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:
Black Americans Report Changing Financial Habits Due to COVID-19 by Amanda Umpierrez. The ongoing pandemic and its subsequent economic crisis has disproportionately impacted Black Americans. The economic downturn is also changing how many Black workers make major financial decisions, according to the results of a survey from Lincoln Financial Group that was featured in this article from Plan Sponsor. Because Black workers were “most likely to have experienced job loss due to the pandemic,” most are taking another look at their finances. The survey found that “74% of Black American workers are planning to make lasting changes to the way they spend and save” and “75% are planning for their financial future differently.” Even before the pandemic began, Black Americans faced significant obstacles to achieving financial security in retirement, as “Black families are less likely to have employer-sponsored retirement accounts than white families.” Defined-benefit pensions, however, can help Black households achieve financial stability in retirement. As we shared on our blog this week, “23.7% of Black women and 20.3% of Black men work in the public sector, higher than for whites at 17.2% of white women and 13.4% of white men.” Because of this, “Black households are almost as likely to have a pension as white households are, and with it, the security of knowing they can retire with dignity.”
Finance committee considers state pension funds by the Huntsville Item. On Tuesday, the Executive Director of the Texas Employee Retirement System (ERS), Porter Wilson, and Texas’ Comptroller, Glenn Hegar, testified before the State Senate Finance Committee on the fiscal outlook for ERS. Due to years of underfunding by the Texas state legislature, the ERS could run out of funding by 2061, which could negatively impact public employees’ hard-earned retirement security and the state’s credit rating. In his testimony, Wilson pointed out that “pension benefits are a major incentive for state employees, with 75% of state employees reporting that they were a major factor in choosing to work for and stay with the state,” making them a valuable tool for recruiting and retaining public employees in the state. During the hearing, State Senator Charles Perry argued against harming public employees’ retirements, stating that, “our employees signed on with an expectation and I think it’s only fair that we meet that expectation if it’s conceivably possible.” Public employees deserve to retire with the pension benefits they’ve earned and paid into with each and every paycheck.
Teachers pension process needs to be comprehensive, deliberate by State Rep. Mike Mrowicki. Vermont Treasurer Beth Pearce recently introduced a proposal that would cut public educators’ pensions to address the fund’s unfunded liability. Vermont State Rep. Mrowicki stated in response that there must be collaboration between all those who are invested in the system, including the educators, to plan its future. “The best next step is to bring together all the stakeholders in this situation and find a solution that is derived from all the pertinent stakeholders,” Rep. Mrowicki writes. “That process needs to be comprehensive and deliberate and will take time.” We are glad Rep. Mrowicki called for educators to have a seat at the table to discuss this proposal since, as Rep. Mrowicki notes, they “have been paying into their pension for these many years and have also given so many years of dedicated service to our kids, families and communities.”
Be sure to check back next week for the latest news in the fight for a secure retirement!