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. You need to know this news in the fight for a secure retirement.
In an op-ed for the Grand Forks Herald, political blogger and writer Rob Port perpetuates the myths and misinformation about public pensions that threaten the retirement security of the more than 41,000 active members of the North Dakota Public Employee Retirement System (NDPERS). The narrative surrounding defined-benefit pensions in North Dakota is dangerous for public employees and their communities. Port says, “Defined-benefit plans are great for workers. It’s a guaranteed retirement. They’re less great, however, for taxpayers.” This anti-pension talking point lacks empirical evidence and implies that hard-working public servants are not themselves taxpayers.
In fact, according to the National Institute of Retirement Security’s 2023 Pensionomics Report, taxpayers have a favorable return on their investment into NDPERS. For every $1 invested by taxpayers into the system, there is a $5.74 total economic output. As North Dakota legislators consider Senate Bill 2239, a proposal to pay $250 million into NDPERS from increases in both employer and employee contributions, which also includes an option for public employees to opt into a 401(k)-style defined-contribution plan, it would be wise for lawmakers to discontinue drawing the line between public employees and taxpayers. Investing in a healthy pension system ensures its longevity, promises the economic benefits of pension dollars circulating in local economies, bolsters the recruitment and retention of essential public employees, and provides crucial income to retirees who have dedicated their careers to public service.
Also this week, the Equable Institute released its year-end update detailing the aggregate funded ratios of public pension systems across the US. With their reliably exaggerated vernacular, Equable perpetuates the “sky is falling” myth that plagues state public pension systems and deliberately creates fear and confusion. The report states that public pension plans averaged a -6.14% return in 2022, less than the 6.9% average assumed annual rate of return. It is important to note that markets are fluid, and increases and decreases in return rates are to be expected in any investment scheme. Equable executive director Anthony Randazzo even admits the positive gains from 2021 weren’t entirely wiped out in 2022. Funding pension systems is a complicated and nuanced process. For more information on the rate of return, check out NPPC’s rate of return one-pager.
Be sure to check back in next Friday for the latest news in the fight for a secure retirement!