US - State and local defined benefit pension schemes face opponents on fundamental, philosophical and financial fronts, National Association of State Retirement Administrators (NASRA) research director Keith Brainard has said.
Brainard told Global Pensions: “There are numerous service providers - who lobby state legislators - that see the money available in public sector sections and would like a piece of the action.”
Other people were just “fundamentally and philosophically” opposed to pooled assets in public sector, he added. Another battle DB plans faced was the perception that government could wring some fiscal savings out of those pension plans by terminating them.
“So I think effort to terminate DB pensions, or make them optional, has several sources,” said Brainard.
Brainard stressed the opposition to DB schemes might be misplaced, as such plans were in “good shape” as a group, and were moving in the right direction.
“These plans phase in investments over several years, and have booked most of their losses, but very little of investment gains that started three years ago,” he said. “So in next couple of years will see funding levels tick back upwards.”
He did concede certain plans were in poor condition, buts said people needed to view each plans problems as a unique case.
“Plans need to reflect on their governance structure, plan design, and ensure we plan design meets needs of all stakeholders - employers, tax payers, and plan participants.”
Brainard concluded that society was not well served through a decline in DB pensions.
“The nation’s retirement readiness has deteriorated over last 30 years as the number of DB plans declines,” he said. “I think all of us have an interest in promoting policies that provide a source for assured retirement income.”
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