Promoting Defined Benefit Pension Plans Hank Kim, Esq. National Conference on Public Employee...
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Transcript of Promoting Defined Benefit Pension Plans Hank Kim, Esq. National Conference on Public Employee...
Promoting Defined Benefit Pension Plans
Hank Kim, Esq.
National Conference on Public Employee Retirement Systems
Presentation Overview
• Introduction to National Conference on Public Employee Retirement Systems
• Past battles to preserve DB
• Battles ahead and applying lessons learned
• The new language of DB
• Wrap up and Q & As
NCPERS
• Largest nonprofit trade association representing 500 public sector DB plans
• Who we ARE:– Advocacy– Research– Education
NCPERS Position
• All workers (public and private) should have a traditional pension benefit (DB plan) as their primary pension plan
• DB plans are good for governments, employees, taxpayers and the economy
Test Your Knowledge of Public Pensions
• How many public pension plans are there in the United States?
a. 78
b. 472
c. 2656
Test Your Knowledge of Public Pensions
• How much money do public pension plans control?
a. $300 billion
b. $3 trillion
c. $30 trillion
Test Your Knowledge of Public Pensions
• How many public servants are there in the United States?
Test Your Knowledge of Public Pensions
• How many public servants are there in the United States?
a. 14.1 million active/6.9 million retired
Test Your Knowledge of Public Pensions
• What is the average pension benefit of a retired public servant?
Test Your Knowledge of Public Pensions
• What is the average pension benefit of a retired public servant?
a. $20,400 per year
Test Your Knowledge of Public Pensions
• How many Fortune 500 companies offer DB plans?
a. none
b. Less than half
c. More than half
Public Pensions
There has to be a balance:
• employer contributions,
• employee contributions,
• investment returns, and
• benefit-funding ratio
Past Battles
Defined Benefit to Defined Contribution
• West Virginia Teachers (1990)
• Michigan State Employees (1997)
• Alaska (July 1, 2006)
Past Victories
DC to DB
• North Dakota (1977)
• Nebraska (2000)
• West Virginia Teachers (2005)[61% voted to return to DB plans]
Past Victories (cont.)
Preserving DBs
• Florida (2000) - optional
• California (2005)
• Colorado (2006)
The Battles Ahead
Three Alarms – direct threats (5)
Alaska – working to overturn
Arizona – DC bills introduced
Kentucky – commission to review benefits
Rhode Island – state-wide two-tier system proposed plus Providence has DC proposal
Utah – DC proposal for select new hires
The Battles AheadTwo Alarms – significant threat (12)
California
Hawaii
Illinois
Michigan
Minnesota
Montana
New Jersey
Oklahoma
Ohio
Oregon
Virginia
Wisconsin
The Battles Ahead
One Alarm – potential threat (19)Alabama Colorado ConnecticutIndiana Kansas LouisianaMaryland Massachusetts Mississippi Nevada New Hampshire New MexicoNew York North Carolina Pennsylvania South Carolina Texas WashingtonWest Virginia
Are you concerned?
• 36 states’ public pension systems are in play today!
California Battle-Lessons Learned
ELIMINATE DB PLANS:
• Governor proposed ballot initiative
• Legislator introduced bill
• Coalition of concerned groups
• Powerful DB message
• Stayed on message
Alaska Battle-Lessons Learned
Eliminate DB Plans (7/06):• Legislation (short session)
• Legislature kept in session
• Groups slower to organize
• Message not as clear
Colorado Battle-Lessons Learned
• Bill to eliminate DB plans
• Ballot initiative proposed
• Groups overcame differences and formed an effective coalition
• Got buy-in from all stakeholders
• Legislative compromise deflated ballot
initiative
Download DB Tools
www.NCPERS.org
• NCPERS Research
• Fact sheets
• Myths and Facts
• Testimonials
• Updated information
Download DB Tools
www.NCPERS.org
• NCPERS Research
• Fact sheets
• Myths and Facts
• Testimonials
• Updated information
Download DB Tools
www.NCPERS.org
• NCPERS Research
• Fact sheets
• Myths and Facts
• Testimonials
• Updated information
Download DB Tools
www.NCPERS.org
• NCPERS Research
• Fact sheets
• Myths and Facts
• Testimonials
• Updated information
Download DB Tools
www.NCPERS.org
• NCPERS Research
• Fact sheets
• Myths and Facts
• Testimonials
• Updated information
Messages That Work
• Elimination of death & disability benefits
• Traditional pensions are a tried and true system that benefit taxpayers
• New system will be costly and chaotic
Messages That Work
Use analogies and best face of public service :
• mortgage
• public safety heroes
What’s the Problem?
Total unfunded liability of public funds is $350 billion (2,656 systems)
Americans owe $8.8 trillion in mortgages!
Should we abolish home mortgages?
What’s the Problem?
Our plans are funded at 87%.
If you had 87% of your mortgage paid off – would anyone consider you in financial trouble?
Things to Remember
• Not a debate on the merits of DBs—it’s a media battle!
• Educate constituents early and often
• Build coalition with other stakeholders
• Have emotional stories and sympathetic figures
• Stay on message
NCPERS 2007 Educational Programs
Legislative ConferenceFebruary 5-7 in Washington, DC
Trustee Educational Conference May 18-19 in Honolulu, HI
Annual Conference May 20-24 in Honolulu, HI
Program for Advanced Trustee StudiesJuly 26-27 in Cambridge, MA (HLS)
Public Sector Health Care Symposium October 1-3 in Chicago, IL
Public Safety Employee Pension & Benefits ConferenceOctober 14-17 in Palm Springs, CA
For More Information
NCPERS444 North Capitol Street, NW, Suite 221Washington, DC [email protected]