Category Archives: Benefits

Pointing Out: How Walmart Unlawfully Punishes Workers for Medical Absences

Source: A Better Balance, June 2017

From the summary:
Walmart is proud of its heritage as a family-founded company. Ironically, while the Walton family touts its family values, Walmart’s absence control program punishes workers who need to be there for their own families. Walmart disciplines workers for occasional absences due to caring for sick or disabled family members and for needing to take time off for their own illnesses or disabilities. Although this system is supposed to be “neutral,” and punish all absences equally, along the lines of a “three strikes and you’re out” policy, in reality such a system is brutally unfair. It punishes workers for things they cannot control and disproportionately harms the most vulnerable workers.

Punishing workers for absences related to illness or disability is not only unfair, it’s often against the law. Based on our conversations with Walmart employees as well as survey results of over 1,000 current and former Walmart workers who have struggled due to Walmart’s absence control program, Walmart may regularly be violating the federal Family and Medical Leave Act (FMLA) by failing to give adequate notice to its employees about when absences might be protected by the FMLA and by giving its employees disciplinary points for taking time to care for themselves, their children, their spouses or their parents even though that time is covered by the FMLA.

Similarly, we allege that Walmart’s policies and practices of refusing to consider doctors’ notes and giving disciplinary points for disability-related absences is a violation of the Americans with Disabilities Act (ADA). The ADA protects workers with disabilities from being disciplined or fired because of their disabilities. It also requires employers to engage in a good faith interactive process to determine an appropriate accommodation for workers with disabilities. Unfortunately, as detailed in this report, this is too often not Walmart’s practice. Other federal, state and local laws such as pregnancy accommodation protections, and sick time laws, could also be at play. Walmart’s policies and practices are not in compliance with many of these laws.

Simply put: Giving a worker a disciplinary “point” for being absent due to a disability or for taking care of themselves or a loved one with a serious medical condition is not only unfair, in many instances, it runs afoul of federal, state and local law.
Related:
Press release

(Un) Ready for Retirement

Source: Anna Petrini, State Legislatures Magazine, June 2017

States face a costly future if their citizens fail to save enough for retirement.

Most Americans are not saving enough for retirement. The problem is especially severe among small-business employees, low-income workers and communities of color. On the brink of a national retirement security crisis, state lawmakers are stepping into the breach with a spectrum of innovative solutions.

Retirement planning experts have traditionally used the analogy of a three-legged stool to describe the common sources of retirement income: Social Security, employer-provided pensions and individual savings. But the stool has grown wobbly for many workers, particularly in the private sector. For one, fewer employers offer traditional pensions, which puts the onus on workers to save more themselves. Another issue is changing demographics—people are simply living longer and need to save more money as a result. A third concern: Just how secure is Social Security?

As state officials stare down the prospect of mounting costs if their citizens retire into poverty, they’re looking carefully at how to boost retirement savings. Should they create and facilitate new retirement savings programs for private sector workers or encourage participation in existing plans?….

Paid Family Leave in the United States

Source: Sarah A. Donovan, Congressional Research Service, CRS Report, R44835, May 24, 2017

…. This report provides an overview of paid family leave in the United States, summarizes state-level family leave insurance programs, notes paid family leave policies in other advanced-economy countries, and notes recent federal proposals to increase access to paid family leave. ….

Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth

Source: Craig Copeland, Employee Benefit Research Institute, EBRI Notes, Vol. 38, No. 7, May 16, 2017

Home equity and retirement accounts—401(k)-type plans and IRAs—account for nearly all the assets that many families have to depend on in retirement outside of Social Security and traditional pension plans, according to new research from EBRI.
Related:
Press release

Pensions v 401(k)s: An Illinois Case Study

Source: Kezmen Clifton, OnLabor blog, May 26, 2017

Illinois’ pension liability is estimated to stand at more than $130 billion. The reason behind Illinois’ ever-growing pension liability is one of debate. Some attribute the deficit to legislators voting on pension bills they didn’t fully understand. Others argue that politicians chose to kick the pension ball down the road to avoid raising taxes or cutting spending on their watch. Still others, like Illinois Governor Bruce Rauner, argue the structure of the pension system itself is to blame: employees change jobs as a way to qualify for more than one pension and many seek raises in their final years as that guarantees them higher payouts during retirement.

