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.
Retirees: Watch out for your pensions – inflation isn’t just affecting grocery bills by Alessandra Malito and High Inflation Leads to Expensive Cost-of-Living Adjustments for CalPERS and Others by Anna Gordon. As inflation continues to rise, the discussion about its impact across different sectors and demographics has increased. In her article for Marketwatch, Malito covers how inflation has become a significant concern for many retired Americans as rates continue to surge, reaching a record high of 7.5%. Pensions are especially a topic of concern. While some pension systems have provided cost of living adjustments (COLAs), many of them do not adjust to inflation, leaving retirees struggling to make ends meet with the same benefit they received in the 1990s. Some states are considering issuing a “13th check” to help provide retirees relief from inflation, but “there have only been a handful in the last few years, and the rules for approving one vary from state to state,” said Bridget Early, Executive Director of NPPC. For the states that do have built-in COLAs, retirees will see some relief. After a year of solid investment returns, some CalPERS members will see the highest COLA increase since 1990 at 4.7%. Some state employee pensions systems try other methods to beat inflation. The New York City Employees’ Retirement has a built-in COLA that adjusts to inflation yearly; however, it’s capped at 3%.
Dave Young: Pass HB22-1029 to make our PERA members whole by Dave Young. In his op-ed for the Greeley Tribune, Colorado State Treasurer Dave Young advocates for HB 22-1029, which would restore lost funding to PERA. In 2020, the annual $225 million contribution to PERA was cut from Colorado’s budget. Because the payment was not made, PERA lost out on the $78 million it would have earned in compound interest. It’s not too late for the state to correct since this bill would restore the payment and interest lost. “Everyone deserves a sustainable and dignified retirement, including our dedicated public employees. Passing HB22-1029 is the right thing to do. By taking action now, the Colorado General Assembly is making our PERA members whole, and safeguarding our future,” said Young.
83 Percent of Americans Worried About K-12 Public School Staff Shortages, New National Institute on Retirement Security Survey Finds by National Institute of Retirement Security. Public school staff shortages continue to be a significant issue across the country. A survey conducted by Greenwald Research showed that most Americans agree on one thing–teachers deserve better, including a better pension. Among key findings in the study, 86% of participants believe that a “more generous” pension would help recruit and retain teachers, and 92% say better pay would also be a great solution. Participants also agree that expanding benefits to include student loan forgiveness would incentivize current teachers to stay while persuading new teachers to join the field. Americans agree enough is not being done to retain teachers, which has increasingly been a concern with the ongoing pandemic and the Great Resignation, compounding preexisting issues. Dan Doonan, NIRS Executive Director, said, “Teachers were frustrated before the pandemic, and there have been fewer people going into the profession since the financial crisis created severe budget pressures. Now, we’re facing an urgent need to retain existing staff, draw experienced teachers back to schools, and figure out how to make the profession more enticing to young people.”
Be sure to check back next Friday for the latest news in the fight for a secure retirement!