Pensions Are Promises. States Need to Keep Up Their End of the Deal

Pension PigMy Pop, a bus driver in Buffalo, worked until the mandatory retirement age of 70. He and my Mom lived on Social Security along with his modest pension. One Christmas, Pop couldn’t get into the spirit of the season. The next day, he confided that the next year health care premium increases would consume his entire pension check, and then some. I can only imagine how my parents’ lives would have been affected if Pop’s pension had been cut in retirement.

Like my parents, millions of retirees count on their pension benefits to meet their basic needs. Public employees, like teachers, firefighters and police officers, have earned their retirement. They, like others, have paid into the system over a lifetime of hard work and now rely on the pensions they’ve been promised to retire with dignity.

Unfortunately, their employers – states – don’t always keep up their end of the deal. Too often states try to abandon their commitment to these hard-working Americans when they:

– Leave a pension system underfunded.
– Make unfair cuts to promised cost-of-living adjustments.
– Use a pension fund as a piggy bank to pay for other state programs.

These actions affect state employees’ ability to live independently as they age.

To make matters worse, unlike most Americans, many teachers, police and other state employees do not get Social Security, and instead rely more heavily during retirement on the pension benefits they earned.

This is why AARP is fighting to make sure states across the country keep up their end of the deal. Here are some of the ways we’ve protected the financial future of our teachers, firefighters, police and other public employees who are counting on their pensions after a lifetime on the job:

In Arizona, AARP fought to defeat House Bill 2058. The bill would have put a limit on how much of an employee’s income the state could use to calculate their pension, without allowing for inflation adjustments.

In Mississippi, retirees will keep their 13th check, a component similar to a cost-of-living adjustment to help retirees make ends meet.

In Nebraska, a change in tax structure will benefit retirees. Now Nebraskans’ Social Security benefits are exempt from state income taxation up to $58,000 for married joint filers and $43,000 for all other filers.

Related: Work and Save From Sea to Shining Sea

In addition, Colorado and Wyoming have taken steps to make sure their pension systems are strong for generations to come.

In Colorado, AARP fought to defeat legislation that would have renegotiated reforms made in 2010 to shore up the state’s pension system before they had time to work.

In Wyoming, the state public pension fund was made more secure by increasing both employee and employer contributions.

AARP will continue to fight across the states to make sure hard-working teachers, firefighters, police and other public employees receive the benefits they have earned.

Follow me on Twitter @RoamTheDomes for more news on advocacy across the country. And to stay up to date on our AARP advocacy in the states, sign up for the AARP Advocates e-newsletter or visit your state Web page.

montco1 5pts

These guarantees can't continue. People have to step up and take responsibility for their own retirements, like the rest of us. Unfunded public liabilities, I. e., pensions are never fussed up to. Not hard to figure that one out.

Citizens have virtually no control over the promises of your politicians. Hey, its the politicians pensions, too. Fix is always in.

dr5226 5pts

There are few companies with exception of unionized ones that still offer a pension.

The unionized companies will not be able to meet the pension levels of union pay and will find ways

to eliminate them. Just as the rest of the private sector did.

The glory days of working 4 hours, getting paid for 8, working another 4 for time and a half and getting 8 hrs time and a half and a pension are over.

This was my Father-in-Law working for GM.

At least he was fiscally responsible and saved his easy money.

Others just blew it.

Most I would say.

evandkenwood 5pts

the states are liable for thisdebt to all people that have worked or is now working for them this is a signed contract and it is bindind

st2017 5pts

The pension egg started to crack for the private sector in the 80s as declining asset prices put too much pressure on corporations to pay future debt obligations.The public sector depends on the private sector for funding of salaries, benefits, etc. so the stress in the public sector is understandable given the economic climate over the past 10+ years.Public sector pensions will be around for some time, but adjustments are obviously needed.At its core the pension issue is a debt issue and dealing with debt is very

ccncee 5pts

@montco1 well, I did my due diligence & saved for my retirement 25 of the 40 years I worked.  I used to work for a company that had great benefits including a defined pension plan, but I was downsized at age 54. Still, I thought I'd saved enough to take the time to consolidate liabilities, have several yard sales & sell my house over a 2 year period using my severance pay, unemployment insurance & money market savings for 2 years, before moving to the state I'd planned to retire in. Guess what? Between the greed on Wall Street & some really bone-headed government decisions, my retirement savings got hit with a 30+% loss, not once, not twice, but 3 times over 8 years, so I'm living on the reduced (87%) monthly pension + $1,000/month from my savings & trying to hold on to age 66 when I can collect my full SS.  Why am I waiting? Because the pension could stop at any time due to the company I used to work for just coming out of bankruptcy.  If they cannot sustain a profit, I lose my pension. In order to make up that monthly payment, I need to wait to get my SS until I reach age 66.  If I took SS now, yes, I'd get more than enough to live on - FOR NOW - but if I lost my pension & with the rate of inflation, by the time I was 66, that monthly SS would NOT be enough & what's left of my retirement savings would be gone within 10 years - if Wall Street & the government don't waste it again like they've done before.  So much for promises.  Seems the contract between employee/employer does NOT mean a thing - regardless of whether its private, like the company I worked for, or public, like any state government. To me, trust is the issue, not saving money.  I did what everyone is encouraged to do, slowly building up my savings from 5% of pay to 30% of pay over my working life, putting more into my retirement savings as I got closer to retirement & building up my liquid money market funds so I had enough to live on for 1.5 years.  Still, it didn't do me much good because of the greed & ineptitude of Wall Street & government.  I live in constant fear that what relatively little I have left in my retirement savings will again be taken from me & I will end up in poverty with an uncaring government being my guardian in my old age.  I don't like that picture of the future.  Again, I say, trust & honesty are the problem.  Until those are fixed & employers honor their contracts with their employees, don't expect the saving rate to increase to what it once was.  A lot of people feel it's better to save their money in their mattress at home rather than let Wall Street or the government know they have it.  The lure of small interest compounded over the years isn't as shiny once it's been tarnished by the corruption & lying & stealing that most investors have seen over the last 14 years.