Welcome to February’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:
U.S. Retirement Crisis Hits Black Americans Hard by Anne Tergesen and Heather Gillers. Even before the coronavirus-induced economic crisis began, Black Americans disproportionately faced obstacles in preparing for retirement. According to Tergesen and Gillers’ article in the Wall Street Journal, “Black families on average had roughly one-sixth the savings set aside for retirement compared with white families” before the pandemic began. Now, the economic uncertainty from the current downturn may further threaten Black workers’ ability to afford to retire. One way to help ensure Black Americans’ retirement security is by protecting pensions. We’ve previously reported that Black Americans are more likely to work in the public sector than other groups. As a result, “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.”
Every State’s Pension Crisis Ranked by Grant Suneson. We can’t say we’re too surprised to see an article like this one published recently; we’re just disappointed that pension misinformation still occasionally appears in the news. In a slideshow for MSN.com, Suneson ranks every state based on their unfunded liabilities to argue that every state has a “pension crisis.” This claim is incorrect because research from the Center for State and Local Government Excellence and the Boston College Center for Retirement Research shows that the average funded ratio for local and state plans held steady in the fiscal year 2020, proving the sky is not falling in regards to public pensions. Second, it’s misleading to rank states based on their pension plans’ funded status as an unfunded liability “means that at a specific point in time, the pension plan does not have the full amount of money it will need to pay out ALL of the retirement benefits it will owe in the future to ALL of its current and former employees.” This has never happened, given that pension plans are specifically designed to earn investment returns over a long time, ensuring they will have enough assets to pay out retirees’ benefits. Finally, the reason a select few states may have larger unfunded liabilities than others isn’t due to public employees; it’s because politicians in these states have “repeatedly skipped, deferred, or only partially paid into pension funds every budget cycle.” Public employees have paid their fair share into these systems with each and every paycheck.
Concern About Retirement, But Some Confidence Regardless by John Iekel. In last week’s edition of This Week in Pensions, we shared that the National Institute on Retirement Security (NIRS) released a new report on how the retirement security crisis vastly transcends political affiliations. Iekel, in an article for the American Society of Pension Professionals & Actuaries (ASPPA), summarized more highlights from the report, which includes Americans’ views on pensions. Of those surveyed, 76% said they saw pensions favorably, 75% believed all workers should receive access to a pension, and 65% thought pensions were superior to defined-contribution accounts like 401(k)s. While the survey found that most Americans are concerned about retaining economic security in retirement, it’s important to note that Americans overwhelmingly support pensions to help guarantee retirement security.
Be sure to check back next week for the latest news in the fight for a secure retirement!