Welcome to this month’s final 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 stories of public employees helping their communities.
Here are the top stories from this week:
State and local pension plans funded status holds steady despite pandemic by MissionSquare Research Institute. According to new research from the MissionSquare Research Institute, the funded status of public pensions has remained stable throughout the coronavirus pandemic and subsequent economic crisis. The average funded status for state and local plans in 2020 was 72.4%, a slight increase from the previous year. The institute also revealed that policymakers continued fully funding their pension plans throughout the past year since “most pension plans continued making all or most of their annual contributions in 2020.” This news illustrates the importance of practicing fiscal discipline and making required contributions to a plan as it is an essential element in maintaining a plan’s financial health.
Every State’s Pension Crisis Ranked by Samuel Stebbins. In this article for MSN, Stebbins ranks each state based on the status of their unfunded liabilities to falsely argue that they are in a supposed state of “crisis.” As we’ve written before, ranking states based on their funded status is highly misleading. An unfunded liability means that, at a certain point in time, a pension plan does not have enough assets to pay out retirement benefits to all of its current and future retirees. Instead of focusing on systems’ unfunded liabilities, individuals should focus on the government’s funding discipline. By implementing and sticking to a funding plan, a system can pay out benefits to retirees as it earns investment returns off of the contributions both employers and employees make to the plan.
Unequal Pay Bites Women In Retirement by Teresa Ghilarducci. In an article for Forbes, prominent labor economist Teresa Ghilarducci writes that female workers face unique challenges in preparing for retirement. According to Ghilarducci, women usually have lower retirement savings than men because of the wage gap between male and female employees. Combined with a longer life expectancy, these factors mean that “more than half of American women over 65 are economically vulnerable and much more likely to fall into poverty.” This article is another example of why pensions are a critical tool in keeping older women out of poverty.
Be sure to check back next week for the latest news in the fight for a secure retirement!