Over the past several weeks, we have seen a growing anxiety around conversations happening in the legislature regarding public employee pensions. We have seen a rise in misinformation and confusion concerning what is actually happening and why these considerations are occurring at this time.
The reason I have prioritized this issue is simple: our state pensions are in critical need of reform to stabilize the system and get it on track for long-term stability. While these conversations are in the early stages and still evolving, I want to be clear: current retirees and those close to retirement do not need to panic and worry that their retirement plans are in jeopardy. This is an incredibly challenging topic, but we must take on this work to ensure that retirees and current employees have the peace of mind that their retirement benefits will be safe at the end of their careers.
I have also heard from many Vermonters asking why I have prioritized working on pensions this year while still coping with the pandemic. The answer is simple: time is of the essence. I believe it is imperative that we have a secure and reliable pension program for our dedicated public employees – our teachers, state troopers, municipal workers, and state employees – who keep our systems of school and government functioning well, so that we may experience the high quality of life that being a Vermonter provides.
Furthermore, I want to make sure that Vermonters truly understand the scope of our pension system crisis. New projections show that the unfunded pension liability for teachers and state employees will grow by another $604 million in the coming year alone, which would force the state to increase annual contributions to the system by $96 million. This is on top of the estimated $4.5 billion unfunded liability reported last year. Our pension system is in dire need of reform, and we must all work together to ensure that we guarantee retirement for those who have dedicated their lives to serving Vermont — before it’s too late.
We are at this point because of a wide range of factors, including past and projected investment under-performance, historic underfunding beginning in the 1990s, and changing demographic trends that include an older Vermont with more teachers and state employees retiring each year.
The Legislature has made some tweaks over the years to help address the problem, but it has not been enough to bend the curve. As it stands today, if we do not work together to make the necessary changes, the Vermont State Employees’ Retirement System (VSERS) and the Vermont State Teachers’ Retirement System (VSTRS) do not have enough assets to pay for the expected costs of the retirement benefits they will have to pay out in the future. This gap between assets and future costs has grown substantially in recent years, and without making any changes, it is expected to worsen in the future.
I have said throughout our work on this challenging issue, and all legislative work, that all stakeholders need to be at the table and engaged together in discussing all options to sustain our state pensions system. I know that there is a lot of conjecture out there, but again, I want to be clear: we are still reviewing all the options, and there is no specific plan that would immediately go into effect and impact those close to retiring. The last thing I want is to create fear in Vermonters who have been working for decades and planning for retirement.
I am staying in constant communication with union representatives and receiving calls, emails, and letters from Vermonters, which has been incredibly helpful in informing this process. I know that any time the Legislature examines pensions, it can spark fear and anxiety, but I want you to know we are taking on this effort to make sure the pension is sustainable for generations to come. Our state employees, teachers, and state police are essential and invaluable to Vermont, and I want to make sure that they have peace of mind and financial security during their golden years.
Rep. Jill Krowinski,
Speaker of the House