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.
A new survey shows Americans have increased their retirement “Magic Number”
Northwest Mutual released their latest survey findings, revealing that Americans anticipate needing at least $1.46 million in retirement savings to sustain quality of life in their golden years. The figure, which is a 15% increase over the previous year’s survey, showcases the population’s expectations based on a dramatically increased cost of living since 2020. The stark reality is that Americans, on average, are not saving at a rate that will reach these expectations. According to the Federal Reserve, the average amount in Americans’ savings by retirement age is only expected to be $255,200.
NIRS releases new report on Rhode Island’s public employee retention
The National Institute on Retirement Security (NIRS) recently released its latest report, focusing on the impacts of pension reform on employee retention in the small, densely populated state. Employees’ Retirement System Of Rhode Island: Examination Of Turnover Trends Since Retirement Reforms, which explores the state’s 2011 transition from a defined-benefit pension plan to a hybrid system, determined several key findings:
- Nearly every group of workers, including state employees, public safety officers, and educators, has had consistently increased turnover rates since 2011.
- Fewer workers have whole careers in their communities. The study suggests that only 29% of new state employees will reach 25 years of service.
- High turnover rates mean workers with less experience, impacting productivity and the quality of public services.
Public workforce shortages in Maine cause issues in the courts
We often discuss how staffing shortcomings in education and public safety affect our communities. Still, other overlooked facets of public service also suffer without adequate staffing, including the public court systems. A piece by the Bangor Daily News editorial board this week detailed how an imbalance in the ratio of public defendants to state-employed public defenders is leading to backlogged court systems, overcrowded prisons, and unnecessary jail time for people awaiting trials for crimes that do not require incarceration, even if found guilty. Noting that the hourly rate for public defenders is close to half of what lawyers in the private sector can make, the BDN board encourages Maine lawmakers to take action to draw more employees to work for the state. Maine was the last state in the country to add public defenders to their payroll, only initiating the roles in 2022. Pensions are part of a reasonable benefits package that helps combat the pay inequities between the private and public sectors.
Connecticut sets the example for redeeming past pension-funding mistakes
Pension systems in Connecticut have long been woefully underfunded due to a series of questionable moves by state officials in past administrations, but the combination of a record-setting year on Wall Street and astute fiscal responsibility has led the state to a “breath-taking” rebound of funds. Aside from a change in what State Senator John Fonfara calls a lack of oversight over the state treasurer’s office in the past, surging state budget surpluses allowed the governor and legislature to plug an additional $7.7 billion into pension funds since 2022. Connecticut is one of only two states, the other being North Carolina, that grants the state treasurer sole fiduciary responsibility over the pension funds without input from a designated board. State Treasurer Erick Russell spoke about the need to focus on making smart investment decisions with public employees’ money. “We are long-term investors. Our goal is to have sustained returns over market cycles… We are certainly proud of our one-year numbers. … We were able to move up the ranks with our performance.”
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.
