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. This is the news you need to know in the fight for a secure retirement.
Alaska Pension Fight Gets Heated in the Media
As House Bill 78 makes its way through the Alaska Senate, the political discourse around establishing a new defined benefit system spilled over into the state’s largest newspaper this week.
Days after lawmakers proposed sending inmates out of state to combat the $24 million in unexpected costs in the Department of Corrections budget, the Editorial Board of the Anchorage Daily News shared a dangerously misinformed opinion about restoring retirement security for public service, which neglected to address one of the biggest economic issues facing the state: exponential budgetary increases due to overturn-related costs.
Senate Majority Leader Chuck Kopp penned an immediate response, noting that the cost of losing workers’ institutional knowledge has a residual fiscal impact on the entire state.
“Engineers who understand permafrost. Fisheries managers who know the runs. Troopers who know their communities. Teachers who build careers in the same district. Institutional knowledge is operational capacity. Right now, we are bleeding that capacity and paying for it at escalating rates,” Kopp writes.
The state’s actuary confirms that, “HB 78 will flatten overtime costs, decrease vacancies, [and] improve retention.”
Can AI Close the Gap of Financial Literacy?
A primary pitfall of individual defined contribution accounts is the prevalent lack of financial literacy in today’s workforce–and now, some workers are turning to AI to help them navigate their 401(k)s.
Nearly 30% of people surveyed by Intuit Credit Karma in August reported using generative AI for financial advice, specifically to help with retirement decisions.
“AI is filling a gap for millions of people who may not have access to traditional financial guidance,” said Courtney Alev, a consumer financial advocate at Intuit Credit Karma. “If used thoughtfully, it can help people start planning for retirement earlier, set clearer goals, and make more informed decisions.”
However, financial professionals have reservations about using AI for retirement planning, citing nuances AI doesn’t pick up on and the potential for privacy breaches when users pony up their personal information, such as sensitive financial details or personally identifiable data like bank statements or their Social Security number.
“When you use AI for retirement planning, remember, the model doesn’t know you — it only knows patterns in its training data,” said Chris Cochran, vice president for AI security at SANS Institute, a cybersecurity training company. “It might sound confident, but its investment outlook is unlikely to match your real risk tolerance, which is why a human check is still essential.”
Colorado Joint Budget Committee Rejects PERA Payment Cuts
In a major win for retirement security, the Colorado Legislature’s Joint Budget Committee (JBC) voted 6-0 this week to fully fund the state’s obligation to the Public Employees’ Retirement Association (PERA). The move reaffirms the JBC’s commitment to fiscal responsibility, which directly defied Governor Jared Polis’s budget proposal to temporarily reduce contributions from employers in PERA’s State Division.
The JBC also voted to draft legislation to strengthen the system and reduce the risk of triggering automatic adjustments. Proposals include allowing PERA to decide how to direct the State’s $225 million annual payment to prevent automatic adjustments best, and utilizing funds from the employers’ health care trust fund to pay down pension debt.
Wyoming Retirees Make a Case for Inflation Adjustment
This week, former Executive Director of the Wyoming Education Association and member of the Wyoming Coalition for a Healthy Retirement, Ron Sniffin, penned a letter to the Cowboy State Daily, emphasising the critical need to address rising costs for Wyoming state retirees.
“It is choosing between filling a prescription or turning up the heat in winter. It is stretching groceries to make it through the month. It is quietly worrying about rising property taxes or insurance premiums while living on the same monthly check that they received in 2008,” Sniffin writes.
“These are the men and women who taught our children, maintained our highways, cared for vulnerable citizens, and protected our communities. They upheld their commitment to public service.”
The Wyoming Legislature has the opportunity to make a budget amendment providing responsible retiree relief this year. If you live in Wyoming, follow this link to send a letter to your legislator today.
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.