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.
Retirement Is Expensive. Here’s Why Pensions Can Help by Dan Doonan. In this piece for Forbes, National Institute on Retirement Security (NIRS) director Dan Doonan makes a case for pensions as the solution to America’s looming retirement security crisis. While this crisis is partly due to a gradual switch over the last few decades from defined-benefit pensions to defined-contribution plans, a globally aging population is also part of the issue. Doonan cites research from a new report from the Healthcare of Ontario Pension Plan (HOOPP) called The Value of a Good Pension to support his stance. Pensions work as an efficient vehicle for retirement security in three ways: “saving income earned while working for future use in retirement, growing these savings through productive investment, and converting these savings into a reliable stream of post-retirement income.”
Putting out fires: Proposed bill would make pension plan stable in 22 years by Stephen Dow. In 1997, when the Wyoming Retirement System’s Fire A Pension Plan was fully funded, legislators elected to close the plan and place subsequent hires into a Fire B Pension Plan, which has reduced benefits. With all employee and employer contributions terminated in the years since, the plan’s funded status has sunk. Now, legislators are scrambling to keep the fund solvent. Along with a proposal that includes the state paying over $75 million to the fund, pensioners themselves will be impacted through the removal of a 3% cost-of-living adjustment, which has been offered each year. We’ve written before about the importance of legislatures holding up their end of the bargain and paying their obligation to pension funds every year – hopefully, this story will serve as another cautionary tale.
Amidst great investment returns, public pension systems should reassess plan designs by Richard Hiller and Rod Crane. As public pension plans across the country report excellent investment returns from FY 2021, the Reason Foundation continues to spin their narrative that defined-benefit pensions are no longer the best option for public employees. One of their arguments is a lack of portability. As we’ve discussed previously on this blog (in 2021 and 2016), public pension contributions stay with the employee who contributes them, regardless of their career mobility. For over one hundred years, public pensions have been the gold standard for retirement plans for Americans. The great returns of FY 2021 should be encouraging us to stick by what works, not start looking for problems where there are none.
Be sure to check back next week for the latest news in the fight for a secure retirement!