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The Rising Tide of Insecurity: Americans’ Positive View of Pensions

Tallahassee

  
-- Recent surveys by non-partisan research groups show significant public support for pension plan retirement systems, despite the demise of corporate pension plans in the U.S. workforce. This research is significant because it occurs despite a groundswell of “pension envy” exacerbated by steep stock market losses among 401(k) investors during the recent recession.

While mainstream media has focused steadily on challenges facing public pension plan sponsors, like a widening of unfunded liabilities resulting from the failure of funds to meet earnings expectations, main street has been awakened to the reality that private sector workers are not getting retirement benefits equal to what public employees receive – employees who are paid with taxpayer dollars.

Benchmarks vary, but recent reports from The Center for Retirement Research at Boston College and from the National Institute on Retirement Security (NIRS), as well as from U.S. Senator Tom Harkin (D-Iowa) who chairs the Health, Education, Labor and Pensions Committee all reveal a striking failure of working Americans to achieve the savings they will need in retirement.

Senator Harkin’s research culled from two years of testimony shows more than half Americans have less than $10,000 in savings; just one in five will have a pension to see them through retirement; and in 2010 nearly 6 million Americans over 65 were living in poverty – a number that is expected to rise commensurately with retiring Baby Boomers.

The Center for Retirement Research at Boston College reported to the Wall Street Journal that just 8 percent of Americans have enough savings to allow them to live at 85 percent of their current income.

NIRS this spring released an updated report that surveyed Americans about their retirement prospects. Among the findings:

  • An overwhelming majority of Americans (85%) continues to report concern about their retirement prospects, with more than half (55%) very concerned.
  • A large majority, 83 percent of Americans, report favorable views of pensions, and 82 percent say those with pensions are more likely to have a secure retirement. Moreover, 84 percent indicate that all Americans should have access to a pension to be self-sufficient in retirement.

Towers Watson released an autumn 2012 report showing Americans have an increasing awareness of the positive impact defined benefit pensions have on their retirement security. The corporate benefits consulting firm issued the results of a survey posing head-to-head questions about what employees want more – a guaranteed pension or other benefits. A large plurality (49%) chose the pension over the opportunity to earn a bigger bonus. The pension also ranked higher than a paid vacation, an increased chance at a promotion, and larger salary increases.

These findings are further borne out by the National Conference on Public Employee Retirement Systems (NCPERS). NCPERS conducted extensive research while developing an innovative public-private partnership program designed to bring pension plans to small businesses.

NCPERS research confirms that employers in the private sector also would like to offer pension plan benefits to employees. NCPERS found nearly all small business owners surveyed (82%) agree that offering a retirement benefit helps to recruit and retain good employees. They also found a solid majority (56%) worry about their own retirement security and nearly two-thirds (65%) worry that their employees will not have enough money to retire.

Before eliminating public pension plans, more needs to be done to keep them stable. More also needs to be done to encourage their reintroduction into the private sector, because it increasingly appears the challenges facing defined benefit pension plans are more easily surmountable than the challenges facing our country if they are absent completely.

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Raymond Edmondson, Jr. is CEO of the Florida Public Pension Trustees Association, a nonprofit educational organization offering a nationally recognized certification program for public pension trustees. More than 250 of the state’s 490 municipal pension plans are FPPTA members. Contact him at ray@fppta.org.


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