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Archive June 2020

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NCPERS Response to "COVID-19 will turn the state pension problem into a fiscal crisis"


States have fiscal problems in good times and bad, so to heap these problems on the doorstep of public pensions is unwise and unfair. As a former executive director of National Governors Association, Professor Scheppach surely knows that allocating and implementing adequate and equitable funding for public education, health care, infrastructure—or for any public service for that matter—is one of the most vexing issues any state faces. Spending decisions are often highly politicized; scapegoats are sought when the numbers don’t add up to the liking of politicians who want to fund their pet projects.

State and Local Governments Have Solid Capacity to Sustain Pensions

  • By: admin
  • On: 06/24/2020 13:30:14
  • In: News
  • Comments: 0
 

Producing compelling and timely research that illuminates practices, trends and the outlook for public pensions has always been a cornerstone of our mission at NCPERS. And in the current environment, when the Covid-19 health crisis is stirring up concern about the fiscal health of states and municipalities, this mission is particularly urgent.

Our newest Research Series report, “In Tranquility or Turmoil, Public Pensions Keep Calm and Carry On,” adds to the growing body of knowledge about the capacity of state and local governments to handle their pension obligations.
 

Unintended Consequences: Conclusions

  • By: admin
  • On: 06/23/2020 09:36:37
  • In: News
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Most policy makers across the country have had to wrestle at one time or another with whether to scrap public pensions and move forward with retirement savings plans that shift the investment decisions to employees, as well as whether to cut benefits and increase employee contributions. But they have been pondering these choices in an information vacuum, because they have not reckoned with the ripple effects of discarding a time-tested method of providing workers with a secure retirement. Our research demonstrates that public pensions have beneficial effects on state and local economies. Shutting them down would ultimately increase taxpayer burdens, and harm state and local economies and tax revenues.

Trends in the Economic and Revenue Impacts of Public Pensions

  • By: admin
  • On: 06/15/2020 10:43:54
  • In: News
  • Comments: 0

In the second half of the third part of the Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk: 2020 Update Results blog, we will examine the trends in the economic and revenue impact of public pensions.

Now that we have conducted the Unintended Consequences study twice using the latest data available each time – 2016 data in 2018 and 2018 data in 2020 – we are able to examine the trends. As mentioned earlier, the impact of pension fund investment on the economy increased between 2016 and 2018. In 2016, the economy grew by $1,088 for each $1,000 investment of pension fund assets. In 2018, the same figure is $1,362 – a 25 percent increase. This increase may reflect the size of pension fund assets and changes in the relative impact of other variables in the model.

NCPERS Response to "Two Decades Ago, Progressives Warned of a Retirement Crisis. It Didn’t Happen"




Andrew Biggs’ latest Forbes column (“
Two Decades Ago, Progressives Warned of a Retirement Crisis. It Didn’t Happen,” May 29, 2020) is a study in cognitive bias. When confronted with mounting evidence that Americans are woefully unprepared for retirement, his response can be boiled down to the ostrich effect—“Nothing bad has happened, so nothing bad WILL happen.” Disbelieving and minimizing threats, as he does, is just as bad as defaulting to a worst-case scenario, as he often does with public pensions.

Unintended Consequences: Results

  • By: admin
  • On: 06/10/2020 09:11:53
  • In: News
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In the third part of the Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk: 2020 Update blog series, we will discuss the results of the study.  First, we describe the results of the econometric model to measure the economic impact of pension fund assets, considering other variables that also impact the economy. Second, we examine the impact of pension fund assets on the economy and the tax revenues of each state. Third, we measure the impact of spending of pension checks by retirees on state economies and tax revenues. Fourth, we evaluate the total impact of pensions (pension assets plus retiree spending) on state and local revenues. Finally, we compare state and local revenues with taxpayer contributions to examine whether or not pensions are net revenue generators, and if they are, how much more taxpayers would have to pay to receive the current level of services if there were no public pensions.
 

LAM Blog Post: Investment Implications of COVID-19

  • By: admin
  • On: 06/03/2020 09:00:50
  • In: News
  • Comments: 0

NCPERS hosted a webinar with Lazard Asset Management, “Life on the Other Side of COVID-19” with Ronald Temple. Ron divided the COVID-19 crisis into four parts: healthcare, the economy, policy responses, and investment implications. In this blog, we will breakdown the investment implications.

Fixed Income Markets

In a typical month over the last eight years, U.S. corporations with investment-grade credit ratings issued about $100 billion of debt per month on average. 

Public Pensions Have Staying Power Despite Short-Term Setbacks, Study Shows




Public Pensions Have Staying Power Despite Short-Term Setbacks, Study Shows
 
WASHINGTON—Public pensions have the economic capacity to keep paying benefits in difficult times notwithstanding short-term hitches caused by the Covid-19 health crisis, according to a research report by the National Conference on Public Employee Retirement Systems.

 

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