Retirement Security for All Brian Klopp and Gary Gorski Department of Research and Collective Bargaining Services

What is the average retirement age in the United States? a)60 b)63 c)66 d)69

How much of their pre-retirement income will retirees typically need to maintain their standard of living? a) 50 to 60 % b) 60 to 70% c) 70 to 80% d) 100%

What are the primary sources of retirement income? Social Security Employer Sponsored Retirement Plans Supplemental Employee Savings

3 Legs of a Secure Retirement

Social Security Covers 75% of public employees Funded by employees and employers Replaces 30% to 40% of pre- retirement earnings

State Supplemental Social Security Initiative Combines features of Social Security and defined benefit pension program Target benefit to half of Social Security benefit – Normal retirement at 65 – Target cost = 4 percent of payroll

Employer Sponsored Retirement Plans Defined benefit Defined contribution Combination Cash balance

How Do Defined Benefit Plans Work? Benefit based on: – Years of Service – Multiplier – Final Average Salary Worker with: – 25 years of service – 2% multiplier – $50,000 Gets $25,000 – (25 x 2%) x $50,000

Percentage of U.S. Employees in Defined Benefit Plans,

Combination and Cash Balance Plans Combination plans: – modest defined benefit + defined contribution Cash balance: – contributions + investment credits

How do Defined Contribution Plans Work? Employees contribute to individual investment account Employers may also contribute Retirement savings = investment + earnings

Why Does AFSCME Support Defined Benefit Pensions? Employee Benefits: – Lifetime benefit – Disability insurance – Survivor benefits – Cost-of-living adjustments

Why Does AFSCME Support Defined Benefit Plans?

Pension Benefits Are Under Attack

Pension Changes – Reduced Benefits

Pension Changes – Increased Contributions

AFSCME Is Fighting Back! Work with affiliates and partners in National Public Pension Coalition State Battles Won in 2015 (8): Missouri, Oklahoma, Indiana, Wyoming, Colorado, Arizona, Louisiana, Nevada

Percentage of U.S. Employees in Defined Benefit Plans, 2014

Small Group Exercise Mayor has proposed closing pension plan What is the union going to do? Select group spokesperson to report out