Kimberlie Edmondson Prior, CEO
Too Many Americans Face Obstacles to Saving for Retirement!
The National Institute on Retirement Security recently released a case study that expounded on the FPPTA story featured at our 2016 Annual Conference: The Palm Beach Story. NIRS’s case study puts data to the tale of how Palm Beach suffered following the closing of their fire and police pension plans in 2012, before reinstituting those plans. They also recently published a report on the importance of pensions as a recruitment and retention feature for teachers, proving significant economic and performance quality losses when pension plans are closed. Training workers is expensive.
Attracting the best quality employees and keeping them is an economic benefit the FPPTA has and will continue to emphasis in 2018.
So, I traveled to the NIRS 9th annual policy conference curious to learn if there were others around the country experiencing the same thing. There are. But industry experts also talked about other stories and trends. We were bluntly told of the challenges facing too many working Americans who cannot save for retirement. It made me see that public employees, in particular, are among the elites in reaching a secure retirement and must pay attention to the trends (financial and social) in order to make decisions that will protect their pensions. This has never been so clear to me.
We heard from the Managing Director and Vice Chairman of Investment Banking at Lazard who is also the former Director of the Office of Management and Budget; the United States Comptroller General and Head of the U.S. Government Accountability Office Office, and other industry policy leaders – too many to list here, but suffice to say there were some heavy hitters giving the conference a deep bench.
What struck me especially were the number and types of American workers who will struggle to achieve anything resembling a comfortable retirement – and many who won’t make it. These are people in the “gig” economy, students carrying excessive loan loads, restaurant and service workers, small business employees, and of course, all low wage workers. Even small businesses that want to provide a retirement plan for employees – and there are many – have few resources and as yet no legal remedy to ERISA regulations that prevent it; meanwhile there is steady erosion to traditional safety nets.
The good news is there is plenty of evidence that public sector defined benefit pension plans are demonstrably more cost effective than the alternatives. They are also a critical recruitment and retention tool for work that requires unique skill sets unequaled in the private sector. There is a strong argument for pensions to be seen as an economic benefit to cities.
So, staying on top of the financial trends and employing prudent management practices is critical to their survival. There is an easy moral case for keeping public pensions, but there must be an economic case as well, because the alternative is not an option.