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.
Here at NPPC, we are invested in the ongoing efforts to reestablish a pension system for public employees in Alaska. With support from ten state senators, SB 88 heard public testimony this week. Alaska closed its pension system in 2006 after lawmakers were given poor actuarial advice. The state has subsequently suffered a compounding public employee shortage, causing disruption in the delivery of public services–prompting cities to go to extreme lengths to entice applicants, such as $40,000 sign-on bonuses for certain municipal positions in the capital city.
A third-generation Alaskan firefighter called in from Washington state to testify before the legislative committee, noting that a need for better retirement benefits prompted his move to the lower 48. But supporters of SB 88 weren’t the only people in attendance at the hearing. Not only was the billionaire-funded anti-pension group Americans for Prosperity in attendance, but the libertarian Reason Foundation showed up, too. Alaska lawmakers were quick to question the motivations of the Reason representatives, asking about “past professional experience with cases bearing a resemblance to Alaska’s unique pension predicament.” The Reason Foundation has a history of using misleading information to perpetuate a sky-is-falling panic surrounding pensions and system costs.
In Connecticut, where lawmakers are considering SB 935, a bill that would compel municipalities to offer pensions to city employees, state comptroller Sean Scanlon addressed concerns this week over anticipated rising costs to cities who are already participating in the Connecticut Municipal Employees Retirement System (CMERS). Like many states, Connecticut’s pension system suffered from poor fiscal management in the past, including skipped government contributions.
More recently, the Connecticut funds have rebounded, thanks to strong market performance and a surplus in the state’s rainy day fund, which triggered extra payments into the system. CMERS, in particular, has performed better than the state’s other two systems for teachers and public employees. Labor leaders in Connecticut argue that the public staffing crisis warrants the need for a municipal pension offering. “In the midst of a growing staffing crisis in towns and cities, where we are losing thousands of critical public service employees and applicants to higher paid jobs in the private sector, it is irresponsible and tone deaf…to suggest lowering pension benefits,” stated an open letter from a coalition of labor unions and advocacy groups. Connecticut currently has a 17% vacancy rate in public employment. Pensions are a proven recruitment and retention tool in the public sector.
Finally, the back-to-back collapse of Silicon Valley Bank and Signature Bank made waves across the financial community earlier this month, raising red flags in the media about the potential hit that public pension plans might take as a result. This week, the Associated Press reported that despite the alarm bells, the losses to public pension funds were minimal. Because defined benefit pensions utilize investment tactics like longevity risk pooling and asset diversification, financial experts say there is little concern about the impact on states’ pension funds. The AP article states, “In every case, the banks’ stocks represented no more than a few dollars out of every $10,000 in assets in the fund,” an important qualifier that pension-nemesis Equable neglected to note when they churned out a hyperbolic list of losses to pension system investments from the banks’ collapse. State pensions are currently funded at the highest level since before the Great Recession in 2008, after years of increased employee contributions, positive market performance, and regular state contributions.
Be sure to check back next Friday for the latest news in the fight for a secure retirement! For now, sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.
