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.
Here are our top stories:
Sharf: Colorado still kicking PERA can down the road by Joshua Sharf. Last week, the Colorado House Finance Committee approved House Bill 22-1029, a bill designed to repay PERA the $225 million payment that lawmakers skipped in 2020 due to anticipated financial instability caused by the Covid-19 pandemic. Considering the estimated returns, the committee approved a $304 million payment to help stabilize the Colorado Public Employees Retirement Association (PERA). In this article, Joshua Sharf, a senior fellow in fiscal policy at the Independence Institute, a conservative think tank in Denver, expresses his “pessimism” about the future stability of PERA regardless of this payment, further perpetuating the myths surrounding unfunded liabilities. Sharf argues that the state should consider moving public employees to a 401(k)-style defined-contribution plan so “we could all sleep easier.” However, we here at NPPC would counter that public employees and the communities that rely on their essential services will significant challenges and costs if the PERA system were to close. Not only would the public-sector workforce receive an inadequate retirement benefit, it would also cost more to administer and the state would lose the valuable advantages that go along with defined-benefit pensions.
We Need More Teachers. Retirement Benefits Help On This Front By Dan Doonan. In his recent contribution to Forbes, National Institute on Retirement Security (NIRS) Executive Director Dan Doonan addresses the educator staffing crisis facing public schools in a post-pandemic reality. Insufficient salaries, burnout, and lack of respect are just a few of the many reasons why school districts are struggling to hire and retain educators. A study by The American Association of Colleges for Teacher Education found that in the decade between 2009 and 2019, the number of college students earning bachelor’s degrees in education fell by close to a third. And while there are a number of factors that contribute to this shortage, there remains one sure-fire way to recruit and retain public school teachers: offer them adequate defined-benefit pensions. NIRS conducted a study comparing teacher pensions vs. 401(k)s that found educators earn more in retirement with pension plans than they do with other defined-contribution plans. In addition, pensions offered by the six states in the study proved to be an effective workforce retention strategy.
Senate unanimously votes to override Scott’s pension bill veto by Lola Duffort. This week, the Vermont Senate spoke loudly; they won’t let Governor Phil Scott strip public employees of their hard-earned pensions. S.286 was developed in response to a year-long study by the Pension Benefits, Design and Funding Task Force on the state’s $5.7 billion unfunded liability, and dictates that both the state and public employees will increase their contributions to help stabilize and preserve the retirement system. Gov. Scott opposed the bill, insisting on allowing public employees to enroll in 401(k)-style retirement plans instead of their existing defined-benefit option. In an unanimous 30-0 vote, the senate overrode Scott’s veto, securing lifetime benefits for essential state workers, for now. “I think every side fleshed out their ideas, made hard decisions and came to the best compromise that helped correct the path the pensions were on and helped secure retirement for our state employees and our teachers,” Senator Corey Parent said.
Be sure to check back next Friday for the latest news in the fight for a secure retirement!