Welcome to the latest edition of This Week in Pensions! We have gathered the best stories about pensions and retirement security from the previous week. You need to know this news in the fight for a secure retirement.
NPPC News
Did you know that professional athletes receive defined-benefit pensions? In honor of the start of football season, we’ve gathered all the facts for you! Read about it here.
Study: Decline in DB Plans Widens Income Inequality Gap
The National Conference on Public Employee Retirement Systems (NCPERS) published a report this week that found a troubling connection between a reduction in public pensions and income inequality.
The study examined the implications of the rising trend of employers switching from defined benefit to defined contribution plans while also seeing reductions in spending on pension plans through means such as raising employee contributions, cutting benefits, and closing pensions to new hires. According to the report, the share of the US workforce covered by defined benefit plans decreased from about 50 percent in 1977 to about 37 percent in 2021.
These changes not only create immediate hardships for individual workers but also have a broader, detrimental impact on the economy. For instance, one estimate suggests that rising inequality reduces GDP growth by 2 to 4 percentage points each year—a significant concern given that approximately 70 percent of U.S. economic growth is driven by consumer spending.
When retirees spend their pension income, it results in a significant boost to both the local and national economy, as well as the trillions of dollars that are spent across diverse investment portfolios. Pensions are a tremendous force in driving economic growth.
This report is a stark reminder that a strong pension plan for workers benefits everyone.
Be sure to check back next Friday for the latest news in the fight for a secure retirement! For now, sign up for NPPC News Clips to receive daily pension news from across the country directly to your inbox.