Welcome to the latest edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement. We have gathered the top stories about pensions and retirement security from the previous week.
National News
[NIRS]
This week, we heard from the National Institute of Retirement Security’s (NIRS) Executive Director, Dan Doonan, about the long-term effects of financial woes on public employees. In response to a Federal Reserve survey indicating that 35% of Americans feel financially worse off than the previous year–an increase from 20% in 2022–Doonan poses the question: “Should We Worry About Public Worker Financial Anxiety?” This guiding question gains significance as all Americans grapple with inflation and rocky stock market performance. Public employees, in particular, remain a vulnerable population due to their comparatively lower salaries in relation to private sector employees. According to a recent report from MissionSquare Research Institute, “a whopping 88 percent of public service employees expressed concern about their personal finances and financial decisions. Among those who are concerned, 77 percent report worrying about this while at work, an increase from 66 percent in 2019.” Financial insecurity disrupts workplace productivity and reduces employee retention rates. Defined-benefit pensions remain one advantage the public sector has access to in the face of ongoing financial anxiety.
State News
[Connecticut]
As the Connecticut General Assembly prepares to adjourn for the summer, pension opponent Chris Powell took the opportunity to push for the long-term dismantling of the Connecticut Municipal Employees Retirement System (CMERS) in his column for the CT Examiner. In Government Worker Pensions Should be Ended Gradually, Powell says that pensions, “are no longer necessary to draw people to government work and since they will always be vulnerable to unfunded liabilities that can worsen for many years before they are much noticed and elected officials find the courage to address them.” This muddled logic is markedly backward, as this column is in response to reforms put in place this year by State Comptroller Sean Scanlon to ease the financial burden that falls on the cities that participate in CMERS. For the record, 107 of the state’s 169 cities offer benefits to their employees through the system. Powell also erroneously claims that state and local government workers earn more than their private-sector counterparts, and perpetuates the unfunded liability myth by claiming, “Additionally, as their unfunded liabilities show, the state and municipal pension systems have permitted governors, state legislators, and municipal elected officials to promise benefits without fully appropriating for them.” Unfunded liabilities can be complicated to understand, and Powell’s voice is just another in the chorus of pension opponents who rustle up confusion and fear over what are often well-managed and well-administered pension systems.
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