Welcome to August’s last 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:
If COVID-19 Prompts Teacher Retirements, Pensions in Jeopardy by Lee Barney. In this article for Plan Sponsor, Barney writes about a recent presentation from the National Institute on Retirement Security (NIRS) on the impact of the coronavirus pandemic on public teachers. If large numbers of public educators retire early due to health-related concerns from the pandemic, Barney writes, this may put more pressure on pension systems due to lower employee contributions. However, the vast majority of public educators will serve long careers in public service which could help offset the early retirements. Rocky Joyner, a participant in the webinar who is the Senior Vice President and Actuary at Segal, said, “Sixty-five percent of teachers are expected to serve 30 years or more, and 68% will serve until their retirement eligibility.” It’s critical that plan sponsors practice funding discipline in light of this potential challenge to maintain optimal funding for their plans.
Rolling back pension progress is unhealthy by Curtis Shelton. In this article for the Oklahoma Council of Public Affairs (OCPA), Shelton misleadingly writes that taxpayers play an outsized role in funding pensions. According to the National Association of State Retirement Administrators (NASRA), state and local governments spent less than five percent of their overall spending on pensions in the fiscal year 2017. NASRA has also found that public pensions receive most of their funding from investment earnings, not employer contributions, as investments have provided 63 percent of all public pension funding since 1989. Furthermore, pensions provide an economic benefit for taxpayers. According to NIRS, pension benefits supported more than $200 billion in federal, state, and local tax revenue in the fiscal year 2016, including more than half a billion dollars in Oklahoma alone. Whenever pension opponents claim that pensions are not beneficial for taxpayers, this should be taken with a grain of salt considering the evidence shows the positive impact pensions have on the local economy at a low cost.
Be sure to check back in two weeks for the latest news in the fight for a secure retirement!