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.
This week, workforce shortages, recruitment, and retention are trending topics as municipalities and states seek to attract public workers. One of the ways state and local governments are trying to incentivize workers is by offering sign-on bonuses, among other benefits, to get applicants in the door. However, Bridget Early, Director of Membership and Strategic Alliances at the National Conference on Public Employee Retirement Systems (NCPERS) and former NPPC Executive Director, pointed out in her piece for Route Fifty that these are only “short-term fixes that may temporarily help with attracting applicants but not with retention.” When layoffs increase in the private-sector and those affected draw from their 401(k)s in financial distress, she says that the public sector has an advantage: they offer a pension. If positioned correctly, pensions could help fill job vacancies, “while public-sector employers typically can’t compete with the private-sector on salary, they may have an edge when it comes to total compensation packages. It’s clear that workers find their pension benefits extremely valuable, but it’s crucial that the value of these benefits is demonstrated to applicants and new hires,” said Early.
To address the workforce shortage in Alaska, Gov. Mike Dunleavy has ordered that the state review whether four-year degrees are really needed for state jobs. While relieving the applicants of the four-year degree requirement could make a dent in the state’s vacancies, the long-term solution is fixing the state’s “death tier” retirement system. Alaska is the only state where new employees don’t have access to a pension or Social Security benefits. Alaska Memo Writer, Matt Buxton said, “one of the major draws of working in the public sector has been a good, dependable retirement plan, and Alaska simply doesn’t offer that in any shape or form for any employee who started working for the state after the 2006 change in pension plans.”
Last week, the Alaska House Committee advanced HB22, a bill that aims to create a defined-benefit pension plan for firefighters and certain law enforcement officials in the state. NPPC continues to monitor legislation addressing the state’s lack of retirement benefits for other public employees.
Meanwhile, in New Hampshire, the future of defined-benefit pensions is in jeopardy as lawmakers consider House Bill 559, which seeks to switch all state employees hired after July 1, 2024, to a defined-contribution plan. The bill’s prime sponsor, Rep. Dan McGuire, claims that his plan is more flexible. However, NPPC has addressed the many disadvantages of 401(k)-style plans and the consequences of locking new hires out of a defined-benefit plan. We have also shared the unfortunate outcomes seen in other states that have passed similar legislation.
Pensions remain a vital resource for recruiting and retaining public employees, especially in the public-sector. Denying future employees the security of a pension will exacerbate the current recruitment and retention crisis.
Be sure to check back next Friday for the latest in the fight for a secure retirement! Sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.