Source: Greg Mennis, Pew Charitable Trusts, January 2017
From the overview:
A number of states with defined benefit, or traditional, pension plans have enacted policies that retain the core elements of the plans while sharing the risk of cost increases—as well as potential gains—between public employees and employers. These mechanisms for sharing costs can help reduce volatility and investment uncertainty while preserving the ability to pay promised pension benefits.
For most public sector defined benefit (DB) plans, the cost of providing these benefits fluctuates, depending on investment performance, inflation, salary growth, life spans, and workforce demographics. Cost volatility can strain state or local budgets or lead to underfunded pension plans if policymakers have not provided sufficient contributions.
In response to the budget strains and funding challenges, some states have looked to alternatives to traditional pensions, including defined contribution, cash balance, and hybrid plans. Still, most state and local governments continue to offer DB plans, though many now use cost-sharing mechanisms to reduce budget uncertainty. Employees continue to receive guaranteed lifetime benefits and in some cases see gains, such as higher cost of living adjustments (COLAs), from strong investment returns….
….This map and table highlight strategies used by large state pension plans to share cost increases with members. Looking at the benefits offered to new workers in 102 primary state retirement plans, Pew’s public sector retirement systems project identified 28 plans in 16 states that use formal cost-sharing mechanisms to manage risk….
Source: Congressional Budget Office, publication number 52371, January 2017
From the summary:
…In brief, CBO and JCT estimate that enacting that legislation would affect insurance coverage and premiums primarily in these ways:
– The number of people who are uninsured would increase by 18 million in the first new plan year following enactment of the bill. Later, after the elimination of the ACA’s expansion of Medicaid eligibility and of subsidies for insurance purchased through the ACA marketplaces, that number would increase to 27 million, and then to 32 million in 2026.
– Premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by 20 percent to 25 percent—relative to projections under current law—in the first new plan year following enactment. The increase would reach about 50 percent in the year following the elimination of the Medicaid expansion and the marketplace subsidies, and premiums would about double by 2026. …..
Source: Danielle Corley, Sunny Frothingham, and Kate Bahn, Center for American Progress, January 2017
From the summary:
Paid sick days and paid family and medical leave have gained new momentum in the past several years as policymakers, businesses, and the public increasingly recognize the necessity of these policies for working families. In 2002, California became the first jurisdiction in the United States to pass paid family and medical leave. In 2007, San Francisco became the first jurisdiction to pass paid sick days. Today, five states and the District of Columbia have passed paid family and medical leave laws and seven states, 30 cities, and two counties have passed paid sick days laws—including Washington state and Arizona, which passed ballot measures in November 2016. Access to paid sick days was further extended across the country in 2015 when President Barack Obama signed an executive order to provide an estimated 1.15 million federal contract workers with paid sick days. Additionally, businesses continue to make headlines as they adopt these policies on their own, citing their positive workplace effects. And American voters—across the political spectrum—have repeatedly shown strong support for these policies in public polling. Almost 70 percent of those who voted for President-elect Donald Trump support a national social insurance program for paid family and medical leave, alongside 89 percent of those who voted for Hillary Clinton.
Yet even as states and cities across the country pass laws guaranteeing paid sick days and paid family and medical leave, too many families still do not have access to these critical workplace standards. More than one-third of private-sector workers do not have a single paid sick day, and only 13 percent of private-sector workers have paid family and medical leave. Furthermore, it is often the workers who can least afford unpaid time off from work who do not have access to these policies. Workers in the highest earnings quartile are more than two times as likely to have paid sick days and more than four times as likely to have paid family leave as those in the lowest earnings quartile…..
…..While opponents may worry about the costs of providing paid time off, the cost of not having these policies in place is enormous. Previous Center for American Progress research shows that workers lose out on $20.6 billion in wages every year because of the lack of paid family and medical leave. An additional $1.1 billion per year could be saved through reduced emergency room visits and spending on public health insurance programs if all workers had access to paid sick days. Putting this money back into workers’ pockets would also have positive macroeconomic effects, as workers are more likely than businesses to reinvest their money in the economy through increased spending.
This report will review and build upon existing research supporting paid family and medical leave and paid sick days to demonstrate that these policies do not lead to increased unemployment. By showing that these policies are not job killers, continued progress can be made toward ensuring that all workers have access to paid time off and that families, businesses, and the economy experience the benefits of these policies…..
Source: Donald J. Boyd, Yimeng Yin, Nelson A. Rockefeller Institute of Government, Pension Simulation Project, January 2017
The latest report from the Rockefeller Institute’s Pension Simulation Project examines the difficult choices public pension funds faced as interest rates fell over the last 25 years. Public plans generally increased investment risk in an effort to avoid lowering expected investment returns, creating substantial potential for plans to become severely underfunded or to require sharp increases in government contributions in the future. This is the fourth report of the Pension Simulation Project, supported by the Laura and John Arnold Foundation and The Pew Charitable Trusts.
Source: Joan Treichel, Steph Meyer, and Johanna Schussler, Labor Notes, January 3, 2017
Many unions agonize over how to get young workers involved. At the Minnesota Association of Professional Employees (MAPE), we did it with a fight over an issue that mattered to younger members—paid parental leave…. It started with just a few of us who got angry about the problem, and grew into a two-year campaign that energized our union by attracting new members, boosting meeting participation, and developing new leaders. And when we won the right to six weeks of paid parental leave for both parents for the birth or adoption of a child, a new generation felt the power of the union. Our victory benefits not only MAPE’s 14,000 members but all 32,000 union-represented executive-branch employees, including members of AFSCME, Nurses United, and the teachers unions…..
