Alaska Public Pension Coalition

Senator Egan Introduces Senate Bill 30, Retirement Choice for Public Employees

Today (January 22, 2013) Senator Dennis Egan, D-Juneau, introduced Senate Bill 30, which allows teachers, firefighters, troopers and other public servants to choose between two Alaska retirement systems: paying into the current 401(k)-style defined contribution accounts or earning a defined benefit pension. The legislation creates a new, more predictable pension tier for public employees.

“This bill is cost-neutral, and it gives people a choice,” said Senator Egan. ”Teachers and public employees will put more of their pay into the system than the old pension tiers. Also, most employees will have to be eligible for Medicare before the system helps pay for retiree health care and they’ll always pay a share of those insurance premiums.”

Senator Egan expects the law to save the state $40 million in the first five years and be cost-neutral over the long term because it splits the risk of rising health care costs between the employer and the employee so the new tier never costs more than the current defined contribution system. Additionally, since most Alaska teachers and public employees can’t earn the defined benefit of Social Security, it gives them a chance to choose a safety net similar to the private sector.

Nearly 3/4 of Americans Support Pensions for Public Employees

A new nationwide public opinion research report finds overwhelmingly support for Congressional action to provide all Americans with access to a new type of privately run pension plan. The research also finds that Americans remain highly anxious about their retirement prospects (85 percent), and see pensions a way to improve their retirement readiness. Even though their retirement is in the distant future, virtually all Millennials - those born after 1976 for the purposes of this study - agree that the nation's retirement system is under stress and needs repair (95 percent).

 

These findings are contained in a new research report, Pensions and Retirement Security 2013: A Roadmap for Policy Makers, issued February 26, 2013 by the National Institute on Retirement Security (NIRS) at the organization's fourth annual retirement policy conference in Washington, D.C.   

 

Read coverage of the study in The Washington Post here

 

"Despite stabilization of the financial markets, declining unemployment, and increased consumer confidence, Americans are deeply worried about retirement," said Diane Oakley, NIRS executive director and report co-author. "Perhaps the high level of anxiety can be tied to Americans' sentiment about the risks embedded in today's crumbling retirement infrastructure - one where fewer Americans have a reliable monthly pension check in exchange for a system where Americans are investing on their own in a volatile stock market," she said.

Texas State Pensions Well-Funded and Strong

Texas’ state pensions—the Employees Retirement System (ERS) and the Teacher Retirement System (TRS)—are a different breed from many other state pension systems. Strong constitutional and legal controls have helped ERS and TRS to weather economic storms better than their counterparts in other states. In fact, they are held up as national models because they are well-funded, strong, and sustainable. While some policymakers and interest groups have suggested fundamental changes in the systems, such as turning them into 401(k)-style plans, such an unwise move would end up costing taxpayers, retirees, and the Texas economy dearly.

In both systems, the costs are shared between the state and employees, with the employees contributing a share nearly equal to the state’s. Risks are also shared between the state and its employees. Strong plan design and good management allows ERS and TRS to provide a modest benefit for retirees at a reasonable cost.

Download full Texas_pension article here.

Public Pensions in Washington State: Insuring Economic Security for Retirees

Pensions enable retirees to live out their older years in dignity. In the United States, an
employer-provided retirement plan has long been considered an essential complement to Social Security and personal savings to ensure retirees have satisfactory incomes and certainty for household finances. However, public pensions have increasingly come under attack as private sector employers have scaled back their pension offerings to all but the most highly compensated employees, and public budgets have been decimated by a deep recession and anti-tax ideology.

In contrast to some states, Washington has 99% of its public pension obligations funded – the state’s public pensions are in good financial shape. These combined pensions have net assets of $57.6 billion (as of June 30, 2010), having gained $5.5 billion in the past year. (Continue reading this report from the Economic Opportunity Institute...)

Download Public-pensions-insuring-economic-security-may11

Public Pension Resources From The Center for Economic and Policy Research

 

Testimony on Return Assumptions on New Mexico Pension Plans January 23, 2013, Joint Session of the Labor and Education Committees New Mexico State Legislature   Pension Liabilities: Fear Tactics and Serious Policy January 2012, David Rosnick and Dean Baker   The Origins and Severity of the Public Pension Crisis February 2011, Dean Baker   The Wage Penalty for State and Local Government Employees in New England

September 2010, Jeffrey Thompson and John Schmitt

 

Returns on Public Pensions: What Rates Should We Assume?

March 2011, Dean Baker 

 

Are Public Sector Workers Overpaid? The Story of Underfunded Pensions November 2010, Dean Baker

 

List of Public Pension Resources From the Economic Policy Institute

Public Pension Sources

Groups Generally Supportive of Public Pensions

 AARP

• Sample (NH) testimony, Geraldine (Gerri) Madrid-Davis, Director, Financial Security & Consumer Affairs, State Advocacy & Strategy Integration: http://pffnh.org/Gerri%20Madrid-Davis%20Retirement%20Testimony.pdf

 Center for American Progress

• In Defense of Defined-Benefit Pensions

http://www.truthaboutpensions.org/files/In-_Defense_of_Defined-Benefit_Pensions.pdf

 Center for Retirement Research at Boston College

• http://crr.bc.edu/special-projects/state-local-pension-plans/
• Public Plans Database: http://slge.org/research/public-plans-database (with SLGE)
• The Impact of Public Pensions on State and Local Budgets http://crr.bc.edu/briefs/impact-of-public-pensions-on-state-and-local-budgets/
• The Funding of State and Local Pensions in 2010

http://crr.bc.edu/wp-content/uploads/2011/05/slp_17-508.pdf

• The Impact of Pensions on State Borrowing Costs

http://crr.bc.edu/wp-content/uploads/2011/02/slp_14-508.pdf