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.
In 2013, the City of Webster Groves joined the Missouri Local Government Employees Retirement System (LAGERS), a statewide public defined benefit retirement plan covering local government workers from all across Missouri. This is our story of why and how we made this giant leap forward in providing retirement benefits to our employees, and, we believe, in ultimately enhancing service to our citizens.
LAGERS retirees contribute to the economies of cities and counties all across our great state. Just take a look at this snapshot of the economic impact created by the retirees of Northwest Missouri. In 2017, over $15 million was paid to our retirees, who then in turn spent money in our communities with their LAGERS benefits.
Jackie Barnett, PHR, SHRM-CP is a long-term public employee at the City of Columbia, MO. She has completed 23 years of service and is the HR Manager responsible for payroll support and benefits for over 2000 employees. The City of Columbia has recently engaged LAGERS to do on-site meetings for its employees in order to better inform them on the value of a LAGERS pension. Since pensions are a great tool to attract, but also retain quality employees, the City wants to educate its employees on LAGERS in order to increase retention among City employees. This is her account of their experience.
Above: 2016 annual benefits paid to LAGERS' benefit recipients in Missouri.
This post was originally published in November, 2017. For more information on how pensions benefit everyone, go to showmesecurity.molagers.org
Employee benefits are often thought to be for the betterment of one and only one group - the employees. Rather than simply providing a salary, employers use benefits like health insurance, retirement plans, and paid vacation to build morale, keep good workers, and to attract new workers. For these reasons, it makes sense to think that compensation other than salary are good for the employees and only the employees. But there is more to it than that.
A publicly-held company must make decisions that will positively affect the bottom line so the shareholders may profit. Likewise, government leaders serve the taxpayers and make decisions to enhance the prosperity of their communities. Decisions about employee benefits, therefore, cannot only be valuable to the employee, but also must make sense for the shareholder or taxpayer. In other words, all stakeholders must get some return on the investment for employee benefits.
A little over a year ago, LAGERS board and staff established “A Secure Retirement for All” as our new vision statement. By their nature, vision statements are meant to be lofty, inspiring and something on the edge of being unobtainable. However, every goal, strategy, and decision that is made at LAGERS is driven by this statement.
About a year ago, I had a conversation with some of my friends about what I do for a living. When I told them I work for a public pension plan, their reaction was not quite what I expected. They began telling me pension plans are old fashioned and the best type of retirement plan was the 401(k). They all work in private industry and are seeing fewer private employers provide pension plans. So, their assumption is, of course, the 401(k) is better.
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).
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.