Welcome to this 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.
Here are the top stories from this week:
Lembo: Extra pension payments mean big savings now — and down the road by Keith M. Phanuef. Last month, Connecticut’s budget contained a $1.25 billion investment to pay down the state pension systems’ unfunded liabilities. Not only does this put the funds on a path to improved funding but recent findings suggest that this investment will result in short-term savings due to long-term returns for the systems. Cavanaugh Macdonald Consulting, the actuarial firm used by the Connecticut State Employees’ Pension System, projects that the investment of $1.25 billion will grow to a value of $2.75 billion over the next 25 years. This is due to how pension funds are able to take advantage of time, investing across the market and reinvesting gains back into the fund. By putting those dollars to work now, Connecticut will free up $110 million annually. These are dollars that can be reinvested elsewhere across the state budget without sacrificing the retirement security of the state’s essential workforce.
Pensions, pay raises should be a boon to city of San Diego’s recruitment efforts by Michael Smolens. Much of the recent news cycle on the national labor market has covered the efforts of corporations to convince workers to join their company over another. The public sector is familiar with the competitive nature of organizations attracting and retaining employees and knows that the key lies with them providing a wage and benefit package that is better than their rivals. The City of San Diego understands this issue firsthand. With the passage of Proposition (Prop) B in 2012, San Diego became the only city in California to not offer new employees a pension, and it also implemented a five-year pay freeze for the workforce. Prop B resulted in those public servants that dedicated their careers to the City of San Diego leaving, taking their expertise and institutional knowledge with them. The city is now experiencing a vacancy rate of 13% across public sector jobs. How can San Diego turn the tide around? Mayor Todd Gloria has worked with lawmakers and workers to secure pay increases for current public employees. Gloria acknowledged this in April, stating “We are setting the city on a path to attract and retain top-notch public servants who provide the everyday services San Diegans rely on. For too long, past city leaders sat idly by while workers were underpaid, leading to some of our most promising and experienced employees leaving for better-paying jobs at other agencies in the region.” When the courts struck down Prop B, reopening the pension system for new employees, the city was provided with another tool in the toolbox to recruit and retain workers to the public sector. As we have seen time and time again, offering a secure retirement is a key way to attract and keep workers. In time, these changes will pay off for the city and residents of San Diego.
Be sure to check back next week for the latest news in the fight for a secure retirement!