Welcome to this month’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:
The Pandemic Hit Public Pension Funds Hard — But Now They’re Better Funded Than They’ve Been in Years by Jessica Hamlin. In a piece for Institutional Investor, Hamlin writes how Goldman Sachs Asset Management’s (GSAM) public pension fund report for the first quarter of this year highlights the gains public pensions have made since the onset of the COVID-19 pandemic. The report is based on a sample of 99 public pension plans across the nation whose assets amount to approximately $3 trillion. Last spring, worldwide shutdowns hit pension funds hard – the majority of pensions sampled saw their funded statuses decline 10.1% to 12.5% in March alone. That same month, funds’ aggregate funded status dropped to 64 percent. A year later, funded status has climbed back up, reaching 80 percent in March 2021. “When you look at that funded level, not only is it up dramatically from the depths of Covid-19 prices, but it’s really the highest funded status on a system-wide basis that we’ve seen since going back to the global financial crisis,” Michael Moran, senior pension strategist at GSAM.
Disappearing benefit packages leave workers with chronic economic insecurity by Lynette Hazelton. Almost 2.2 million Americans lost their jobs last year due to the COVID-19 pandemic. Not only does that mean lost wages, but it also means lost benefits, namely healthcare and retirement benefits. Unfortunately, this loss is part of a trend, as the Great Recession was used as an opportunity for employers to cut benefits. In 1975, 55% of workers had employer-sponsored pension plans, whereas now pension plans in the private sector are almost unheard of. With so many Americans without access to a retirement plan, those jobs that do offer comprehensive and portable benefits – namely, a defined benefit pension plan – will likely have an easier time hiring qualified applicants.
Retirees are overly optimistic about their financial future by Kerry Hannon. The nonpartisan Employee Benefit Research Institute (EBRI) released their 31st annual Retirement Confidence Survey this week. While it appears that American workers have sunny outlooks regarding their retirement plans, reality paints a much darker picture. Seven in 10 workers said they were confident in having enough money to live comfortably in retirement. However, the feasibility of this is very dependent on whether or not workers have access to a retirement plan – 65% of workers without a retirement plan have less than $10,000 saved. Expectations for working beyond retirement also clash with the actual statistics: Seventy-five percent of workers expect to earn money in retirement, but only 3 in 10 retirees actually report doing so.
Be sure to check back next week for the latest news in the fight for a secure retirement!
