Promoting Defined Benefit Pension Plans Hank Kim, Esq. National Conference on Public Employee Retirement Systems

Presentation Overview Introduction to National Conference on Public Employee Retirement Systems Past battles to preserve DB Battles ahead and applying lessons learned The new language of DB Wrap up and Q & As

NCPERS Largest nonprofit trade association representing 500 public sector DB plans Who we ARE: –Advocacy –Research –Education

NCPERS Position All workers (public and private) should have a traditional pension benefit (DB plan) as their primary pension plan DB plans are good for governments, employees, taxpayers and the economy

Test Your Knowledge of Public Pensions How many public pension plans are there in the United States? a.78 b.472 c.2656

Test Your Knowledge of Public Pensions How much money do public pension plans control? a.$300 billion b.$3 trillion c.$30 trillion

Test Your Knowledge of Public Pensions How many public servants are there in the United States?

Test Your Knowledge of Public Pensions How many public servants are there in the United States? a.14.1 million active/ 6.9 million retired

Test Your Knowledge of Public Pensions What is the average pension benefit of a retired public servant?

Test Your Knowledge of Public Pensions What is the average pension benefit of a retired public servant? a.$20,400 per year

Test Your Knowledge of Public Pensions How many Fortune 500 companies offer DB plans? a.none b.Less than half c.More than half

Public Pensions There has to be a balance: employer contributions, employee contributions, investment returns, and benefit-funding ratio

Past Battles Defined Benefit to Defined Contribution West Virginia Teachers (1990) Michigan State Employees (1997) Alaska (July 1, 2006)

Past Victories DC to DB North Dakota (1977) Nebraska (2000) West Virginia Teachers (2005) [61% voted to return to DB plans]

Past Victories (cont.) Preserving DBs Florida (2000) - optional California (2005) Colorado (2006)

The Battles Ahead Three Alarms – direct threats (5) Alaska – working to overturn Arizona – DC bills introduced Kentucky – commission to review benefits Rhode Island – state-wide two-tier system proposed plus Providence has DC proposal Utah – DC proposal for select new hires

The Battles Ahead Two Alarms – significant threat (12) California Hawaii Illinois Michigan Minnesota Montana New Jersey Oklahoma Ohio Oregon Virginia Wisconsin

The Battles Ahead One Alarm – potential threat (19) AlabamaColorado Connecticut IndianaKansasLouisiana MarylandMassachusettsMississippi NevadaNew HampshireNew Mexico New YorkNorth CarolinaPennsylvania South CarolinaTexasWashington West Virginia

Are you concerned? 36 states’ public pension systems are in play today!

California Battle-Lessons Learned ELIMINATE DB PLANS: Governor proposed ballot initiative Legislator introduced bill Coalition of concerned groups Powerful DB message Stayed on message

Alaska Battle-Lessons Learned Eliminate DB Plans (7/06): Legislation (short session) Legislature kept in session Groups slower to organize Message not as clear

Colorado Battle-Lessons Learned Bill to eliminate DB plans Ballot initiative proposed Groups overcame differences and formed an effective coalition Got buy-in from all stakeholders Legislative compromise deflated ballot initiative

Download DB Tools NCPERS Research Fact sheets Myths and Facts Testimonials Updated information

Download DB Tools NCPERS Research Fact sheets Myths and Facts Testimonials Updated information

Download DB Tools NCPERS Research Fact sheets Myths and Facts Testimonials Updated information

Download DB Tools NCPERS Research Fact sheets Myths and Facts Testimonials Updated information

Download DB Tools NCPERS Research Fact sheets Myths and Facts Testimonials Updated information

Messages That Work Elimination of death & disability benefits Traditional pensions are a tried and true system that benefit taxpayers New system will be costly and chaotic

Messages That Work Use analogies and best face of public service : mortgage public safety heroes

What’s the Problem? Total unfunded liability of public funds is $350 billion (2,656 systems) Americans owe $8.8 trillion in mortgages! Should we abolish home mortgages?

What’s the Problem? Our plans are funded at 87%. If you had 87% of your mortgage paid off – would anyone consider you in financial trouble?

Things to Remember Not a debate on the merits of DBs—it’s a media battle! Educate constituents early and often Build coalition with other stakeholders Have emotional stories and sympathetic figures Stay on message

NCPERS 2007 Educational Programs Legislative Conference February 5-7 in Washington, DC Trustee Educational Conference May in Honolulu, HI Annual Conference May in Honolulu, HI Program for Advanced Trustee Studies July in Cambridge, MA (HLS) Public Sector Health Care Symposium October 1-3 in Chicago, IL Public Safety Employee Pension & Benefits Conference October in Palm Springs, CA

For More Information NCPERS 444 North Capitol Street, NW, Suite 221 Washington, DC