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.
Hank Kim: Vermont’s pension sky is not falling by Hank Kim.
In his commentary for VTDigger, Hank Kim, executive director of the National Conference on Public Employee Retirement Systems (NCPERS), responds to David Flemming’s commentary that 25% of pension payments leave Vermont. What Fleming fails to consider and what Kim highlights is the economic impact of spending in the state. Kim writes “consider the effect of tourism, which is one of Vermont’s top industries. Visitors from other states come to Vermont to ski in the winter, enjoy blue skies and breezes in the summer, and leaf-peep in the autumn, and surely some of these people are retired.” Vermont’s tourists bring in $3 billion every year, trumping the $90 million that Flemmings claims to be leaving the state. Similarly, data supports how Vermont benefits from pension spending. According to the National Institute on Retirement Security, that while state and local pensions funds paid a total of $524.4 million in benefits to Vermont residents, the economic output was far greater at $670 million. Finally, when looking at pension sustainability and resources, Kim says it is important to remember that pensions “amortized over 30 years, and it’s fatally flawed logic to compare them to one-year revenue streams.”
Public safety employees promote pension plan by Peter Segall.
When Alaska closed its pensions system to public employees in 2005, the state suffered a devastating drop in the recruitment and retention of its public workforce, from teachers to firefighters. On Thursday, over a decade later, dozens of Alaska’s state and municipal public safety workers gathered at the capitol to persuade state senators to pass HB 55, a bill that would reopen the state’s pension system. Paul Miranda, president of the Alaska Professional Fire Fighters Association, said, “Our current retirement system sets our public safety servants up for failure in retirement. Our state is losing money and valuable experience due to the inability for us to retain public safety members.” The state spends $100,000 to $200,000 each year to train public employees that eventually leave to seek positions in other states that offer more secure retirement programs. Despite the ongoing costs to taxpayers by keeping the system closed, the bill is being opposed by the Koch-funded Americans for Prosperity and the Reason Foundation. In addition to HB 55, HB 220 would provide teachers and other public employees an opportunity to rejoin the defined-benefit plan offered by the Alaska Teachers’ Retirement System and the Alaska Public Employees’ Retirement System.
Experts discuss lifetime income, emergency savings in Senate testimony by Brian Croce.
Chairwoman of Senate Health, Education, Labor, and Pensions Committee, Sen. Patty Murray, D-Wash., and ranking member Sen. Richard Burr, are working on a bipartisan bill that would build on the Retirement Improvement and Savings Enhancement (RISE) Act, a bill focused on providing more financial security for U.S. working people. The bipartisan bill aims to hone in on bettering retirement security. Panelist Doug Chittenden told Congress that one of the ways they could improve the retirement system was by expanding lifetime options in defined-contribution plans. Unlike defined-benefit pension plans, defined-contribution programs do not offer lifetime annuity options, putting participants at risk of outliving their retirement savings. Cindy Hounsell, president and founder of Women’s Institute for a Secure Retirement (WISER), also said Congress needs to do more to help women save for retirement. Women are at a disadvantage regarding retirement savings due to lower wages, leaving work to provide care for children or family members, or other factors. However, defined-benefit pensions help mitigate this issue.
Be sure to check back next Friday for the latest news in the fight for a secure retirement!