This year, the holiday season will look a little different due to the coronavirus pandemic. Unfortunately, that hasn’t stopped some from acting like Grinches and spreading misinformation around public pensions and their ability to offer a secure retirement.
Below are three ways pension skeptics share misleading and often inaccurate information about public pensions.
1. Falsely claiming the COVID-19-induced economic crisis has devastated pension plans.
From their peak on Mount Crumpit, pension opponents like the Reason Foundation have falsely claimed that this year’s economic downturn has negatively impacted pension plans’ funded status.
Reputable research, however, shows this not to be the case. According to a joint report from the Center for State and Local Government Excellence and the Boston College Center for Retirement Research, the average funded ratio for local plans in the fiscal year 2020 was 70.8%. For state plans, it was 72.4%. These numbers are roughly the same as they were in the last fiscal year before the pandemic began.
2. Using their “official” sounding titles to spread misinformation.
The aforementioned Reason Foundation may sound as trustworthy as Cindy Lou Who on paper, but in practice, they and others are part of a large constellation of groups seeking to undermine public employees’ hard-earned retirement security.
Many of them, such as Reason, belong to the State Policy Network (SPN). The SPN bills itself as a “state-based free-market think tank movement,” but underneath that veneer, it funds organizations that advocate against workers’ rights by publishing biased and misleading research on pensions and retirement security.
Consider your source of information and check if they have advocated against pensions in the past when pensions are in the news – and be sure to read This Week in Pensions for the latest news in the fight for retirement security.
3. Arguing that defined-contribution plans like 401(k)s offer the same level of retirement security as pensions.
This point is incorrect because 401(k)s are more vulnerable to market downturns than pensions. Pensions are pooled and specifically invested for the long-term, unlike their defined-contribution counterparts, making them more equipped to overcome blips in the market. And while 401(k)s were initially marketed as a way for workers to prepare on their own for retirement, the 401(k) makes it more difficult given the rising cost of living, cutting into workers’ ability to save for retirement.
This holiday season, watch out for misleading information from anti-pension Grinches. You never know when they could be lurking around Whoville.