While there is much debate about the cause of the deficit, its existence is certain. Despite being in the top 1/3 of the nation’s wealthiest states, Illinois has one of the most poorly funded retirement systems in the country. Illinois has only funded 39 cents for every dollar it has promised to pay out in pensions. The pensions of similarly populated states like New York and Pennsylvania are far better funded, with New York at 89 percent and Pennsylvania at 62 percent, respectively. It is clear that Illinois needs to rethink its current pension scheme. Some groups like Illinois Policy, a conservative think tank, advocate for Illinois to adopt 401(k)s for new government workers, but the idea has not received much traction among state employees. While the traditional debate has been between keeping traditional defined benefit plans like pensions or moving to a defined- contribution plan like a 401(k), there is a lesser explored option as well: the hybrid 401(k)-pension plan. The hybrid plan combines the guaranteed income of a pension while lowering employer contributions with a 401(k)…..

2016 Annual Survey of Public Pensions

Source: U.S. Census Bureau, May 25, 2017

From the press release:
Employer pension contributions made by state and local governments increased by 6.5 percent or $8.5 billion while earnings on investments dropped by $105.7 billion to $49.9 billion, according to the U.S. Census Bureau’s newly released report.

“The 2016 Annual Survey of Public Pensions found that total contributions were $191.6 billion in 2016, increasing 6.6 percent from $179.7 billion in 2015. Government contributions accounted for the bulk of them, $140.6 billion in 2016, increasing 6.5 percent from $132.0 billion in 2015, with employee contributions at $51.0 billion in 2016, climbing 7.1 percent from $47.7 billion in 2015,” according to Phillip Vidal, chief, Pension Statistics Branch.

The other component of total revenue — earnings on investments — declined 67.9 percent to $49.9 billion in 2016, from $155.5 billion in 2015. Earnings on investments include both realized and unrealized gains, and therefore reflect market fluctuations.

In 2016, the total number of beneficiaries of state and local government pensions increased
3.3 percent to 10.3 million people, (from 10.0 million in 2015 and 9.9 million people in 2014). The benefits they received rose 5.4 percent to $282.9 billion in 2016, from $268.5 billion in 2015.
Meanwhile, total assets decreased 1.6 percent to $3.7 trillion in 2016, from $3.8 trillion in 2015.
The Annual Survey of Public Pensions provides a comprehensive look at the financial activity of the nation’s state and locally-administered defined benefit pension systems, including cash and investment holdings, receipts, payments, pension obligations and membership information. Statistics are available at the national level and for individual states. State and Locally Administered Defined Benefits data will also be released on May 25, 2017.

Making your dollars count - Top 9 states: public-sector retirees' benefits for total contributions

State Public Pension Funds Increase Use of Complex Investments

Source: Pew Charitable Trusts, April 2017

From the overview:
State and locally run retirement systems currently manage over $3.6 trillion in public pension fund investments, most of which are held by states. Broadly, half of these assets are invested in stocks; a quarter in bonds and cash; and another quarter in what are known as alternative investments, such as private equity, hedge funds, real estate, and commodities.

Although governments and employees contribute to pension funds, investment earnings on plan assets are expected to pay for about 60 percent of promised benefits. In a bid to boost investment returns and diversify investment portfolios, public pension plans in recent decades have shifted funds away from low-risk, fixedincome investments such as government and high-grade corporate bonds. During the 1980s and 1990s, plans significantly increased their reliance on stocks, also known as equities. And over the past decade, funds have increasingly turned to alternative investments to achieve investment return targets.

