Consumers’ Research Advocates for State and Local Pensions

By Natalie DeCoste

Today Consumers Research submitted a Freedom of Information Act request (FOIA) to the Department of Labor (DOL) for communications ordering the deletion of a vital examination of the impending state and local pension crisis.

The DOL originally published the report, titled “OASP Working Paper on State and Local Pensions – The Case for Fundamental Reforms,” on January 15, 2021. However, it was taken down from the department’s website without explanation within hours of President Biden’s oath of office.

Consumers’ Research believes the disappearance of the DOL report was likely motivated by the ERISA fiduciary requirements that the DOL released clarifying regulations on pension investments. The regulations were released in June of 2020 during the Trump administration. They clarified that employer-sponsored retirement plans need to be made solely based on pecuniary considerations, such as the health and profitability of companies, not the personal politics of the investment managers. Shortly after the change in administration, the DOL issued guidance that they would not be enforcing this recent rule.

The report addressed the nature of the widespread underfunding of state and local pension systems and its impact on the retirement security of the nation’s public workforce. The decrepit state of state and local pensions should read as a warning sign of how precarious a situation the financial well-being of retirees has become.

The sorry financial state of pensions, along with changes from the Biden administration to the rules governing administration of employer sponsored plans, increases the significant likelihood that millions of retirees will not receive the benefits they were promised.

“The disappearance of this report is concerning because state governments are facing a looming pension crisis,” said Will Hild, Executive Director of Consumers’ Research, the nation’s oldest consumer protection organization, established in 1929.

“Most states are prepared to meet only 70 percent of their pension obligations,” he said. “Four states have not set aside sufficient assets to meet even half of their pension commitments.”

Consumers’ Research hopes that through its FOIA request it can shine a light on what motivated the deletion of the report from public access and whether government employees at the Department of Labor were taking orders from incoming Biden administration officials before the change in leadership.