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.
NPPC News
Contrary to what some opponents say, pensions are highly beneficial to young workers. Understanding the benefits offered to them is a crucial step in recognizing the value pensions provide for a secure retirement. Check out our latest blog post, The Value of Public Pensions: Why They Matter for Younger Workers, where we explore the hurdles that a lack of financial literacy creates for today’s working-age population.
Who Cares About Pensions? Workers Do.
In an opinion piece penned for Governing this week, Hank Kim, Executive Director and Counsel for the National Conference on Public Employee Retirement Systems (NCPERS), reiterated what the research proves: workers still care about defined-benefit pensions–but they could use more education and transparency about this valuable benefit.
Pensions have long been a critical recruitment and retention tool for public employees. While special interest groups who oppose defined-benefit pensions continually insist that younger workers do not value pensions when choosing a career, Kim suggests that it’s an overwhelming lack of financial literacy–both by the general public and lawmakers themselves–that’s problematic.
“In the under-35 demographic of the public sector, recent data from the MissionSquare Research Institute found that 1 in 5 employees did not know whether they were participating in a defined-benefit or defined-contribution plan,” Kim writes. “But it’s not just younger generations struggling with financial literacy, despite the increasing anxiety most are experiencing around their ability to enjoy a secure retirement. Across generations, nearly half of Americans do not know what a 401(k) is.” Despite the gaps in understanding retirement security, research suggests that 83% of Americans believe that all workers should have a pension.
The Retirement Crisis Is Real.
It’s no surprise that crisis denial happens, with so much misinformation and opinion-skewed commentary circulating in the media. But when that denial prevents legislation designed to protect some of our most vulnerable populations, the vortex of inaccuracy becomes dangerous. In an article for the Hill this week, economist Teresa Ghilarducci and senior writer for The Schwartz Center for Economic Policy Analysis (SCEPA), Christopher Cook, addressed the alarming trend of retirement crisis denial in federal and state governments.
“How is it not a crisis when, at minimum, more than 10 percent of America’s elderly people aged 65 and up — more than 5 million, likely around 12 million — are in poverty?” Cook and Ghilarducci ask. Pointing out that one out of every 5 American households aged 55-64 has less than $100,000 in total assets (including deposit accounts, investments, and property wealth) and no defined benefit retirement plan, this article details how dire the situation is for America’s rapidly aging population.
In addition, close to 40% of middle-income workers are at risk of downward mobility into poverty or near poverty in retirement. If lawmakers don’t act, retirement security for current workers looks even worse. “Instead of playing numbers games to deny or dismiss America’s retirement crisis — which does a disservice to the realities older Americans are facing — we need solutions.”
Alaska’s Public Workforce Won’t Get the Boost They Need This Year
It’s been a long battle to restore defined-benefit pensions to public employees in Alaska after lawmakers closed the pension system to new hires in 2006. Last year, Senator Cathy Giessel introduced Senate Bill 88, which created a new defined-benefit system designed to address legacy debt and create an attractive benefits package to recruit and retain public employees and ease the problematic vacancies in education, transportation, public safety, and various other state agencies. However, despite an aggressive and strategic campaign by state labor leaders, the bill failed to make it over the finish line before Alaska’s legislative session ended this week. Giessel conceded that the chance to pass the law was “probably zero — but that doesn’t mean it’s not a critical issue, especially for our workforce.” A large portion of Alaska’s public workforce continues to struggle with balancing inadequate retirement benefits, while communities deal with deficiencies in public services due to lack of staffing,
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.
