Posted by Rachael Heisler on March 25, 2016 at 2:50 PM
SAN JOSE, Calif., March 25, 2016 – “Leaders who take on pension reform know it is difficult work. In Chicago, Mayor Rahm Emanuel’s reform efforts were dealt a setback yesterday by the Illinois Supreme Court’s decision to strike down the city’s pension plans. This decision highlights just how difficult it is to achieve retirement security for public sector workers. Even when government and union leaders came together and agreed on a path forward, their work was swept aside by justices who will one day each receive a public pension. Retirees, workers and taxpayers are all worse off with this decision.
“When Chicago’s pension plans were reformed in 2014, the city had agreed to higher funding if the growth in pension liabilities was slowed. Now, with this decision, the burden falls to the next generation of Chicago taxpayers who will face much greater bills for today’s pension debt. The Illinois Constitution says nothing about required funding levels, yet this court decision now imposes that on all Illinois governments.
“Over the last eight years, more than 45 states and numerous local governments have instituted some form of pension reform, which many times included increasing contributions and reducing benefits. There have been more than 18 state court decisions dealing with pension reforms by state or local governments, and more than 75 percent of those affirmed the pension reform, many times citing the higher public purpose of assuring the funds for essential governmental services. Illinois is one of the few states that has over the past two years ruled against pension reform, including any reduction of benefits or any involuntary increases of contributions by public workers.”
Posted by Rachael Heisler on February 16, 2016 at 5:29 PM
SAN JOSE, Calif., February 16, 2016—The Retirement Security Initiative (RSI) today called Arizona’s bipartisan legislative overhaul of its statewide public safety pension system a huge win for the state and for pension reform efforts across the nation. The legislation, which was signed into law today by Governor Doug Ducey, will set Arizona’s public safety pension system on a path to stability, saving the state billions of dollars in the coming decades while still providing retirement security for workers.
Arizona’s Public Safety Personnel Retirement System currently has $6.2 billion in assets but $12.7 billion in liabilities. The plan’s debt has been skyrocketing for years due to factors like poor investment performance and an unsustainable cost-of-living formula structure. To help make up the shortfall, required employer contributions to the plans have drastically increased over the past few years, by as much as 145 percent, exceeding 60 percent of payroll in many jurisdictions throughout the state.
“Without immediate changes to Arizona’s public safety pension system, employer contributions will continue to skyrocket with every downturn in the market putting the system at risk of collapse,” said RSI principal and former Utah State Senator Dan Liljenquist. “These reforms are a major victory for Arizona taxpayers and public workers.”
Major provisions of the reforms include replacing the broken cost-of-living formula structure with a traditional Consumer Price Index-based calculation for employees and retirees; offering new workers a choice between a full-defined contribution plan and a traditional pension plan; and requiring new employees and their employers to share equally, 50/50, in retirement account costs while capping pension payments.
RSI credits Arizona State Senator Debbie Lesko (R-21) for her tenacious, year-long effort to build consensus among pension stakeholders, including firefighters, police officers and city and local governments, as well as the leadership exhibited by Arizona’s public safety associations, including the Professional Fire Fighters of Arizona, without which the reform would never have happened. The Reason Foundation also provided substantial support, including actuarial analysis, reform ideas and facilitation of consensus among stakeholders. RSI believes that successful pension reform must include collaboration and partnerships and be developed with input from employees, retirees, labor, management, taxpayers and fiscal experts.
“We congratulate Senator Lesko, Arizona’s public safety associations and Reason Foundation for a job well done,” said Liljenquist. “Their efforts are a shining example that pension reform is possible and we are optimistic this win will provide momentum to other state and city governments that are challenged by growing pension debt to act sooner rather than later.”
For more information on the Arizona reforms, click here.
Posted by Rachael Heisler on January 26, 2016 at 3:00 PM
San Jose, Calif., January 26, 2016 – A group of nationally recognized pension reformers today announced the launch of the Retirement Security Initiative (RSI), a national, bipartisan advocacy organization focused on helping state and local governments meet their pension obligations and avoid insolvency. Spearheading the group’s efforts are: former Utah State Senator Dan Liljenquist; former Lt. Governor of New York Richard Ravitch; former Mayor of San Jose Chuck Reed; former CFO of Chicago Lois Scott; and financial restructuring expert Jim Spiotto.
With national unfunded pension liabilities in excess of $1 trillion, state and local governments throughout the U.S. are under tremendous strain to provide adequate services and meet their pension obligations. As pension costs continue to skyrocket, policymakers often pull funds from important public services like education, public safety and transportation to pay pension debt. In the end, it’s taxpayers and communities that pay the price.
“We need to fix the pension crisis now to avoid further tax increases and public service disruptions,” said Liljenquist, who championed groundbreaking Utah pension reforms during his senate tenure. “Many pensions, as they are currently structured, are like the game Pac Man, chewing up funds that should be going toward essential community services.”
In an effort to help state and local governments meet these challenges, RSI marshals a broad range of expertise and resources to organize and support policy development and advocacy efforts at the federal, state and local levels.
“Solutions to the funding and cost crises need to be developed with input from employees, retirees, labor, management, taxpayers and fiscal experts,” said Reed, who spearheaded comprehensive pension reform that was approved by San Jose voters in 2012. “RSI has the experience and resources to bring all of these parties together.”
RSI advocates for state and local governments to act to ensure that their retirement plans are sustainable, fiscally sound and responsibly managed so that all retirees and employees get paid what they have earned. The organization also advocates for decision making and management of retirement plans to be open, transparent and non-political.
To learn more about RSI, visit: RetirementSecurityInitiative.org.