Greater investment in equities and alternatives can provide higher financial returns but also bring heightened volatility and risk of shortfalls. Most funds exceeded their investment return targets during the bull market of the 1990s but then suffered losses during the volatile financial markets of the 2000s—leading to higher pension costs for state and local budgets. The volatility inherent in public funds’ investment strategies can be seen in more recent results as well, with large funds posting fiscal year gains of over 12 percent in 2013 and 17 percent in 2014, but only 2 percent in 2012, 4 percent in 2015, and 1 percent in 2016.

The shift toward more complex investment vehicles has also brought higher investment fees. State funds reported paying more than $10 billion in fees and investment-related costs in 2014, which amounted to their largest expense. Those fees, as a percentage of assets, have increased by about 30 percent over the past decade, a boost closely correlated with the rising use of alternative assets, which has more than doubled since 2006. Additionally, state funds are paying billions of dollars in unreported performance fees associated with these alternative investments…..

The State Pension Funding Gap: 2015 Market volatility deepens the divide between assets, liabilities

Source: Pew Charitable Trusts, Issue Brief, April 2017

From the overview:
The gap between the total assets reported by state pension systems across the United States and the benefits promised to workers, now reported as the net pension liability, reached $1.1 trillion in fiscal year 2015, the most recent year for which complete data are available. That represents an increase of $157 billion, or 17 percent, from 2014.

A state pension plan’s annual funded ratio gives an end-of-fiscal-year snapshot of the assets as a proportion of its accrued liabilities. In aggregate, the funded ratio of these plans dropped to 72 percent in 2015, down from 75 percent in 2014. Investment returns that fell short of expectations proved to be the largest contributor to the worsening fiscal position, with median overall returns of 3.6 percent.1 On average, state pension plans had assumed a long-run investment return of twice that—7.6 percent—for fiscal 2015.

Though final data for 2016 are not yet available, low returns will also be reflected there. Based on returns averaging 1.0 percent for that year, the net pension liability is expected to increase by close to $200 billion and reach about $1.3 trillion. Market volatility will also have a significant impact on cost predictability in the near and long terms.
Related:
Downloadable data

Local Government Employee Health Insurance Programs, 2016: Summary Report of Survey Results

Source: International City/County Management Association (ICMA), May 2017

From the summary:
The International City/County Management Association (ICMA), in collaboration with Cigna, an ICMA Strategic Partner, launched a national survey in the summer of 2016 to learn about the current state of local government employee health insurance programs. ICMA and Cigna conducted this research in follow-up to a similar survey conducted in 2011. The 2016 survey was sent via postal mail to a sample of 3,110 local governments. An online submission option was also made available. The survey was addressed to the Human Resources Director of each selected local government. The response rate was 23.0%, with 714 local governments responding. With this response, the margin of error is +/- 3.5% at the 95% confidence level.

Retiree Health Care Benefits for State Employees in Fiscal Year 2015

Source: Alex Brown, National Association of State Retirement Administrators, NASRA Issue Brief, May 2017

From the overview:
Other Postemployment Benefits (OPEB) is an umbrella term that characterizes retirement benefits, other than pensions, that are offered to employees of state agencies and participating political subdivisions who meet designated age and/or service related eligibility criteria. The most significant costs associated with OPEB benefits are for employer-subsidized health care for retired employees.
The brief discusses how different plan designs, coverage levels, and financing arrangements are associated with varying costs for sponsoring state governments.

Among the findings:
– Most states provide retiree health benefits to retired state employees, and benefits vary in design and delivery;
– More than three-fourths of the cumulative $585 billion in unfunded state OPEB liabilities are held by ten states;
– State spending on retiree health benefits was equal to 1.4 percent of total FY 15 state fund expenditures.

As state and local governments seek to reduce their liabilities, many public employers continue to accumulate assets to prefund future retiree health benefits and to reduce OPEB through program and policy changes.