Welcome to the latest edition of This Week in Pensions! We have gathered the best stories about pensions and retirement security from the previous week. This is the news you need to know in the fight for a secure retirement.
NCPERS Proposes a New Tool to Make Public Pension Plans Fiscally Sustainable from the AP. After the Great Recession wreaked havoc on markets, causing valuations to plummet, many state lawmakers and the media focused on pension systems and their unfunded liability to determine if systems were “healthy.” As we have noted in our blog, the unfunded liability is only one measure of many to determine if a system is fiscally stable. Now, there is a new tool to help understand if a pension system is on the right path – the sustainability valuation. This tool–according to a study by Michael Kahn, Director of Research at the National Conference on Public Employee Retirement Systems (NCPERS), can keep public pensions sustainable for the long haul by incorporating it into funding policies and practices. According to the study, pension systems can use sustainability valuation to monitor their fiscal status continuingly, helping to gain insight that would enable them to identify fiscal adjustments needed to stabilize pensions long-term.
Lawmakers stare down Covid-19, housing shortage, pension crisis and more as legislative session approaches by Sarah Mearhoff & Lola Duffort. Later this month, Vermont’s legislative session begins and lawmakers have a list of issues that they plan to address, including pensions. Last year, lawmakers proposed several modifications to the defined-benefit plan; modifications that would have unfairly put the burden of reducing the unfunded liability on the backs of public employees. State Senator Becca Balint remains hopeful that lawmakers will come to an agreement with the Vermont State Employees’ Association and the Vermont National Education Association this session. Top legislators, including Senate Appropriations Committee Chair Jane Kitchel have been meeting to come to a potential compromise. Unions have made it clear that for them to be satisfied, any deal must include their wish list of ongoing tax revenue– such as marijuana taxes or a wealth surcharge to pay down the system’s debt after a year. Senator Balint believes lawmakers may be willing to go further than $150 million in one-time money already set aside for pensions once a deal is brokered, potentially dedicating some of the state’s general or education funds on an ongoing basis. She believes Republican Gov. Phil Scott will veto any agreement that includes new tax revenues.
Younger Generations Behind on Retirement Preparedness, Says Study from FEDWeek. The Employee Benefit Research Institute produced a study that found that Generation X is behind in retirement preparedness compared to Baby Boomers at a similar stage in their life. Unlike Boomers, Generation X is more “likely to rely on their own savings when it comes to retirement security,” according to the study. The findings also showed that Millennials do not fare better than Generation X. Rather, they are further behind, having lower rates of homeownership and higher rates of student loan debt. This study tracks with the data the National Institute on Retirement Security released last year, showing the growing disparity in retirement security as more and more private-sector workers are no longer offered pensions. Fortunately, pensions continue to be the primary retirement benefit offered to public employees, providing security and dignity in retirement after a career in public service.