What Made Paid Parental Leave a Good Organizing Issue?
Organizers are always on the lookout for problems that can be solved through collective activity. Use these four criteria to evaluate a possible organizing issue:
– Is it widely felt? Many people must feel that this is a real problem and agree with the solution you’re pursuing. It became clear that paid parental leave was a hot issue among MAPE members when an initial meeting attracted 75 people.
– Is it deeply felt? It’s not enough that many people agree if none feels strongly enough to do anything about it. Paid parental leave hit home, touching on the value of family. Enough members were ready to back up their feelings with action to form a Solidarity Team.
– Is it winnable? It’s hard to know for sure whether you will win, but it’s possible to get a good idea of whether you can. Identify the decision-maker who can give you what you want. How hard do you expect this person to resist, and how much pressure can your group muster? MAPE had evidence that workers elsewhere had won similar benefits—and a decision-maker, the governor, who seemed moveable.
– Does it build the union and build leaders? MAPE had a goal to involve more of its newer members—and this issue mattered especially to them. Through this campaign, many newer members participated in union activities for the first time or took on new roles of leadership. ….
Source: Jean-Pierre Aubry and Caroline V. Crawford, Center for Retirement Research at Boston College, Issue in Brief, SLP#54, January 2017
The brief’s key findings are:
• Since the financial crisis, 74 percent of state plans and 57 percent of large local plans have cut benefits or raised employee contributions to curb rising costs.
• Plans with a larger pension cost burden and lower initial employee contributions were more likely to enact such changes.
• And, among plans that made changes, those in states with the strongest legal protections for current workers were more likely to limit the cuts to new hires.
Source: Nisha Kurani, Usha Ranji, Alina Salganicoff, and Matthew Rae, Kaiser family Foundation, Data Note, December 2016
From the introduction:
Workplace benefits are an important part of balancing work, family, and medical needs. So called “fringe benefits” such as paid family leave and sick days can help employees meet their personal and family health care needs, while also fulfilling work responsibilities. Yet there is no federal requirement for paid leave or sick days, which leaves many individuals, particularly low-income workers, to face tradeoffs such as taking time off while forgoing wages, going to work while sick, or paying for caretakers for their children and family members.
The federal Family and Medical Leave Act (FMLA) passed under the Clinton administration requires eligible employers to provide unpaid family leave. However, unlike most other developed nations, the U.S. does not have national standards on paid family or sick leave.1 In recent years, there have been a number of local and state initiatives to expand access to paid family leave and sick days in the U.S. Employees not covered by these local laws must rely on voluntary employer policies, which can vary considerably. This is particularly salient for women, who are often the primary caretakers for children and also comprise nearly half of the nation’s workers.2 Approximately seven in ten women with children under age 18 were in the labor market in 2015.3 The issue of paid leave received some attention during the 2016 election, but the incoming administration has not yet signaled any plans.
This data note summarizes state and local policies on paid family leave and sick days and presents new data from the 2016 Kaiser/HRET Employer Health Benefits Survey on the share of firms that offer paid parental leave and paid sick days benefits.
Source: Organisation for Economic Co-operation and Development (OECD), December 2016
From the abstract:
The OECD Pensions Outlook 2016 assesses policy issues regarding strengthening pension systems and, in particular, funded pension plans. It covers defined benefits and defined contribution pension plans; fiscal incentives to save for retirement; policy measures to improve the financial advice for retirement; annuity products and their guarantees; pension design and financial education; and the pension arrangements for public-sector workers, including a comparison with those for private sector workers.
Source: Paul J. Yakoboski, Joshua M. Franzel, Center for State and Local Government Excellence, December 2016
From the summary:
This report examines the employment and retirement planning and saving experiences of state and local government workers, as well as confidence in their retirement income prospects.
The findings include:
• One-third of public sector employees have been with their current employer for less than 10 years, and one-third for 20 years or longer. Approximately two-thirds do not expect to leave their current employer anytime soon.
• Health insurance, retirement benefits, job security and salary are the most important job elements they would consider in deciding whether to switch employers.
• The vast majority are covered by a primary defined benefit pension plan; almost 20 percent of these workers reported changes to these benefits over the past two years.
• Two-thirds expect to receive retiree healthcare benefits from an employer when they retire; among these, one-quarter reported changes to their benefits over the past two years.
• The typical state and local employee would like to retire at age 62, but expects to retire at 65.
• Most public servants do not know how much they need to save for a comfortable retirement, nor have they planned and saved specifically for medical expenses in retirement.
• Forty-four percent are very confident that they will receive all of the retirement plan benefits they have earned and 44% are somewhat confident. The analogous figures for retiree healthcare benefits are 30% and 54%, respectively. Their confidence in future Social Security and Medicare benefits is lower.
• About 20 percent are very confident that they are saving and investing appropriately for retirement, with approximately 55 percent somewhat confident in their savings and investing.
Source: Anna Petrini, LegisBrief, Vol. 24 no. 44, November 2016
Even as they are living longer, many Americans—especially those working in the private sector— are not saving enough to ensure a comfortable retirement. Concerned about costs for public assistance programs if their citizens retire into poverty, states have begun exploring a spectrum of policy solutions to avert a retirement savings crisis.