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: 

A Shockingly Small Number of Americans Receive All the Traditional Sources of Retirement Income by Christy Bieber. Most retirement experts say that retirement planning should revolve around a three-legged stool that includes a defined-benefit plan, a defined contribution plan, and Social Security. In this article for the Motley Fool, however, Bieber writes that very few Americans receive retirement income from all three of these sources, leaving them at a higher risk for retirement insecurity. Bieber cites a recent report from the National Institute of Retirement Security (NIRS) which shows that less than seven percent of Americans draw income from all three sources in retirement and that only about 15 percent of Americans draw income from either a defined-benefit plan or a defined contribution plan. Policymakers should protect pensions so public employees can rely on this key part of planning for a secure retirement. 

Ranking Texas’ most underfunded public pension funds by Scott Burns. In this article for the Dallas Morning News, Burns ranks the unfunded liabilities of public pension plans across the state of Texas to insinuate that they are in poor financial shape. As we’ve written about before, comparing plans based on this metric is an incredibly distorted way of framing pension funding. An unfunded liability means that, at some point in time, a pension plan does not have enough assets to pay out retirement benefits to all of its current and future retirees. Instead of focusing solely on systems’ unfunded liabilities, policymakers and taxpayers should focus on the government’s funding discipline. By implementing and sticking to a funding plan, the system will have the ability to pay out benefits to retirees as it earns investment returns off of the contributions both employers and employees make to the plan.

Be sure to check back next week for the latest news in the fight for a secure retirement!