Defined Benefit Retirement Plans: The Solution to Americas Retirement Crisis

For many americans the dream of a secure and comfortable retirement is fading we have a retirement crisis looming in this country millions of americans will retire into poverty what people have talked about traditionally is the idea of having a three-legged stool and typically that means you have social security then individuals would have a pension from their

Employer and then they’d have their own individual savings if so many firefighters don’t receive social security in any event that the three-legged stool doesn’t even apply their modest public pension is all they have even amount of poverty in retirement the importance of it maybe is is long-term that’s what i have to live on you know 20 30 years down the road

When i’m done it’s the pension we don’t have social security a lot of people may not know that to maintain their living standards a household needs 75 percent of their income in retirement the median household income in the u.s. is 51 thousand seventeen dollars so a household earning the median would need an annual retirement income of 38,000 263 dollars to receive

That income with cost-of-living increases and a surviving spouse benefit you’d have to save eight hundred ninety seven thousand eight hundred seventy four dollars if you don’t have a defined benefit retirement plan or social security but most households aren’t even close and the median family that’s the family right smack in the middle of america in terms of their

Income has only three thousand dollars in a retirement account for firefighters and paramedics defined benefit retirement plans are a lifeline a defined benefit pension is a lifetime guarantee that after i retire that i’m gonna receive a check every single month it’s money that i’ve invested very large parts of my wages go into that pension system and when i walk

Away it gives me a dignified retirement that i know i can live every month off of defined benefit retirement plans also provide disability benefits for firefighters who are injured and death benefits for the families of those killed in the line dooty defined benefit retirement plans are really deferred wages every payday firefighters and paramedics put part of their

Paychecks into their retirement plan and accept lower pay in exchange for having a defined benefit when they retire i pay more into my retirement than the general public pays into social security defined benefit retirement plans are neither a handout nor a luxury they are part of the compensation for firefighters in a job where a career-ending injury or death prior

To retirement is a real possibility and retirement at an early age is a necessity firefighters are limited in terms of how long they can work so it makes having a secure retirement all the more important but that hasn’t stopped wall street bankers from trying to profit on the retirement savings of firefighters there is a concerted ideological effort to undermine

Public pensions to eliminate public pensions there are billionaires or spending literally tens of millions of dollars to eliminate public pensions across the country so john arnold is one major factor but it doesn’t end with john arnold the koch brothers the americans for prosperity alec was pretty much out of the alec playbook it was to you know minimize benefits

See also  Retirement Planning in Your 50s and Beyond

Put new folks in either a cash balance plan or defined contribution plan to declare that our funds were irreparable none of which is true all of these organizations are funded by billionaires who have no worry in the world when it comes to retirement they have their billions to rely on but they are ideologically bent on eliminating public pensions and it’s very

Dangerous this line of attack is not not only meant to undermine public workers but runs the risk of leaving firefighters and teachers and sanitation workers in poverty contrary to misinformation popularized in today’s politically charged environment most public defined benefit retirement plans are doing fine over the long term no one has to have this plan be a

Hundred percent funded on any one given day that’s one of the benefits of defined benefit plans if it plans about 80% funded it’s in a reasonably good place to be sustainable over the long term and if it’s moving towards that it’s gonna be in good shape the few plans that are troubled got that way for one big reason it’s because politicians failed to pay into the

System year after year funding corporate tax subsidies or whatever other priority they might have other than the retirement of our firefighters and our public workers and when they’ve taken like it they did in new hampshire these pension holidays which the employers didn’t pay what they were supposed to pay and the bill comes due they don’t want to pay it we’re

Willing to keep our promise we’re just asking the city to fulfill theirs every state municipality gives away literally millions and in some cases tens of millions hundreds of millions of dollars in corporate subsidies and tax breaks in loopholes and it is fundamentally dishonest to say that you can’t fund one thing it because you’re funding the public pensions

Of firefighters it’s just part of the political game that’s being played to grab what we’ve built and take that trust that we’ve built in our systems and basically rob our pension systems of what we have built attacks on public safety retirement plans hurt injured firefighters who can’t get social security disability benefits and widows and orphans who will not

Receive survivor benefits defined benefit retirement plans are the only way to protect those who choose this dangerous by vitally important profession most americans have some modest disability covers through social security so again for those firefighters who don’t have social security it’s critically important that that defined benefit plan provide disability

