Welcome to the latest edition of This Week in Pensions. This is the news you need to know in the fight for a secure retirement.
Alaska has a teacher retention problem. The state is ready to pay someone to help solve it. by Claire Stremple. In 2005, Alaska closed its defined-benefit plan to public employees. Since then, the state has faced a chronic and costly retention issue that has yet to be resolved. Now, the state’s department of education is looking to hire someone to address the issue of turnover. The lack of retirement security is an oft-cited reason for leaving the teaching profession in Alaska. James Harris, Alaska’s 2017 Teacher of the Year, left to teach in Washington state, saying, “Unfortunately, the retirement system in Alaska, it was set up in a way that there was just absolutely no way for me to retire with any kind of dignity.” An unintended consequence of closing the defined-benefit plan is the pattern of what union leaders have dubbed “teacher tourism”: the phenomenon of teachers from out-of-state coming to Alaska for a few years and then taking their talent, and the training Alaska has invested in them, back home where they can find a career that provides a pension. In order to turn the tide on this retention issue, state lawmakers should strongly consider efforts to bring back the defined benefit plan for public employees.
Here’s why our brains make it so hard to start saving for retirement by Jasmin Suknanan. As previously noted on this blog, pensions are the best vehicles for a secure retirement, in large part because a worker can calculate what their estimated income will be in the future. Without a defined-benefit plan, workers are faced with navigating financial services on their own. Compounding the problem? Our brain’s wiring, as Suknanan lays out in her article. Looking at retirement from a behavioral science lens, Suknanan notes most workers do not make decisions with an eye towards the long-term. For instance, recently graduated students entering the workforce in their 20s aren’t thinking about retirement because it’s over forty years away. Another issue is that workers often miss the mark when it comes to how long they need to achieve a savings goal. In other words, they do not give themselves enough time to realistically save the amount of money needed for a secure retirement. With increases in life spans and the cost of living, planning for retirement now will pay dividends in the future. This is also why preserving opportunities to provide pensions is imperative to guarantee a secure and dignified retirement.
Be sure to check back next week for the latest news in the fight for a secure retirement!