A digest of timely information and insight about finance, investing, and retirement.

Response to Pew report, The State Pension Funding Gap | National Association of State Retirement Administrators
The vast majority of public pension plans have assets to continue paying benefits for decades, according to a recent statement from the National Association of State Retirement Administrators (NASRA) in response to recently published research on public plans from The Pew Charitable Trusts. Nearly all states have made changes in recent years to benefit levels, financing structures, and actuarial methods and assumptions to preserve or restore their sustainability. Many of these reforms and adjustments result in near-term cost increases while advancing long-term sustainability, and have been recommended by Pew in the past. States and pension plans can be expected to continue to make changes as necessary to ensure their sustainability.

Public-sector pension changes create residual effects | PlanSponsor
A new Issue Brief publication from the Center for State and Local Government Excellence (SLGE) seeks to answer the broad and challenging question, “How Have Pension Cuts Affected Public Sector Competitiveness?” The analysis explores the impacts of public pension reform from 2005 to 2014, finding some statistically significant evidence that cuts to pension benefits have reduced the ability of public-sector employers to compete with private-sector employers for workers. As the organization points out, there is a growing need for states and localities to consider in detail how pension benefit reductions may impact public-worker recruitment and retention, and whether more analytical work can/should be done to further examine the workforce impacts of pension cuts. Read the Issue Brief.

1 million Americans are counting on Congress to save their pensions |CNN Money
More than 1 million workers and retirees could lose their pension benefits within 20 years. Many of them were construction workers or truck drivers who belonged to a union and paid into pension funds set up to cover workers from multiple employers. But about 100 of these pension plans are expected to run out of money in the next two decades, according to a report from the Center for Retirement Research at Boston College. Lawmakers on both sides of the aisle agree that something must be done. A bipartisan committee headed by Republican Senator Orrin Hatch and Democratic Senator Sherrod Brown was created earlier this year with a mandate to come up with a legislative fix by November. “A number of the country’s biggest multiemployer pension plans are approaching insolvency, which poses a threat of small businesses going bankrupt, retirees seeing their benefits cut, and taxpayers getting stuck footing the bill,” Hatch said in a statement. (The Senate Finance Committee is currently accepting public comment.)

Retirement surprises: What retirees wish they had known | Yahoo! Finance
Retirement isn’t exactly as expected for many, with surprises including a younger-than-expected retirement age and higher health care costs, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index. Nearly one quarter of retired investors say they stopped working earlier than they’d have liked, which, according to Joe Ready, head of Wells Fargo Institutional Retirement and Trust, is a reason to consider different retirement scenarios in their planning. “Life events happen, and people don’t always get to choose when they retire — which is why it’s important to have a well thought-out plan that maps out different retirement age scenarios and projected costs in retirement,” said Ready. The average retirement age of those surveyed was 62, significantly below the age of 70 to which many are being encouraged to continue working to maximize savings and their Social Security benefits. Twenty-seven percent of men, and 19 percent of women, felt that their retirement age was earlier than they would have hoped.

How retirement investors can protect themselves — even without a fiduciary rule |MarketWatchA court may have blocked implementation of the fiduciary rule, but retirees can still protect themselves. That’s referring to the Department of Labor’s rule that, until it was blocked in mid-March by a U.S. appeals court, would have legally bound brokers and advisers who handle retirement accounts to act in the best interests of their clients when they receive any compensation. Though that court ruling isn’t necessarily the final word on the matter, some are now predicting that the rule will never get implemented. To be sure, some think this is a good outcome, while others are lamenting it. But the point of this column is not to take a position either pro or con on the fiduciary rule but instead to show how you can still arrange it so that you are just as protected as you would have been had the fiduciary rule gone into effect.

The States’ Retirement-Savings Social Experiment |GoverningSeveral states are undertaking what amounts to a significant social experiment, one that leaders and policymakers in other states will want to watch closely. Concerned about private-sector employees’ lack of retirement savings and the potential impact on poverty levels, and subsequently on state budgets, legislators in nine states — California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Oregon, Vermont, and Washington-have enacted programs designed to remedy both problems. They have good reason. Unlike most government employees, more than 30 million of the nation’s private-sector workers — about a third of the workforce — lack access to a retirement savings plan through their jobs. While some of these employees may have other savings vehicles, such as individual retirement accounts (IRAs), research by The Pew Charitable Trusts has shown that only 28 percent of those without access to an employer-provided plan have any retirement savings at all.