Welcome to this month’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:
Bid to toughen teacher retirement rules criticized, shelved likely until next year by Will Sentell. In Louisiana, legislators tabled a proposal that would have extended the age at which newly hired public educators can retire with their full pension benefit from 62 to 67. Lawmakers in both parties condemned the effort, and State Senator Rogers Pope stated that raising the retirement age “would worsen an existing problem with recruiting teachers to the classroom by taking away one of the incentives.” Reputable research shows that Pope’s claim is correct, as the National Institute on Retirement Security (NIRS) has found that 86% of public educators say their pension benefit is a major reason why they remain in their jobs. Pensions are especially critical for retired public employees to meet their economic needs in Louisiana. The state is one of seven in the country where its public employees cannot participate in Social Security.
In reform of Vermont’s pension system, process is key by State Rep. Kate Donnally. On April 2, Vermont House Speaker Jill Krowinski shelved an attempt to reduce the state’s unfunded liabilities. The plan would have required public employees to increase their contributions, stay in the workforce longer, and reduce or eliminate the cost-of-living adjustments (COLAs) they receive. The proposed plan was crafted behind closed doors without feedback from the public employees who would have been affected by its recommendations. Vermont State Rep. Kate Donnally argues in this article that the state can chart a better course forward on lowering unfunded liabilities by including the voices of all parties involved in the system. Donnally writes that, even though “the stakes are high, wide-reaching and personal” in the conversation around pension reform, “an issue of this complexity needs to be honored with a thorough, transparent, inclusive, open, values-based reform process.” Ensuring everyone has a seat at the table is a proven formula that has worked for other states that have considered reforms, including Minnesota.
How the pandemic changed the retirement landscape by Liz Weston. Weston writes for MarketWatch on how the current economic crisis has impacted workers who are 55 and older. “Older workers lost jobs faster and returned to work slower last year than midcareer workers,” she notes, and “certain older workers — women, Black people and those without college degrees — were even more likely to lose their jobs.” While losing one’s job can be traumatic at any age, it creates unique challenges for those nearing retirement, as it cuts into their ability to maximize saving for retirement. During the downturn and beyond, protecting pensions is critical to ensure our nation’s public employees can retire with security and dignity.
Pension Plans Heading the Way of the Dodo: What’s Your Plan B? By Peter Reagan. In a piece for Newsmax, Reagan needlessly creates fear by falsely writing that public pensions are going “extinct.” There are three significant reasons why Reagan’s argument is incorrect. First, he relies on data from the Pew Charitable Trusts to make it sound as if public plans are drowning in debt, which is not true. The Pew Charitable Trusts has a history of publishing biased and misleading research about public pensions, as the vast majority of public plans are also well-funded. According to an analysis from the consulting firm Milliman, Inc.,the funded statuses of the country’s 100 largest public pension plans increased from 78.6% in December 2020 to 79% during the first quarter of this year. Secondly, public pensions are far from going the way of the dodo. According to the U.S. Bureau of Labor Statistics, in 2018, 86% of public employees had access to a defined-benefit plan and 77% of public employees participated in one. Finally, Reagan wants retirees to believe public pensions are in a state of crisis because his job as a financial market strategist at Birch Gold Group is to hawk retirement products, giving him a blatant conflict of interest. While it’s unfortunate that slanted articles like this one occasionally surface, it’s important to remember that public pensions are the most effective method to provide a secure retirement for public employees.
Be sure to check back next week for the latest news in the fight for a secure retirement!