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:
Wyoming’s public employees shouldn’t bear brunt of revenue crisis by Verna Kay Garcia. In a letter to the editor for the Wyoming Tribune-Eagle, retired social worker Garcia writes about why the hard-earned pensions of the state’s public employees should be protected. Garcia accurately notes that the Wyoming Retirement System distributes benefits to almost 80,000 active and retired public employees throughout the state and that, according to AARP, these benefits create a large economic impact for the state’s economy, as “retired public employees’s spending supports 3,358 jobs and $487 million in economic output in the state.” She also points out that there are several other options for addressing the state’s budget shortfalls, including tapping into the state’s well-funded rainy day funds and utilizing funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed in March. We couldn’t agree more that Wyoming’s leaders should defend the earned benefits of thousands of retired public employees like Garcia to protect both their retirement security and a critical source of economic benefits throughout the state.
Our Public Pensions In Crisis by Carrie McCabe. In this article for Forbes, McCabe cites research to claim that public pensions are supposedly in a state of crisis. Long story short, this is not true. McCabe uses misleading data from the Pew Charitable Trusts, a staunch opponent of public pensions, that ranks every state’s pension funding status. Pension opponents sometimes rank states based on this metric as a scare tactic to push an ulterior motive, such as arguing for stress testing in McCabe’s case. When organizations like Pew state that stress testing should be instituted, they either ignore or do not seem to realize that most public pension plans already conduct stress testing to determine what a plan’s actuarially required contribution (ARC) should be. When a plan itself conducts stress testing, it takes into account the plan’s investment performance over the long term to calculate the ARC that is necessary for it to achieve optimal funding. Policymakers would be wise to steer clear of Pew’s recommendations and listen to the experts at the plans themselves to gain an unbiased view of a plan’s funded status.
What the Coronavirus Means for the Future of Financial Planning by Christine Benz. In this article for Morning Star, Benz examines the future of financial planning in the wake of the coronavirus-induced economic crisis. The current economic slowdown is disproportionately impacting older workers who are close to retiring, Benz notes, as this age group has one of the highest unemployment rates during this crisis. Benz also writes that “in previous recessions, it has also taken older unemployed workers a much longer time to become re-employed than younger ones.” These layoffs create added pressure for these workers to retire early, with wide-ranging consequences for their retirement security, as those who retire early ultimately save less for retirement, retire with lower Social Security benefits, and face higher than expected healthcare costs in retirement. This article is further proof that pensions are more than critical than ever, especially for those who are nearing retirement, as they provide the economic security for retired public employees to afford the increasing costs of everyday necessities like healthcare, housing, groceries, transportation, and more.
Older and Self-Employed – a Diverse Lot by the Center for Retirement Research at Boston College. A new report from the Center for Retirement Research at Boston College found that one out of five workers 50 years or older is self-employed and that they are a diverse group. Seventy-five percent of these workers have lower-wage occupations with job titles like “caregiver, cleaner, farmer, artist, and beauty industry worker,” and they are most likely to identify as women or Hispanic. The study notes that members of this group would prefer to fully retire but can’t due to economic reasons. This report is another reason why protecting pensions is so important to keep older workers from falling into poverty and working additional jobs to make ends meet in their retirement.
Be sure to check back next week for the latest news in the fight for a secure retirement!
