Lessons from failed pension reform

We spend a lot of time talking about the savings crisis in the United States.  We’ve written about the unfunded liabilities in 401(k) plans, we’ve written about the lack of financial literacy, and the dangerously low retirement account balances across the country.  And while all of this might lead to the conclusions that having a defined benefit plan, like LAGERS, is an important cornerstone to retirement security in America, pension reform debates still often favor the significant reduction or elimination of defined benefit plans altogether.   

Tagged pension reform, reform, firefighter, police, Value of pensions, value of local government

When it Comes to Pension Reform, Focusing on an ‘Ideal’ Assumed Rate of Return Misses the Mark

As some pension plans across the country continue to struggle with growing unfunded liabilities, we hear a lot these days about pension reform.  One common topic these reforms address is the assumed rate of return used in calculating the fund’s required contribution rate.  While it is imperative that all assumptions used in the calculation of an employer’s pension cost are reasonable and reviewed periodically, it seems that blaming a fund’s chosen rate of return for any funding shortfalls is probably missing the mark.

While policy makers continue to grapple with the question of what is a ‘realistic’ or ‘ideal’ investment assumption, a pension plan experiencing funding difficulties is likely less because of the actual assumption and more the result of not consistently making the required contributions, or failing to adjust the contribution rate when plan experience doesn’t meet the assumptions. 

Tagged reform, Investment Assumption

Closing a Pension Plan Does Not Eliminate Liabilities

 

Since the Great Recession in 2008, warnings of an impending pension crisis have been splashed across the business pages of newspapers across the country. Despite these boisterous decrees, America’s public pension funds are stable. We explore the roots behind the false pension crisis narrative and examine the facts.

Tagged Pension Health, Value of pensions, Retirement Security, reform, pensions, pension reform

Pension Reform Should Not Focus On All-Or-None Solutions

Tagged Employers, Members, pension reform, Prospective Members, reform, Retirees, Security, three legged stool, Unfunded Liability

Pension Reform Jeopardy: "I’ll take The Real Truth for $1,000, Alex!"

Tagged Employers, Members, Prospective Members, reform, Retirees

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