Earlier this summer, the conservative editorial magazine National Review published a piece authored by Dominic Pina entitled Republicans Need to Promise Now: No State Pension Bailouts. The politics and policy story in this notorious right-wing publication (founded by noted segregationist William F. Buckley) has many issues, the most fundamental problem being that it articulates opposition to a phantom proposal that no national pension groups are asking for.
As the Executive Director of the National Public Pension Coalition, I can assure you that public pensions are not asking for a bailout. Why? Because that would be wholly unnecessary. There has never been a public pension system that did not pay its promised benefits. Moreover, public pensions are sacrosanct. The state of public pensions is excellent.
Thus, the National Review is coming out preemptively against a policy solution that nobody is asking for, to a nonexistent problem. In doing so, they are attempting to politicize public pensions and attacking the hardworking firefighters, teachers, and public servants who depend on those guaranteed lifetime benefits for their families’ retirement security. Public servants should not be used as a political football and rhetorically kicked as election-year boogeymen.
Project 2025, the dangerous political initiative developed by The Heritage Foundation, wants to decimate the civil service. Anti-government extremists have already attacked public servants who administer our elections, assaulted the capitol police, banned librarians’ books, and dangerously threatened air traffic safety, outsourcing inspections entirely to Boeing with tragic results.
Heritage wants to go backward–it’s right there in their name. Theirs’ is a full-frontal assault on the humans who run the government day in and day out, middle-class folks who drive the school bus, teach children, and fix them healthy meals. Over the past decade, wise policy changes and increased financial contributions directly from workers’ paychecks have significantly enhanced the cash flow of state pension plans–at the expense of hourly workers’ net take-home pay.
What I am saying is that much of the money that has shored up public pensions has come directly from rank-and-file workers through increased employee contributions—directly out of the pockets of school nurses, social workers, parkkeepers, and community-saving heroes. Meanwhile, millions of public servants have also absorbed substantial benefit cuts since Wall Street caused the Great Recession, accepting a more modest retirement income in exchange for a more secure pension fund, which is measured through an actuarially determined number known as the funding ratio.
The numbers and analysis are just as problematic as the author’s disturbing worldview. When reviewing the average rate of returns and historical performance, it’s hard to argue, as Pina does, that public pension plans are overly aggressive or optimistic in their projections. Plans have adjusted assumed rates or returns and kept them in line with their actual investment return averages. Experts manage these funds, doing their duty with fiduciary interests in mind, with open meetings live on Zoom, and usually backed by bipartisan consensus in state legislatures.
National Review’s Dominic Pina could not have been more wrong when he wrote, “Most states assume discount rates of 7% or higher, which is a complicated return to achieve with investments safe enough to be in a pension fund.” There’s no reason to speculate if a specific rate of return will be difficult to achieve. Pensions & Investments magazine publishes data from select plans across the country to chart their investment returns. The Ohio School Employees Retirement System has a 10-year return average of 7.8%. The San Bernardino County Employees’ Retirement Association has had a 5-year average rate of return of 8.2%.
Meanwhile, survey data from the National Conference on Public Employee Retirement Systems 2024 Public Retirement Systems Study pins the average assumed investment rate of return (what Pina calls terms the discount rate) at 6.91%, compared with 6.86% the year prior, but short of the 7% or higher National Review alleges. In another example, CalSTRS, one of the largest pension systems in the nation, reported a 2023 return rate of 8.4%, well ahead of its investment return assumption of 7%.
This astute management of pension funds was recognized last fall when Pew Research asked, “Are pensions still in crisis?” with the following response: “No state is at risk of insolvency.” The narrative that pensions are in trouble, which the right-wing National Review is pushing, is patently false. In fact, the state of public pensions in the United States hasn’t been this solid in decades, and the data backs this up.
The National Review propaganda piece also states, “Defined-benefit pensions are a thing of the past…” While it is true that dividend-obsessed corporate executives have shifted away from providing pension benefits to their workers since the 1980s (while lining their own pockets with monstrous bonuses), defined-benefit pensions are now experiencing a genuine resurgence.
This past May, the New York Times Magazine published an article outlining the severe problems for retirees related to the transition towards 401(k)s and asking if the move was a national mistake. The fact is, the majority of American workers are behind in saving for retirement, and many will attempt to retire on inadequately funded 401(k)s and Social Security benefits alone.
As NPPC outlined last month, public sector pensions are again experiencing a significant expansion as states and cities across the country reinstate and bolster these benefits. And it goes beyond just the public sector. Earlier this year, IBM began switching its employees from a 401(k) to back to traditional pensions. Pensions now cover thousands of new public sector workers because their employers reversed course and have returned to pensions, knowing that secure retirement benefits are a superior recruitment and retention mechanism.
The National Review article in question is nothing but Koch Brothers-funded Club for Growth propaganda in an infamous libertarian rag. The supposed proposal it rails against has never even been put forth, and the piece is all politics and zero policy because it’s filled with factual inaccuracies. However, this type of misinformation should not go unchecked. Sign up for NPPC News Clips to receive reliable daily pension news from across the country directly to your inbox.