Periodic cost-of-living adjustments (COLAs) in some form are provided on most state and local government pensions. The purpose of a COLA is to offset or reduce the effects of inflation on retirement income. Considerable variation exists in the way COLAs are designed, and in many cases they are determined or affected by other factors, such as inflation or the financial condition of the plan. COLAs add both value and cost to a pension benefit. Public pension COLAs have received increased attention as many states look to make adjustments to the cost of benefits amid challenging fiscal conditions and the current low-inflationary environment. This brief presents a discussion about the purpose of COLAs, the different types of COLAs provided by government pension plans, and an overview of recent state changes to COLA provisions.
Will Pensions and OPEBS Break State and Local Budgets?
Source: Center for Retirement Research
The costs of state pension plans are much in the news. Generally, people lump together these unfunded liabilities and make alarming claims that all state plans are about to go bankrupt. The evidence, though, suggests otherwise. On the other hand, looking just at pension plans and just at states doesn’t give the full picture of costs facing states and localities.
401 (k)s: America’s Failed Experience
Source: National Public Pension Coalition
Every American deserves to retire with dignity.
However, due to the shift from pensions to 401(k)s, a secure & dignified retirement isn’t a reality for millions of working people.
401(k)s were never designed to be the primary retirement savings tool for working families – learn why in our latest video:
Illinois treasurer’s office reissues consultant search for Secure Choice plan
Source: P&I
Illinois State Treasurer’s Office, Springfield, is searching for an investment and administrative consultant for the Illinois Secure Choice Savings Program, said Greg Rivara, spokesman, in an e-mail.
The Illinois Legislature approved a bill in December 2014 to establish the Illinois Secure Choice Savings Program, an auto-enrollment, payroll-deducted retirement savings account for certain private-sector employees whose employers do not offer retirement plans outside of Social Security.
Illinois’ pension woes are not so bad after all
Source: Crain’s Chicago Business
New Jersey became the state with the worst-funded public pension system in the U.S. in 2015, followed closely by Kentucky and Illinois.
The Garden State had $135.7 billion less than it needs to cover all the benefits that have been promised, a $22.6 billion increase over the prior year, according to data compiled by Bloomberg. Illinois’s unfunded pension liabilities rose to $119.1 billion from $111.5 billion.
The two were among states whose retirement systems slipped further behind as rock-bottom bond yields and lackluster stock-market gains caused investment returns to fall short of targets. The median state pension had 74.5 percent of assets needed to meet promised benefits, down from 75.6 percent the prior year. The decline followed two years of gains. The shortfall for states overall was $1.1 trillion in 2015.
How to Fix a Retirement Plan at a School or Nonprofit
Source: The New York Times
If you work for a school or nonprofit of any sort, there is a decent chance that your workplace retirement savings plan is not as good as it could be — if you are lucky enough to have one at all.
While employees of universities and big hospitals often have reasonably attractive plans, public schoolteachers, charity workers and many employees of religious organizations who examine their retirement accounts frequently find that the investment choices are mediocre and the fees are too high.
2016 MidAmerican Opening Ceremonies
Source: 2016 IPPFA MidAmerican Pension Conference
Opening Ceremonies at the 2016 IPPFA MidAmerican Pension Conference.
Illinois has a spending problem, not a revenue problem
Source: IllinoisPolicy.org
By Ted Dabrowski, Craig Lesner, John Klingner
Tax-hike proponents claim there’s no way to fix Illinois’ chronic budget problems without more money. They want Illinoisans to believe the state’s tax revenues simply aren’t enough to cover the cost of government.
But tax revenues aren’t the real problem. Illinois’ perennial budget crises stem from the state’s persistent overspending and misplaced spending priorities. The 2016 budget gridlock is the culmination of years of fiscal mismanagement under Illinois House of Representatives Speaker Mike Madigan’s leadership.
Eric Madiar: State’s pension obligations must be met
Source: The State Journal-Register
Through its recent decisions, the Illinois Supreme Court delivered a clear message that pension reform efforts seeking to unilaterally reduce benefits simply cannot be squared with the Illinois Constitution’s pension clause. That outcome was hardly surprising given the plain language, drafting history, and prior court decisions interpreting the pension clause.
Now that the Illinois Supreme Court has clearly reaffirmed that welching is simply not an option the General Assembly may pursue, the question becomes what can legislators do?
Illinois one of few states still recovering from the Great Recession
Source: IllinoisPolicy.org
By: J. Scott Moody
Taxpayers, families and business owners have been fleeing Illinois for decades in search of a friendlier environment to put down roots or grow a business. New data from the Internal Revenue Service for the 2010 tax year show that Illinois had the second-worst loss of people and income nationally.
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