The Pew Center on the States report, “The Widening Gap: The Great Recession’s Impact on State Pension and Retiree Health Care Costs,” found that in all, state pension system in 2009 were slightly less than 78 percent funded—declining six percentage points from the 2008 level of 84 percent.
WASHINGTON—The good news in the Pew report is that even at the lowest depths of the recession, although the funding status of public pension plans worsened, the plans showed resilience and an ability to weather the massive financial downturn. We should learn from the states that handled the financial collapse well and apply those lessons to others that did poorly.
Retirement security is a shared responsibility for employers, workers and our country. Workers, after careers of hard work and service, should be able to live independent, dignified lives. Before the recession, few employers were providing livable retirement security for workers. Moreover, since the recession, more Americans are unemployed or underemployed, which makes their retirement security even more tenuous. We need to create a new national compact to put pensions on a strong and secure path for all Americans.
The AFT is committed to being an active partner in addressing issues related to public pensions and the looming retirement crisis. An AFT Ad Hoc Committee on Revenues and Retirement Security, composed of 20 elected AFT leaders, staff and teacher pension trustees from around the country, concluded that the debate needs to move past short-term fixes and focus on long-term solutions based on reality, not on misconceptions about workers’ pensions. Public pension reforms should amend, not end, defined-benefit plans.
The committee’s report, to be reviewed at the May AFT executive council meeting, makes a number of recommendations to build a foundation for retirement security for all workers. Those recommendations include:
- Every worker should be covered by retirement plans that provide enough consistent income to secure a reasonable standard of living.
- Retirement security should be the shared responsibility of employers, employees and the government.
- Earned pension benefits should be retained for retirement, and accruals should be portable.
- States and other employers should pay their annual required contributions every year.
- Pension plans should establish a reserve fund to offset market volatility.
- Pension reforms should include elimination of spiking at the end of a career, elimination of double-dipping, and establishment of a benefit ceiling to guard against excessively high pension benefits.