decades. Here are 3 concerns going forward by Brian Eason. In this article for the Colorado Sun, Eason writes about the potential impact the pandemic-induced recession will have on the Colorado Public Employees’ Retirement Association (PERA). One of the options PERA officials are monitoring is future action from the state legislature that would affect the system. So far, legislators have excised the state’s yearly $225 million payment to the system. However, lawmakers previously considered other cuts besides the yearly payment. This past May, for example, “budget writers rejected five more options to reduce spending on the pension, which could have added another $2.5 billion to PERA’s unfunded debt.” Lawmakers may also consider additional actions that could impact PERA, such as “other seemingly unrelated cost-saving moves, like furloughing or laying off workers” that “could also take a bite out of the pension’s finances, because PERA depends on payroll-based contributions to fund benefits.” Going forward, we will continue following the state legislature to see if they will make any additional decisions regarding PERA in the near future.
Head of Kentucky pension system says “train is on the track” for retirement plans despite COVID-19 uncertainty by Jacqueline Pitts. In this interview with the Kentucky Chamber of Commerce, the Executive Director of the Kentucky Retirement System (KRS), David Eager, gives an update on how the current economic crisis is affecting KRS. Eager said that “the system is currently cash flow positive, meaning they are bringing in more money than they are paying out” and that “he does not expect the system to experience huge issues as a result of the pandemic.” Part of the reason KRS is on more solid financial footing is that the Kentucky legislature funded “the retirement systems at the required levels,” which is a welcome change from when the legislature was “not fully paying their bills for years.”
Why Gen Z, millennial savers face America’s biggest retirement challenge, and how they can solve it by AJ Horch. Generation Z and millennials already faced difficulties in saving enough for retirement before the current economic downturn according to this article in CNBC, with “45% of millennials having less than $25,000 in personal savings.” Now, since the downturn began, they will have to face additional obstacles to retirement security, including an increase in credit card debt resulting from the pandemic’s “sudden spike in unemployment.” One way to increase retirement security for younger public employees is to protect pensions to ensure they can retire with the dignity and security they deserve after a lifetime of serving the public.
‘Alarming number’: Boomers struggle to save enough for retirement, survey finds by Dhara Singh. In this article for Yahoo! Money, Singh outlines a number of reasons why the Boomer generation is also having problems obtaining a secure retirement. According to the article, “financial firms, such as Fidelity Investments, recommend those nearing 67 to have saved 10 times their salary,” but achieving this is nearly impossible since “the shortfall for baby boomers is largely because of the late emergence of 401(k) pre-tax retirement plans.” The gradual shift from defined benefit plans to 401(k) style defined contribution plans in the private sector has made preparing for retirement much more difficult for many workers who are a part of this generation.
Be sure to check back next week for the latest news in the fight for a secure retirement!