Alaska Public Pension Coalition

AARP's Educator Community (NRTA): Pension Education Toolkit

As state pensions continue to be under attack, more and more national policy organizations are providing helpful pension research and resources. The fact sheets and reports provide key messaging to help you defend your pensions.

NRTA has released a comprehensive Pension Education Toolkit, developed in collaboration with the National Institute on Retirement Security. The toolkit offers fact sheets and other resource materials that could be helpful in discussions about the attributes of defined benefit pension plans. Specifically, these resources can be used to defend your pension system by providing message points on the current economic environment, unfunded liabilities for your state pension system, unmet annual required contributions and much more. 

Access key resources of the NRTA Pension Education Toolkit including the following Topical Fact Sheets:

•The Economy and Your Pension. Group-based pension plans weathered the economic storm better than individual account plans.

•Pension Funding Gap. Pension funding gaps are manageable and can be filled in 30 years if total contributions increase by just 2.2% of payroll.

•Pension Contribution Requirements. Keeping the pension plan well-funded is a shared responsibility between employees and employers.

•The Importance of Your Pension. Traditional defined benefit pensions provide a cost-effective and guaranteed monthly income for life.

•The Importance of Your Pension (non-Social Security states). This version of the above fact sheet is for employees not covered through Social Security.

•Cost of Living Adjustments (COLAs). COLAs help to ensure that retirees’ purchasing power is maintained, no matter how quickly prices might rise. 

The Origins and Severity of the Public Pension Crisis

With many state governments facing budget shortfalls this year along with dwindling federal assistance, some policy-makers have begun to call for drastic reductions of public sector pensions as a way to ease state budget woes. A report from the Center for Economic and Policy Research puts this issue into better perspective, clearing up many common misconceptions about these funds.

The report, “The Origins and Severity of the Public Pension Crisis,” shows that the main reason public pension shortfalls exist at all is the downturn in the stock market following the housing crash in 2007-2009, not inadequate contributions. The paper demonstrates that if pension funds had just earned returns equal to the interest rate on 30-year Treasury bonds since 2007, their assets would be more than $850 billion greater than they are today.

Download the full report: The Origins and Severity of the Public Pension Crisis.

Some Basic Facts on State and Local Government Workers

The public workforce has been the subject of much discussion lately — and, unfortunately, much misinformation.  A brief report published by the Center on Budget and Policy Priorities presents some basic facts about state and local employees:  the jobs they perform, how many there are, how their pay compares with pay in the private sector, and how much states and localities — mainly school districts, cities, and counties — spend on pay and benefits.

[Directly excerpted from the Center on Budget and Policy Priorities. View the full brief: Some Basic Facts on State and Local Government Workers.] 

Can State and Local Pensions Muddle Through?

The Center for Retirement Research at Boston College released an Issue in Brief: Can State and Local Pensions Muddle Through?  

The key findings include:

1) The market crash has hurt public pensions, and quick fixes aren’t feasible because:

• pension cuts for new hires take time to add up; and
• tax revenues have been hit hard by the recession.

2) Fortunately, most plans do not face a liquidity crisis.

3) Years to exhaustion depend on investment returns and concept.  With 8 percent returns, most plans have:  

• at least 15 years under “termination” concept.
• at least 30 years under “ongoing” concept.

4) Notable exceptions include Connecticut SERS, Illinois SERS, Illinois Universities, Kentucky ERS, Louisiana Teachers, New York City Teachers, and Rhode Island ERS.

View the full report: Can State and Local Pensions Muddle Through?

A Role for Defined Contributi​on Plans in the Public Sector

The Center for Retirement Research at Boston College has released a new Issue in Brief:

 “A Role for Defined Contribution Plans in the Public Sector”

 The brief’s key findings are:

• In recent years, several states have shifted from defined benefit (DB) to defined contribution (DC) pension plans.
• Many of the new plans are “hybrids” with a slimmed down DB plan and a minimal DC plan, which shifts substantial risk to employees.
• A better hybrid design could offer a full DB plan up to an income cap and “stack” a DC plan on top for those with higher incomes.
• The “stacked” approach would give those with modest incomes the full protection of a DB plan while limiting taxpayers’ commitment to those with higher incomes.

View the full brief: A Role for Defined Contributi​on Plans in the Public Sector.

Center for Economic and Policy Research - Pension Return Calculator

“Most pension funds assume a 10 percent rate of return, the historical average,” said Dean Baker, a co-director of Center for Economic and Policy Research (CEPR). “There are practically no plausible scenarios in which stocks will only produce a 4.5 percent rate of return, especially when one considers our current low price-to-earnings ratios.”

“The Pension Return Calculator” allows users to manipulate several variables --including nominal rates of return on stocks and GDP growth-- to show price-to-earnings ratios from 1962-2050 in an attempt to achieve a risk-free, 4.5 percent rate of return.

The calculator demonstrates that attempts to scale back public pensions based on pessimistic expectations of rates of return are misguided. Barring another downturn of the magnitude of the Great Recession, it is highly unlikely that the rate of returns on public pensions will not be near the historic average.

[Excerpted from the Center for Economic and Policy Research. Access CEPR's Pension Return Calculator here.]

Senate Bill 121: "Alaska Pensions"

Senator Dennis Egan

SB 121 - Alaska Pensions

Sponsor Statement

SB 121 lets teachers, Troopers, firefighters and other public employees choose one of two state retirement systems: an individual defined contribution retirement account, or earning a defined benefit pension.

A defined benefit pension takes time to earn, but rewards a record of public service by paying a guaranteed monthly benefit and, for long-term employees, health insurance. An individual defined contribution account is portable from one employer to another, and flexible in how it can be used, but makes no guarantees. SB 121 will let newly hired public servants in Alaska choose the one that fits best.

SB 121 creates a new more stable, more predictable defined benefit pension tier for teachers and public employees. A few years ago, Alaska beefed up oversight of the pension system. Now we have two actuaries analyzing the health of the pension trusts, there are more frequent experience studies and the law bars the practice of sometimes paying less than the cost of benefits. SB 121 keeps these smart reforms, making Alaska pensions stronger than ever.

And the defined benefit pensions for new employees under SB 121 will cost employers less than the pension tiers that came before, saving money for schools, cities, and the State of Alaska.

Alaska teachers and public employees don't earn Social Security, and many even lose Social Security benefits they earned in past jobs. So for most, a defined benefit pension makes sense. Other employees will choose individual defined contribution accounts because they prefer flexibility, portability, and control, or because their plans do not include long-term service in the public sector. SB 121 maintains their option to choose an individual account.

The teachers who educate our children, the police and firefighters who protect our families, and the public employees who serve our state and cities will be able to choose the benefit that best fits their service.

View Sponsor Statement for SB 121 at aksenate.org