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.
NPPC Highlight
Women’s History Month presents an opportunity to honor and recognize the invaluable contributions of women throughout our nation’s history. However, it also serves as a time to reflect on areas where advancements in gender equality are still needed. Check out our latest blog, which delves into a critical aspect of women’s financial well-being: ensuring a secure retirement through pensions.
States Take Action to Address Employee Shortages: Revamping Retirement Plans in Kansas and New York
Due to mounting employee vacancies, states are devising strategies to attract and retain government workers, particularly in critical education and public service sectors. Kansas and New York are exploring reforms to their retirement systems, recognizing pensions’ pivotal role in bolstering recruitment and retention efforts.
Kansas is tackling its teacher shortage head-on with proposed legislation aimed at enhancing retirement benefits for educators. Amidst an alarming rise in teacher vacancies, Senate Bill 479 seeks to transition Tier 3 Kansas Public Employee Retirement System (KPERS) members to Tier 2, offering improved long-term benefits. KPERS 3, created by lawmakers in 2015, is a cash-balance system. Typically, cash-balance retirement plans do not provide the same wage replacement rates that traditional pensions do. With educators bearing the brunt of stagnant wages and mounting student loan debt, the move aims to restore dignity and security to their retirement years.
“Educators have accepted lower compensation to follow their passion. They’ve consistently endured stagnating wages on top of that. They’re facing growing demands from the public and growing disciplinary situations in the classroom… And now, like many other college graduates, teachers are starting their careers with tremendous student loan debt. Ensuring that they have a dignified and comfortable retirement after years of public service is simply the right thing to do,” said Timothy Graham, Kansas National Education Association director of government relations and legislative affairs.
By aligning benefits with Tier 2 standards, Kansas hopes to entice aspiring and experienced teachers to remain in the profession, mitigating the dire staffing crisis its schools face. While we at NPPC applaud the direction Kansas legislators are heading, we hope that legislation there is expanded to include all public sector workers impacted by the Tier 3 cash-balance shift, including paraprofessional educators.
Meanwhile, in New York, concerns loom over the viability of Tier 6, the latest and largest pension tier among the state’s workforce. Tier 6’s stringent retirement age and contribution requirements have sparked discontent among public sector employees, exacerbating recruitment challenges across state agencies, healthcare facilities, and law enforcement agencies. Recognizing the situation’s urgency, lawmakers are pushing for comprehensive reforms to make pensions more competitive and appealing. “What I’ve been hearing from the membership, which caused me to summarize in a nutshell, is that Tier 6 sucks,” said State Sen. Robert Jackson, chair of the civil service and pensions committee. Proposals include lowering the retirement age, reducing contribution rates, and enhancing benefits to align with previous tiers to bolster its workforce and ensure the long-term sustainability of its public sector.
The stakes are high as states grapple with the dual challenges of employee shortages and pension reform. A robust retirement system safeguards workers’ financial futures and is a powerful recruitment tool in an increasingly competitive job market.
