Академический Документы
Профессиональный Документы
Культура Документы
Happytobeheretosettherecordstraight. Coordinated,sustainedattacksbyantipensionadvocateshavefalselycastpublicpensionsas costly,unsustainablegiveawaysthatarebankruptingstatesandlocalities. Whilesomestateandlocalplanshavebecomesignificantlyunderfundedinrecentyears,this hasbeencausedbytheshortsightedpastpracticesoftheirsponsoringgovernments. Moststatepensionplansaresustainableforthelongterm. TheNewYorkCommonRetirementFundisamongthebestfundedandbestruninAmerica. Annualreturnof14.6%forourfiscalyear201011thatendedMarch31st.Fundnowhasfiscal yearauditedassetstotaling$146.5billion,thehighestsincetheglobalmeltdownof200809. EvenwithextraordinarymarketvolatilityandthetepidrecoveryfromtheGreatRecession,we remainmorethanreadytomeetourcurrentandfutureobligations. Anumberofkeyinstitutionalfactorshavebuoyedourretirementsystemsinceits establishment.
Effortstoreformorrestructurestatepensionfundscontinueacrossthecountry.39states havemadesignificantrevisionstotheirpensionplansinthepast18months,includingNew York. Itemslikethelevelofpensioncontributionsandhowtocontrolovertimeabuseare acceptableareasfordiscussionanddebate.WhatIthinkisunacceptableispromotingthe moreextremechangeofreplacingDBplanswith401ks. 401kswereneverintendedtotaketheplaceofpensions.Theyweredesignedtobesavings vehiclestosupplementpensionsandsocialsecurityincome.Andoverall,intheirrelatively shorthistory,theyhaveproventobewoefullyinadequateforthosewhorelyonthemfor theirprimaryretirementincome. AccordingtoBostonCollege'sCenterforRetirementResearch,401kplanslostacollective$1 trillionduringtheGreatRecession. Weveallheardthedesperatestoriesoverthepastthreeyearsofretireeswhose401k nosedivedandwereforcedtofindminimumwagejobsjusttosurviveandwhonowwill havetocontinuetoworkindefinitely. Ifthehumancostisntenoughofareasontobewaryofmovingto401ksheressomemore: DBplanscost46%lessthanindividual401kstylesavingsaccounts,forseveralreasons: o Individualsinvestingtheirown401kpaysignificantlyhigherfees,andearnsignificantly lowerratesofreturn. o Individualsmustbasetheirassetallocationontheirageandwhethertheyarenearing orinretirement,whileadefinedbenefitplanbasesitsallocationonmarketconditions. o Individualsmustsaveataratethatensuresthattheirfundswilllastwellintotheir nineties.Incontrast,largeinstitutionalplanslikeourshaveassetsbasedonthe averagemortalityofitsmembers.
2
MovingfromDBsto401Ksavingsaccountswouldbebadforoureconomyaswell. Themoneyspentbyretireescollectingpensionshasastabilizingimpactontheeconomy. Forinstance,77%ofNewYorkretireescontinuetoliveinNewYorkStateandthe retirementbenefitswepayouttothemcontinuetoberecycledintoourstateseconomy, constitutinganestimated$6.5billioninspending,$9.5billionineconomicactivity,and$1.3 billioninpropertytaxespaid.WecanextrapolatetheNewYorkexperienceacrossthenation. AsExecutiveDirectoroftheNationalInstituteonRetirementSecurity(NIRS)DianeOakleysaid inherJulytestimonybeforetheSenateHealth,Education,Labor&PensionsCommittee: "Pensionsarea'highfive'fortheU.Seconomy:investing$5.35trillioninassetsforthefuture, keepingsome5millionretiredAmericansoutofpoverty,supporting5.3millionAmericanjobs, anddeliveringretirementincomeatnearly50%lowercostthanindividualdefinedcontribution retirementaccounts.
Forallthefocusonthecurrentcostofpublicpensions,theerosionofbasicretirement securityforworkingAmericanshasthepotentialtobeafarmoresignificantlongterm problemforournation. RetirementsecurityisbecomingathingofthepastfortoomanyinAmerica. Thenumberofprivatesectoremployeesinlargeandmediumsizedbusinesseswhohavea definedpensionbenefithasdeclinedfrom84%in1980to30%in2010. Asaresultofthiserosioninpensions,agrowingnumberofAmericansriskretiringwitha substantiallylowerstandardoflivingornotretiringatall. Thisyear,thefirstof79millionbabyboomersturned65,andtheCenterforRetirement ResearchatBostonCollegereportsthatupto45%ofthemabout34millionmenandwomen areatriskofnotbeingabletomaintaintheirlivingstandardsinretirement. Theproblemwillonlygrowinthefuture.ArecentstudyfoundthatthenumberofAmericans livingpast90willgrowfrom1.9milliontodaytomorethan9millionby2050. Wecantaffordtowalkawayfromthisproblemorleaveitforsomeoneelsetodealwith. InhisspeechinKansaslastmonth,PresidentObamagavevoicetotheurgencyofadvancing nationalpolicytopreservethemiddleclassthebackboneofAmericansociety.
3
MovingfromDBsto401KswouldundermineretirementsecurityforevenmoreAmericans andaddevenmoreuncertaintytooureconomy.
Hewasrightinhisemphasis.Wemustincluderetirementsecurityasanearnedrightfor middleclassAmericans. ThatswhyIamcallingonPresidentObamatoconveneaNationalCommissiontoaddressthe declineofretirementsecurity. First,wemustdonoharm.TheCommissionmustdevelopstrategiestoassurethecontinued viabilityofsolid,wellfundeddefinedbenefitplansandidentifystrategiestorestorethe financesofplansthathavefallenintodisrepair. Second,theCommissionmustfocusonthelongertermproblemoftheerosionofretirement security.Anditmuststartitsworkfromthesimplepremisethatweneedtoensurethat peopleareabletosupportthemselveswhentheyrenolongerabletowork. TheCommissionsmembershipshoulddrawfromrepresentativesfromlabor,business, governmentemployers,thefiduciarycommunity,accountantsandactuaries,andacademia Wemustchangetheperceptionofpensionsbeingviewedprimarilyasaliabilityandacostto taxpayerstowhattheyreallyare:aprefundingofalegitimate,loominggovernmentliability andsocietalobligation. Ifpeoplecantsupportthemselvesinretirementandinoldage,taxpayerswillfoot100%of thesefuturecosts.Fromafiscalstandpoint,theresponsiblethingtodoistoprefundthese costsnow. Andaswetacklethisissue,weneedtorememberthatmuchofwhatwereconfrontingtoday isthecontinuedfalloutfromthemarketlossesof0809.Whiletherewasapolicydecision madetopumptrillionsofdollarsintothefinancialsystemtoshoreitup,therewasnota policydecisionmadetoshoreupandrescuepensionplansinthesameway. Ifthathadhappened,wemightnotbehavingthisdiscussiontoday. WiththegridlockinWashingtonandthelackofresources,thistypeoffederalinterventionfor pensionstodayisunlikely.However,attheveryleast,insteadofjoiningtheracetothe bottomtodismantlepensionsystems,thisisthetimetopreservepensionplansthatare proventowork,helpthosethatneedfixing,andtacklethelargerquestionofwhatcanbe doneforthosenotcoveredbypensions. Thismustbecomeanationaldiscussionandanationalpriority. Americansretirementsecurityiserodingbytheday.Solutionswillneedyearstotakehold. Failuretoactnowwillmaketheproblemworseforfutureretirees,andwillleavethefull financialburdentofuturetaxpayers.
4