Welcome to this month’s first 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 educators helping their communities during the coronavirus pandemic.
Here are the top stories from this week:
Governor signs Cost of Living Adjustment for state pensioners by the Oklahoma House of Representatives. Four months ago, Oklahoma Gov. Kevin Stitt signed House Bill 3350 into law, which granted most of Oklahoma’s retired public employees their first cost-of-living adjustment (COLA) in 12 years. Yesterday, Gov. Stitt and the lead sponsor of the bill, Rep. Avery Frix, joined retired public employees from across the state in a ceremonial bill signing marking the achievement. The legislation, which took effect on July 1, phases in a COLA depending on how long a public employee has been retired. Those who have been retired for five years or more as of July 1 will receive a four percent increase in their pension benefits, and those who have been retired for at least two years, but not longer than five, as of the same day will receive a two percent increase.
Oregon PERS: Oregon Supreme Court upholds lawmakers’ changes to public pension benefits by Ted Sickinger. Yesterday, the Oregon Supreme Court upheld a 2019 state law that diverted employee contributions from the Public Employees Retirement System (PERS) to pay down debt from PERS. The Court’s decision will negatively impact Oregon’s public employees, who will receive fewer benefits when they retire due to the lowered employee contributions. Last year, we previously highlighted some of the issues with this law, writing that it would also be especially punishing because public employees will have to divert part of their paychecks to PERS’ unfunded liability instead of contributing to their own retirement.
States Pull Back on Pension Payments as Virus Ravages Revenue by Martin Z Braun. In this article for Bloomberg, Braun wrote about how the states of Colorado and South Carolina have foregone making pension payments in light of the coronavirus-driven economic crisis. In Colorado, the state legislature decided in June to skip an additional $225 million payment to the Public Employees’ Retirement Association, and legislators in South Carolina chose not to implement a one percent increase in employer contributions to the South Carolina Retirement System for the next fiscal year. It’s critical that states practice funding discipline for their pension systems, especially during economic downturns, as the states that did not practice fiscal discipline leading up to the Great Recession ultimately experienced more financial difficulties following the financial crisis.
Retirement worries keep rising: Reports by Emile Hallez. In this article for Investment News, Hallez wrote about a new survey from Charles Schwab which shows that 44 percent of people said retirement security is a major source of stress, which is an increase from the 38 percent of people who said the same thing in 2019. Hallez also highlighted a separate report from the Alliance for Retirement Lifetime Income that discovered roughly 20 percent of people between the ages of 56 to 75 are postponing retirement due to the coronavirus pandemic, a number equal to roughly 3.2 million Americans. The anxiety and concern many are experiencing about their retirement is further proof that defined-benefit pensions are an important resource for public employees, as they are able to earn a secure and dignified retirement after a lifetime of service to the public.
Be sure to check back next week for the latest news in the fight for a secure retirement!