And survivor benefits plus defined benefit retirement plans cost less to administer you can deliver in a defined benefit plan the same level of benefits in a defined contribution plan but in the defined benefit plan you can deliver those benefits for forty six percent less of a cost by contrast 401ks and other defined contribution plans cost participants much more

See also  Ferran Meets His BABY BROTHER For The FIRST TIME!! | The Royalty Family

Force workers to bear all the risk and leave many retirees high and dry new hope like crazy that you’ve chosen a good investment model so that you get a high rate of return and you hope like crazy that the market is really high and you hope like crazy that the market is not really low when you decide to retire because that’s what your future is based on because

Defined benefit plans pull their money and institutionally invest the rates of return are about eight point nine percent on average over twenty five years but an individual accounts workers may or may not make their own decisions on how to invest that money without the expertise perhaps of the public pension funds and often receive much lesser rate of return my

Pension fund has a lot of money and they can go as a large institution go and invest money and funds that i can’t invest in because defined benefit retirement plans are so superior to 401ks they ensure that our communities are protected by the best public safety professionals in the world if individuals are covered by a defined benefit plan is extremely powerful in

Recruiting and retaining the people who are covered by defined benefit plans if we reduce our pension benefit then we are no longer in the position of attracting that talent to our profession defined benefit retirement plans are also good for taxpayers our communities and our economy when individuals receive an income in a defined benefit plan may get that check

Each month they know that check is going to come and our organization did an analysis what we found is because those retirees in their communities were spending their paychecks their spending actually generated a trillion dollars in economic activity in towns all across america and in particular that also helped to make sure that there were six and a half million

People still able to work in jobs supported by that spending because we are a part of a pension system after we do retire we’re still going to be able to contribute to this the economic climate of any community that we live in we’re not going to be kicked to the social system for all of these reasons voters want firefighters and other public safety professionals

To keep their retirement plans what the public really tells us is they understand because we’ve asked them specifically about firefighters police officers these people have hazardous jobs is it important for them to have a plan that enables them to retire when they need to retire resounding majority absolutely despite this public support there’s another threat

Instead of switching to 401ks some politicians waging war on defined benefit plans are proposing other schemes that sound more reasonable but could be just as harmful in some places politicians would like to mix apart 401k plan with a defined benefit plan as part of their answer which is equally dangerous because it opens the doors optimally to close the defined

See also  How To Find Temporary Foreign Worker Jobs in Canada That You Can Apply to From Your Country

Benefit plan and move entirely to a defined contribution plan typically what we’re finding is when they’ve switched to these defined contribution plans individuals will not have enough money with the proposed cash balance hybrid system it doesn’t have a very good safety net for people in those first few years before they get vested in the system to make sure that

They are covered in the event that they do get harmed in the line of duty the real tell is that the politicians who want to switch firefighters to defined-contribution cash balance or hybrid plans don’t switch their own plans virtually every politician is is covered by a defined benefit plan but that doesn’t stop their ideological attack on new workers or current

Workers politicians are guilty of hypocrisy so what’s the way forward how do we solve america’s retirement crisis and ensure that our nation’s first responders can retire with dignity we do it by strengthening defined benefit retirement plans as the best way indeed the only way to achieve this vital goal there is no better system no better way to provide retirement

Security and unfortunately some places took pension holidays that weren’t in shortage they thought they were gonna be when they started that one year turned into two and turned into three in some cases several more so there’s been what when you don’t make your full contribution into a defined benefit plan as the employer that catches up with you you know no longer

Politicians say we can’t fund firefighters retirement because we have to pay our rose or make our class sizes smaller and all the while they’re giving out millions of dollars in corporate subsidies made it’s fundamentally untrue and we need to call them on it even the pew foundation’s own research shows that troubled public retirement plans got that way because

The state or local government did not pay what it own there are some places like florida and wisconsin for politicians faithfully paid into the system and those systems are fully funded and that’s the bet the fundamental difference that’s why the solution could not be more clear employers must make their required contributions on time the employees contribution

To those pension systems typically are mandated in the law and those monies are taken out of the employees checks in full every single time they get a paycheck employers must be subject to this same mandate full funding by employers small adjustments to fix any remaining shortfalls that’s what it takes to ensure that america’s first responders can retire and

Dignity after answering the call to serve their communities and save people’s lives you

Transcribed from video
Defined Benefit Retirement Plans: The Solution to America's Retirement Crisis By The IAFF