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You think you don't own any stocks? Think again

November 12, 2018

The National Public Pension Coalition (NPPC) represents public-sector employees and their interests in retirement benefit plans. On the “About Us” page at its website, the organization states that “NPPC believes every American should be able to retire in dignity. … The NPPC is working to preserve the financial security of all workers for generations to come.”

The NPPC also states that “We also know that there is no one more interested in strengthening the public pension system than the public employees who are counting on pensions to retire.”

Today, Pensions & Investments had a story by Brian Croce headlined “Voters reject candidates in 3 states who lobbied for switch to DC plans.” The article quoted Bridget Early, executive director of the NPCC, “Even when there were attempts to vilify public employees and defined benefit plans and suggestions that everyone should have 401(k)s, I think folks are starting to understand that (retirement security) is very important to the economy.”

Right now, at 1:40pm CT, the Dow is down more than 400 points. Most pension plans are dominated by riskier investments like stocks, real estate, and private equity. Are public pension plan participants concerned?

Maybe not as much as taxpayers or voters are, or should be.

Defined benefit plans offer defined benefits. That’s what makes them safer, on the surface, than 401(k) plans – at least for the people in the plan, especially in public plans in states (like Illinois) where benefits are not only defined but protected by law.

Does that mean these plans aren’t risky? Not for citizens and taxpayers responsible for funding those plans. For those folks, these plans are very risky as they have to make up for any downside.

Retirement security for me, but not for thee.

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