Thousands of Wisconsin Teamsters are celebrating after President Joe Biden signed the coronavirus relief bill into law.
That’s because the move ensures that the workers no longer have to worry about their pensions being cut in half.
The American Rescue Plan includes the Butch Lewis Emergency Pension Plan Relief Act of 2021. The act directs the Pension Guaranty Benefit Corp. to allocate billions of dollars to avoid the drastic cuts.
A task force headed by Wisconsin’s state treasurer has recommended that Wisconsin establish a state-run program that provides a retirement benefit plan for employers that don’t offer one.
The task force, which was created by Wisconsin Gov. Tony Evers in 2019, issued a report outlining the causes of the state’s “retirement security crisis” and provided several recommendations it said would strengthen the financial security of Wisconsin’s retirees.
“Wisconsin is in trouble when it comes to retirement security,” the task force’s report began ominously. “Even before the COVID-19 pandemic, our retirement system was not working for a significant number of Wisconsin workers.”
To date, 12 states and Seattle have enacted retirement savings programs for private-sector workers. They include OregonSaves with more than 90,000 funded accounts and $92 million in assets, the Illinois Secure Choice retirement savings program with $52.6 million and 82,852 funded accounts, and the $38 million CalSavers Retirement Savings Program that as of February had enrolled 274,024 participants, with another enrollment phase coming up.
The predominant model is an auto IRA, in which employer participation is required if no plan is already offered. Other options are a voluntary payroll deduction Roth IRA, a multiple employer plan, and a service provider marketplace, or a hybrid.
Gov. Tony Evers’ biennial budget proposal fulfills many Democratic priorities with big spending increases, but Republicans have raised concern that the $91 billion proposal would almost entirely drain the state’s coffers — by close to $2 billion — and leave Wisconsin in a more precarious financial position down the road.
The state is projected to have a nearly $2 billion surplus in its general fund by the end of the year, but Evers’ projected budget, which includes $1.6 billion in new tax revenue from marijuana, big manufacturers and the wealthy, still reduces that to around $143 million by mid-2023.
“It’s not necessarily inappropriate to draw down a big chunk of your reserves when you’re facing a once-in-100-years pandemic,” Wisconsin Policy Forum research director Jason Stein said. “You don’t have the reserves just to put them on a wall and admire them, but at the same time … you have to think about what’s going to be sustainable for the state budget because some of these challenges are not just going to evaporate either.”
Author(s): Mitchell Schmidt | Wisconsin State Journal , Riley Vetterkind | Wisconsin State Journal
If the recommendations of the Wisconsin Retirement Security Task Force are followed, the Dairy State could join others that have implemented a state-run plan to provide coverage for workers whose employers do not offer a retirement plan.
The task force, headed by Wisconsin State Treasurer Sarah Godlewski, issued its report on Feb. 10. The task force makes a variety of recommendations, including establishing a state-run program dubbed “WisconsinSaves.” Gov. Tony Evers (D) had signed Executive Order 45 on Sept. 16, 2019, creating the task force to address retirement security in the state.
“Wisconsin is in trouble when it comes to retirement security,” says the report, adding that “even before the COVID-19 pandemic, our retirement system was not working for a significant number of Wisconsin workers.” It notes that in 1983, traditional pension plans covered 62% of employees in Wisconsin, but that by 2016, that had shrunk to 17% of them. In addition, the task force says, AARP found that: