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:
We keep our promises, the State of Texas should too by Tanisha Woods. In Texas, lawmakers are currently considering Senate Bill (SB) 321, which would close the state’s Employees Retirement System (ERS) to newly hired public employees and enroll them in a riskier cash balance plan instead. Woods, who has served the state of Texas as a correctional officer for the past 12 years, writes that ending the defined-benefit pension plan for newly hired public employees would be a mistake. Cash balance plans do not offer as secure a retirement as a defined-benefit pension, Woods states, as “a cash balance plan is all about investment risk. You can’t plan for retirement when your final benefit is unknown, dependent on the stock market’s performance. That exposes workers to a lot of insecurity, anxiety, and financial risk.” Additionally, Woods highlighted that defined-benefit pensions are an effective way to recruit and retain qualified public employees, particularly in her line of work. “If you care about having a high-quality state workforce, Texas needs this benefit to compete for good workers,” she notes. “Adding uncertain benefits to the low pay will make it harder to hire and keep staff, especially at the Texas Department of Criminal Justice, which is already woefully understaffed.” As the state legislature continues to debate SB 321, it would be wise to recognize that “correctional officers have kept up their end of the bargain, and the State of Texas should work as well.”
Compromise hammered out quickly on pension governance and task force bill by Greg Sukiennik. A conference committee in the Vermont legislature achieved a compromise for House Bill (HB) 449 on Monday, which would alter the makeup of the Vermont Pension Investment Committee (VPIC) and create a task force to study the state’s unfunded liabilities. State legislators struck a compromise following the shelving of State House Speaker Jill Krowinski’s proposal in April to eliminate retirees’ cost-of-living adjustments and increase employee contributions and the state retirement age to address Vermont’s unfunded liabilities. On the VPIC (responsible for managing the state’s pension investments), the committee ultimately agreed to include nine members and set a 20-year term for its chair. For the task force, the committee decided to include six members total, including three members of the state House, two members of the state Senate, and the state’s Commissioner of Financial Regulation. Finally, state lawmakers also agreed on including the voices of public employees in the task force. Three Vermont National Education Association members, two members of the Vermont State Employees Association, and one member of the Vermont Troopers Association will be represented, which guarantees public employees the opportunity to provide input on the pensions they have paid into throughout their careers.
Be sure to check back next week for the latest news in the fight for a secure retirement!