Welcome to the latest edition of This Week in Pensions! We have gathered this week’s top stories about pensions and retirement security all in one place. This is the news you need to know in the fight for a secure retirement.
In Case You Missed It…
Did you get a chance to read the latest article from Dan Doonan, Executive Director of the National Institute on Retirement Security (NIRS)? In his most recent piece for Forbes, Doonan explores the significant impact America’s shifting demographics, including longer lifespans and lower birth rates, affect retirement systems and the steps that state-funded pension systems can take to prepare for the future.
WIN: Alaska Senators advance Senate Bill 88 to the House.
This week, following a 2-day weather delay, the Alaska State Senate voted 12 to 5 to advance SB 88 to the House. Designed to provide a modest yet secure retirement benefit to public employees, SB 88 is expected to ease the state’s increasing vacancy rates across the public sector, including teachers, public safety officers, and various essential public service agencies. Alaska’s inability to recruit and retain an adequate workforce has taken a toll on communities, inhibiting state residents’ access to public aid and creating unsafe conditions for vulnerable Alaskans.
During Wednesday’s floor debate, some of the 11 bill sponsors and several opposing lawmakers addressed the bill’s possible impacts on the state budget. Primary bill sponsor Senator Cathy Giessel championed the bill’s cost-neutrality, as laid out in the much-contested fiscal note, noting the safeguards written into the language of the bill and the multiple studies and research backing it up. Most recently, an analysis by Teresa Ghilarducci, an economics professor at the New School for Social Research in New York City, estimated that the reduction in educator turnover alone would save the state $76 million per year.
While this is an incredible win for NPPC, the Alaska Public Pension Coalition, and the public sector workforce in Alaska, moving the bill through the House will be a challenge.
Connecticut faces scrutiny for funding pension systems in 2023.
In a 3-part series for the CT Mirror, state finance reporter Keith M. Phaneuf takes a dubious stance on the legislature’s efforts to reduce the state’s unfunded liabilities–which accumulated after years of irresponsible funding by lawmakers. Connecticut Retirement Systems provides state and municipal employees, municipal employees, public safety officers, and court employees with defined-benefit pensions; folks who in turn provide critical services to state residents. Phaneuf misses the mark when he claims that appropriating money into the pension system is reducing other state services by stripping them of funds.
This is a false choice. In a state where a large share of the tax dollars go to subsidizing corporations, private firms, and developers, funding any public services–including providing a secure retirement to the workers who have dedicated their careers to serving their communities–can be a challenge. When the rhetoric pits one group against another–for instance, public employees versus those who depend on state health care, social services, and higher education programs–the only winners are the corporate interests that continue to siphon money away from the public.
Lawmakers in Connecticut have worked to put fiscal guardrails like borrowing caps, spending caps, and mandatory savings triggers to improve financial security in the state’s future, to fix the mistakes of the past. Michael Barry, the coordinator for the Connecticut Coalition for Retirement Security, spoke with a reporter about Connecticut’s pension spending this week regarding increased costs to the pension system in 2023.
Economist Teresa Ghilarducci recommends ditching “DIY” retirement plans.
One thing is abundantly clear about employee-managed retirement funds like 401(k)s: They aren’t working. Ghilarducci, a professor at the New School for Social Research and an expert on retirement security, proposes a “Gray New Deal” in her newest book and insists that policy change is the only way to prepare an aging American workforce for the future.
Americans are working later into life, and have less in retirement savings than previous generations. “This takes a disproportionate toll on middle- and lower-income people who may not have the ability to work longer in physically demanding jobs,” Ghilarducci says. She adds that issues such as Social Security funding, can be solved. “The country could afford to put more money into the system,” she says. It wouldn’t mean job displacement or funding taken away from other groups. It’s not an economic problem. It’s a political problem that will be solved at the last minute, which will make it even more expensive.”
Be sure to check back next Friday for the latest 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.
