Welcome to this edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement.
Here are our top stories:
OPINION: It’s past time for Alaska to restructure first responders’ retirement by State Representative Andy Josephson. Earlier this month, we covered the opinion piece submitted by former Alaska legislator Lyda Green. In her piece, she argues against reopening the Public Employees’ Retirement System of Alaska to first responders, despite the fact that workers have left public service for jobs in other states that offer pensions. This week, State Representative Andy Josephson writes in the Anchorage Daily News why Alaskans would be better served if the defined-benefit pension plan was offered to first responders. According to the state’s Department of Public Safety, a new police or fire employee costs anywhere between $100,000 – $200,000 to train. HB 55 save the state dollars in the long run by reducing costs associated with turnover since it incentivizes those employees to stay for the defined-benefit pension. In addition to HB 55, the House Finance Committee passed HB 220, which would reopen the defined-benefit pension plan to other state employees, including educators where turnover costs the state $20 million annually.
Scott demands changes to lawmakers’ pension deal by Lola Duffort. State senators in Vermont unanimously passed S.286, which reduces the state’s future unfunded pension liability by nearly $2 billion. The bill will inject a one-time cash payment of $200 million into the state’s retirement systems and increase required employee contributions to help further stabilize the fund. However, Governor Phil Scott objects to the bill, arguing that it, “doesn’t go far enough, and simply kicks the can down the road.” Scott is suggesting that state employees should be offered a defined-contribution 401(k) style plan, insisting that it would provide a more “portable retirement plan” for workers who do not plan to stay in the public-sector. Lawmakers (and NPPC) disagree. After last year’s failed attempt at pension reform in Vermont, public-sector union and Democratic leadership in the Legislature created a task force to study and debate how to improve the pension systems in advance of the current legislative session. Leaders argue that Gov. Scott’s objections come too late, Senate President Pro Tempore Becca Balint, said in an interview Tuesday, “We do the work here in the Legislature — we invite all the stakeholders in, we do the committee process, which is how we pass legislation — and then when we seem to have a deal that the parties can get behind, he comes in with an 11th-hour proposal.” The Vermont State Employees Association reports that of all workers who are currently eligible for defined-contribution plans, only about 30% choose them over the pension option. Switching employees to a definition-contribution plan is an unnecessary and risky choice when it comes to recruitment and retention of employees, and in terms of public workers’’ future retirement security.
Sen. Johnson: Pensions partly to blame for first responder funding shortages by A.J. Bayatpour. Earlier this week, Senator Ron Johnson (R-WI) falsely claimed that funding for first responder services is, in part, due to pensions. For someone who purportedly cares about funding public services, he fails to note is that he voted against the American Rescue Plan Act which saw dollars go to state and local governments who continued to provide services throughout the pandemic. Instead, Senator Johnson perpetuates the myth that employer pension contributions crowd out spending in other parts of the budget. While the national average hovers at 5%, in Wisconsin, pension contributions only make up 2.12% of state and local budgets.
Be sure to check back next Friday for the latest news in the fight for a secure retirement!