In Arkansas, we should have the backs of those who have ours. So let’s talk about pensions and why they’re important: a pension plan, or defined-benefit plan, is a retirement plan that requires an employer to make contributions to a pool of funds set aside for a worker’s future benefit. This means new hires fund retirees. 164 years ago, New York created the first pension plan in the county. The plan was designed for police, offering payments for police officers who were injured in the line of duty. Pension plans are widely successful because they are more likely to keep our retired public servants from falling into poverty, unlike 401(k)s.
Now that we know what a pension is, let’s see how they compare to 401(k)s. Originally, 401(k)s were designed to be supplemental to traditional pension plans, rather than a full on replacement. Still, 401(k)s have grown in popularity because they were marketed to allow workers to save money on their own for retirement. This is considered a defined-contribution plan. But the reality is that most Americans struggle to save money on their own. In other words, defined-contribution plans put the burden of saving and investing for retirement, as well as the risk, on employees.
Politicizing Pensions: Fire and Police Suffer
Arkansas doesn’t always get things right, but when it comes to pensions, we excel. However, Wall Street lobbyists are pushing 401(k)s on our first responders. Why? Money and control. Each pension program for the state hires out investment managers, and each program is considered one account. Wall Street types don’t like this set up; they want to have hundreds of accounts instead of just one, which means more money for the Wall Street folks. They want what’s best for them, not what’s best for our first responders. A move like this would destabilize the current system and put Arkansas firefighters and police retirees at risk.
Again, 401(k)s wreak havoc on the public sector, but that doesn’t matter to Wall Street. Moreover, they’ve been working HARD to get legislation passed here in Arkansas that would allow public employees to choose between LOPFI or individual 401k (remember, they make more $$$$ with the 401k system). But who among our leaders would put our retired firefighters and police in harm’s way?
Key Players in the Pension Shuffle:
Pensions Attacked by Special Interest Groups
As a matter of fact, the push to change our pension system started in 2018 thanks in part to Doug House and out-of-state special interest groups. In 2018, The Pew Foundation, the Reason Foundation and Bellwether Education Partners were all invited to testify before the Joint Retirement committee. The goal: attack our public retirement systems, including first responders and teachers. One notable change pushed by these groups was mandated stress testing on pension systems.
Of these special interest groups, Pew, is known for doing this. The thing is, most public pension plans already conduct financial stress tests, and LOPFI is no different. What Pew is campaigning for is a biased stress test that produces results against public pension plans. This enables Pew to push for changes that gut pensions. For instance, House intruded HB1173 in 2019. This bill would have required one of these bias stress tests for eight publicly funded retirement systems, including LOPFI. Thankfully, the bill failed in committee.
What is LOPFI?
The Local Police and Fire Retirement System (LOPFI) is responsible for oversight of the system’s administration, including ensuring compliance with state and federal laws.
“A purpose of LOPFI is to maintain a financially sound retirement system so that each covered police officer and firefighter will receive the full value of their earned benefit for their lifetime. Our goals include providing Member education that helps each person learn how valuable the retirement system can be in meeting long term economic goals.”Pulled from LOPFI Mission Statement.
The LOPFI Board consists of seven members: a current serving and retired police officer, a current serving and retired firefighter, two mayors, and one citizen at large.
Power and Paranoia: Meet Big Gov Bob
Another key player in the effort to hurt LOPFI is Bob Ballinger. This past legislative session, Ballinger proposed SB443, which would require audit of LOPFI salaries and require LOPFI legislative oversight. It’s important to note that LOPFI is a state agency that is funded by local, municipal dollars and local, municipal employees’ contributions. This is a prime example of local control and balance of power. But Big Gov Bob is trying to tip the scale. As mentioned before, our current system is working well, but there is no limit to Ballinger’s quest for FULL legislative power.
And this isn’t the first time Big Gov Bob has attacked public employees either. In addition, he also filed SB341. This bill prohibits collective bargaining in the state. What’s worse is that the bill calls for automatic termination of any employee who goes on strike. It even goes a step further: not only will employees wanting to strike be fired immediately, they will be ineligible to work in the public sector for an entire year. Ballinger originally filed the legislation with no exemptions, later amending it in committee to exclude firefighters and police officers. This decision was met with rightful questioning for picking and choosing who gets cut. Unfortunately this anti-work bill passed and is now Act 612.
So How Do We #SaveARPensions?
In summary, we’re seeing a trend in the state legislature. It’s not a good one. In recent years some of our lawmakers have sided with out-of-state special interest groups who want to gut our public retirement systems for personal gain. Our leaders are starting to turn their backs on our public employees. As a state, we can’t let them win this fight.
Remember, when we’re in trouble, first responders are only a phone call away. Now it’s time for us to have their backs. With well-funded out of state bad actors at play, Arkansans need to come together to speak up for our firefighters, police, teachers, and every other public servant in our state. How? Educate, advocate, and show up. Every Arkansan, especially our public employees, should have access to a secure and dignified retirement. Tell your lawmakers to stop trying to fix what isn’t broken.