Any of this making sense yet?
Flexibility may not be a word you often hear associated with public pension plans. These plans are typically created by state or local policymakers, and changes to the plan structure are sometimes difficult and time-consuming. This is OK for many public pension plans because they cover workers with similar characteristics. It is common, for example, for all teachers covered by a pension plan to have the same retirement benefits regardless of the school district that employs them. All employees have the same benefits; the school districts and employees share in the cost of benefits; and all pay the same amount for those benefits.
Let’s think about these two words for a moment…”covet” (to yearn to possess or have something) vs. “begrudge” (to envy or resent the good fortune of someone, to be unhappy or upset because someone has something you think they do not deserve).
My colleague Penny and I recently spent some time in Rolla to honor one of our long-standing members, Rolla Municipal Utilities employee Rosalie Spencer, who was celebrating 50 years with the organization with a lunch reception. Around 70 of Rosalie's friends, family and coworkers present and past were on hand to celebrate her accomplishment. "When I started here, I told them if they hired me I wanted to stay until I retire. And I am." Rosalie plans to retire at the end of April of this year, and because she has stayed for 50 years should be able to replace a sizable amount of her salary with her LAGERS benefit.
Reform has been the hot topic in the world of public employee retirement plans for years. Too often the conversation immediately turns to tossing out defined benefit pensions for government workers and replacing them with individual investment accounts like 401(k)s. Supporters of the 401(k) approach say these plans are a better fit for the modern worker; they are always fully funded; they give workers control over their own money; the public sector should follow the private sector's lead in eliminating pension plans. However, this thinking does not consider the uniqueness of public sector jobs, workers' lack of understanding of financial products, the impact on workers' retirement security, or the effect on the employer and taxpayers.
LAGERS retirees provide strength for their communities' economy by re-investing their hard-earned retirement benefits back into their communities. For example, in Boone County last year, there were 611 retirees who, combined with other LAGERS beneficiaries, received over 11 million dollars from LAGERS benefits. This income is used by retirees and their families to purchase goods and services within their community. This increases the assets and strength of local area businesses, who, in return, expand their businesses and employment opportunities. There is little doubt the bones of any community consist, in large part, of the businesses found within the community. LAGERS retirees provide the calcium for these bones by providing economic strength through their LAGERS benefits.
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.