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.
Before you dive into our top stories from this week, make sure you check out stories of public employees helping their communities.
Here are our top stories:
OCPA claims HB 2486 would enrich lawmakers, bill rewritten Monday by Thomas Ferguson.Contrary to OCPA’s misinformed claims of lawmakers’ hidden agenda behind HB 2486, the Oklahoma Public Employees Association (OPEA) wanted to make one thing clear—HB 2486 only seeks to benefit the hard-working state employees of Oklahoma. We’ve covered the public employee worker shortages plaguing our nation in multiple blogs and their effect on individual states. One of the ways lawmakers are seeking to improve recruitment and retention in their states is by offering better or reforming the current benefits, of their employees. Yes, that includes pensions. Many states that have switched their public employees from defined-benefit plans to defined-contribution plans have realized what a significant mistake that was. Not only is that decision costing more money, but it’s also costing them their best workers, as they’re now struggling to recruit and retain employees. Oklahoma, which closed its pension system to state employees hired after November 2015, is one of those states. State Rep. Avery Frix said, “We’re, you know, having a terrible time recruiting folks to work for the state of Oklahoma right now, and this was to try to address those workforce challenges.” Most state employee pension recipients make a modest average benefit of $18,184 a year. According to data from 2021, defined-benefit plans are 46% more cost-efficient than defined contribution plans. OPEA’s Executive Director, Sterling Zearley said, “returning to the DB pension is a fiscally conservative decision. According to data by Matthew Gustafson, DB plans can deliver the same benefit at about half the cost of DC plans.”
Saving For Retirement Stalls For Younger Generations As Cost Of Living Soars by Maggie Valenti. Younger generations, such as Millennials and Gen Z, face the hardships of saving for retirement in economically unstable times, putting them behind in savings compared to other generations. Inflation has grown increasingly worse over the last 40 years, which has caused a significant spike in the cost of living, making the future of retirement unprecedented for these generations as they’re saving less and spending more. A study from the National Institute on Retirement Security, titled Millennials and Retirement: Already Falling Short, states, “Millennials entered the workforce at a time of depressed wages, high levels of unemployment, and major structural changes in the American economy.” Not only have these generations dealt with the pandemic, but also The Great Recession that impacted the United States from 2007 to 2009. Millennials, as well as some Gen Z’ers who graduated during the pandemic are paying back high student loan amounts, and are simultaneously dealing with the high cost of living. This is making it harder for younger workers to save. Younger age groups are also receiving less benefits from their employers, like 401(k)s. Pensions are known to provide more security than 401(k)s, and can make a difference for the future of retirement for these young workers.
April is Financial Literacy Month, a great time to check your financial situations and skills. Whether you’re saving for retirement, or already in retirement, this is the time to reflect on your earnings as well as your savings to make sure your goals are met. Below are two articles we think are important to check out:
- 4 Big Expenses You Could Face in Retirement
- A guide to Social Security spousal, ex-spouse and widow’s benefits
Be sure to check back next Friday for the latest news in the fight for a secure retirement!