With various stock indices posting records recently, and stock strategists forecasting another bull run in 2014, some Americans may be breathing a bit more easily about their golden-age prospects.
Fidelity recent reported that the average 401(k) balances of its clients rose more than 11 percent year over year in the third quarter, to $84,300. Those who stayed the course throughout the market tumbles of the recession and recovery fared even better, with 10-year-plus investors showing an average balance up 19.6 percent.
Still, many consumers are financially unprepared for their older years — CNN Money reported earlier this year that 76 percent of Americans say they are living paycheck-to-paycheck, and 46 percent of workers say they have less than $10,000 in their nest egg, according to the 2013 Retirement Confidence Survey by the Employee Benefits Research Institute.
So the news on Tuesday that a bankruptcy court has ruled that pensions for Detroit municipal workers are in play in the city’s bankruptcy proceedings may have prompted a chill in readers nationwide who are counting on public or private pensions to eke out retirement savings and/or Social Security income in their old age. As Forbes reports, Detroit’s unfunded pension liability may be as great as $8 billion, and slashing payments to retirees, while not a certain outcome, now is one chip on the table in balancing the city’s books.
With these headlines afoot, your readers might appreciate a primer on defined benefit pensions and an analysis of the health of any local pension plans that affect a critical mass of your audience, from those at large publicly traded companies to plans via cities, health care systems and other big employers. It’s a huge undertaing and you may need to bite off a slice at a time, focusing on specific employers, angles like “the most generous pension plans” in your city, or a “where are they now?” feature on beneficiaries of previously failed pension plans — what are those retirees getting and how are they making out?
Marketwatch, for example, recently posted a slideshow of “The 10 most threatened state pension plans,” you could perhaps do the same for the towns and employers in your market. The Wall Street Journal has run primers like “Signs your pension plan is in trouble,” and “The Pension Health Checkup” that you could emulate and/or apply to big local employers’ or union plans.
This recent CNBC package on “The Pandemic of Pension Woes” is a good roadmap; you can click on your state to get a list of major pension funds. The Center for Retirement Research at Boston College has an extensive database on state and local plans and offers analysis of issues.
When it comes to private pensions, the Department of Labor’s Employee Benefits Security Administration is a resource worth probing. In addition to FAQs and explanatory documents related to pension laws, you might peruse the lists of critical and endangered pensions to find those of local interest; plan managers are supposed to report to the EBSA when the funds become financially troubled. EBSA offices are established in every state; you can contact yours to determine what other public records such as compliance documents and routine reports might help with insight into local pension issues.
And of course, the Pension Benefit Guaranty Corporation, which administers failed plans, helps you tell your audience about what happens in the worst-case scenario; it’s state by state fact sheets synopsize the benefits paid by state and by Congressional district.
Interesting statistics may be found at the National Institute on Retirement Security, which is billed as a non-partisan, non-profit research group representing financial services companies, academic members and others affiliated with the pension industry.
The Census Bureau reports frequently on the finances (revenue, expenditures) of public pensions; here’s a link to recent reports, and a third-quarter 2013 report is due out on Dec. 19; sign up for e-mail alerts. As background, here’s an old but helpful EBRI report on “State and local pension plans” that gives historical context about the development and regulatory oversight of such plans. And this Morningstar Inc. report on the structure and credit valuation of state and local pension plans is quite helpful as well; it includes red flags to look for. Here’s a GAO report from 201o on unfunded public pension liabilities nationwide, it’ll help you understand how plans are evaluated.