Welcome to December’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 public employees helping their communities during the coronavirus pandemic.
Here are the top stories from this week:
‘Reforms’ to public sector pension plans have all reduced employee benefits by Dave Hannon. Hannon, who serves as the Secretary/Treasurer of Connecticut Health Care Associates District 1199, wrote this op-ed in response to an editorial from Joe DeLong, the Executive Director and CEO of the Connecticut Conference of Municipalities. In DeLong’s editorial, he claims that Governor Ned Lamont should “reform” public pensions in his upcoming budget. However, Hannon points out that public employees across the state have already made sacrifices to shore up pension funding. These sacrifices include cuts to their benefits by seeing “a decrease in the multiplier that decides how much money they end up receiving in their pensions,” as well as “the introduction of a ‘hybrid’ plan where some of their retirement is now invested into a 401k style defined contribution plan, which is a considerably less reliable source of retirement income that in the end costs more money to manage.” In DeLong’s call for more reforms, Hannon argues that DeLong “is advocating for cuts to existing benefits that have been collectively bargained with the state and that workers have paid for and earned.” Public employees across Connecticut have already sacrificed – they shouldn’t have to give up even more of their hard-earned benefits.
Uptick in Kansas retirement applications puts strain on state retirement system; will Kansans get their benefits? By Rebekah Chung. The answer to the question that Chung poses in the headline for this article on the Kansas Public Employees Retirement System (KPERS) is yes, retired public employees in Kansas will still receive their benefits despite an increase in member retirements during the coronavirus pandemic. Alan Conroy, the Executive Director of KPERS, said, “We’re in a good position to continue to provide those benefits that have been earned by public servants.” As of this writing, KPERS is funded at 70 percent, putting it in a stable position to continue paying out benefits throughout the pandemic and beyond.
More contribution hikes, benefit cuts may be needed to close $4.5 billion hole in Colorado’s PERA by Brian Eason. In this article for the Colorado Sun, Eason writes that the Public Employees’ Retirement Association (PERA) faces a $4.5 billion deficit, partly due to the coronavirus-induced economic downturn. Under Senate Bill 200, which was passed two years ago, an auto-adjust mechanism on contribution rates and cost-of-living adjustments (COLA)s are set to kick in if the system’s long-term funding falls behind schedule. These changes Eason highlights include employee contributions increasing by 0.5%, “affected government agencies” increasing their contributions by 0.5%, and COLAs decreasing from 1.25% to 1%. In exchange for these reforms, the Colorado state legislature agreed to appropriate a yearly $225 million directly to the system, which they excised this year. Public employees pay into their pensions with each and every paycheck and have already made sacrifices for PERA, others must also do what they can to ensure PERA’s long-term funding is sustainable.
What’s causing America’s retirement crisis? 9 statistics you need to know by Deb Hipp. In this article for Yahoo Finance, Hipp covers several statistics that illuminate why America is experiencing a retirement security crisis. One statistic Hipp cites on the retirement security crisis comes from the National Institute on Retirement Security’s (NIRS) research on workers’ declining access to employer-sponsored retirement plans as one reason why there is a retirement security crisis. According to NIRS, “49% of private-sector workers had no access to such a plan in 2014.” Hipp also cites NIRS’ research on the declining amount of private-sector workers with a pension as another reason for retirement insecurity, as NIRS has found that “in 1975, around 88% of private-sector workers with a workplace retirement plan had pension coverage.” That number has dramatically decreased since then, as Hipp writes that “by 2016, only 15% of private-sector workers participated in a traditional pension plan, according to the U.S. Department of Labor.” Thankfully, however, most public employees still have access to a defined-benefit pension plan, enabling them to retire with the security and dignity they deserve after a lifetime of public service.
Be sure to check back next week for the latest news in the fight for a secure retirement!