1 Burst results for "Marcy Frost"

]]Securing Public Pensions

After The Fact

05:44 min | 2 years ago

]]Securing Public Pensions

"The first star emission disturbing members can be police officers. They came preschool employees and state employees. And what we do is we. We make sure that they have a retirement benefit at the time that they're ready to stop actively working in calpers over the last four years has been making very difficult decisions about the appropriate funding of these pension plans for the future. We'll trust i'm dan. Lewis can this is after the fact and that was marcy frost. She leads the california public employees retirement system. Calpers is the nation's largest public pension system with a global investment portfolio of around four hundred twenty billion dollars that's a figure larger than the gdp of countries like norway singapore and the difficult decisions. Marcie mentions affect the retirement benefits for nearly two million public employees retirees and their families is a challenge facing many states across the country as they look at the best ways to fund their public pension systems. And that's something. Greg menace works on at pugh helping states develop solutions to close the funding gap between what state pension plans odor their public employees. And the money. That's being put aside to pay that bill up. Hugh analysis in two thousand eighteen found that funding gap in the states totaled one point two four trillion dollars. That's with a t and that's the data point for our episode. It's a number. Experts see growing with the impact of the coronavirus pandemic amid those daunting numbers states like pennsylvania and california have discovered innovative ways to ensure pension systems. Keep their promises to retirees. Most people are familiar with 401k. Plans and over sixty million americans saved through retirement primarily through those kinda plans in the public sector. It's different where most of the state and local workers participate in what are called defined benefit plans by and large this distinction where in the public sector benefits are paid for through a fixed payment in retirement And the money is managed by the state and today there's about four trillion dollars in public assets. Invested in stocks bonds alternative investments is the main differences between that. Most people save for retirement. The all of us have to be concerned about our retirement. All of us need to plan ahead. Why should all of us care about the public. Employees pension system a well funded pension system in the public sector. can literally cost billions billions of dollars less every year from the state or local budget as compared to one. That's severely underfunded. The short answer is that in a well-funded system the state or local government is setting aside money each and every year while people are working to pay for their benefits when they retire and as it turns out by doing that it ends up that compounded investment earnings and up paying for the majority of the benefit. I'm in contrast they severely underfunded system. Where the money hasn't been set aside while people are in their working years. They lose out. On all kinds of compounded investment earnings and as a result the majority of the cost comes out of the state for state or local budget. I'm just to provide some examples. We look at pension. Plans in states. Like tennessee and south dakota and wisconsin all of which are close to being fully funded. It sounds like if states are planning their investments properly in a smart way. The earnings made by those investments can pay for the costs to maintain the fund. What happens with states. That aren't fully funded if you look at states like kentucky illinois new jersey all of which have less than fifty percent of the assets set aside that budgetary cost is closer to fifteen percent of revenue on average so that means no state somewhere between one and ten in one in five tax dollars going to pensions that adds up to about a ten billion dollars of additional cost across those three states alone. And so i think this is important from the public's perspective not only because of the impact that can have on state and local budgets and in turn the resources that are available for public services but also because having a well-funded system helps to prevent reductions in workforce or cuts in benefits that you need to attract skilled public workforce to be very specific. That means there's less money to buy police cars or paved roads or any other public service. That taxpayer dollars fund right. I mean and that's that's a big deal. I mean the government is always looking to contain costs whether it's healthcare or other issues this is. This is a big ticket item for a lot of states. That's absolutely right. And as i mentioned before. I think for a larger state and city the difference between having a well-funded system in an underfunded system comes out billions of dollars every year so everything from investments in education and infrastructure to healthcare ends up being strained in the budget each and every year it almost sounds like innovation is sort of old school ideas of like. Just you know figuring out what the bills are going to be a mixture. You got the money to pay for them you know. I think that that's right. And there are two ways in particular where i think innovation plays a role you to first off it has to do with how plans and pension systems planned for uncertainty and some of the states that i just mentioned tennessee. Wisconsin in south dakota very clear predefined rules about how to adjust cost if there's a downturn or investments underperform. This includes building margin of safety into assumptions essentially setting aside a rainy day fund within the pensions system and then also adjustments to worker benefits. That are clearly understood by everybody and so from that perspective i think innovation goes back to looking at the policies and practices that these states have been following for

Marcy Frost Greg Menace Calpers Marcie California Pugh Norway Lewis Hugh DAN Singapore Pennsylvania South Dakota Tennessee Wisconsin