67. ACHIEVING NATIONAL RETIREMENT SECURITY FOR ALL WORKERS

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1 RETIREMENT COMMITTEE Committee Chair: Thomas Brown, United Federation of Teachers, Local Committee Secretary: Bonnie Luisi, Oregon School Employees Association, Local. ACHIEVING NATIONAL RETIREMENT SECURITY FOR ALL WORKERS Committee recommends concurrence as amended below: 0 WHEREAS, America is facing a looming retirement crisis, with many Americans reporting that they have virtually no savings or investments, and the number of seniors living at or below the poverty line is projected to more than double in a decade; and WHEREAS, while the share of Americans covered by definedbenefit pensions has plummeted over the past few decades, becoming almost obsolete in the private sector, the vast majority of the American Federation of Teachers. million members participate in defined-benefit pension plans, whose assets exceed $ trillion; and WHEREAS, defined-benefit pension plans are actually deferred wages for workers who have actively contributed to their fund, paid their fair share and accepted increased employer contributions in lieu of wage increases for the sake of their retirement; and for many teachers, these pensions are their sole source of retirement security because many cannot access Social Security or receive a significantly reduced benefit as a result of GPO/WEP; and WHEREAS, there are three essential elements that form the foundation of retirement security in America a defined-benefit pension, Social Security and savings but today, few Americans are on track to enjoy a secure retirement built upon all three, because most Americans do not have access to a pension; and WHEREAS, given that the typical family headed by someone ages - had only $,000 saved in a retirement account in, and at least half of all Americans will rely mainly on Social Security for most of their retirement income, with an average yearly benefit of only $,00, it is not surprising that nearly two-thirds of Americans fear running out of money in retirement more than they fear death; and WHEREAS, million working Americans have no options to set money aside for retirement through an employer-sponsored retirement plan, and more than half of U.S. businesses do not offer a plan; and WHEREAS, polling indicates that retirement security has been the No. economic issue for Americans and voters for the last years; and WHEREAS, teacher actions in Colorado and Kentucky were fueled in part by proposed reductions to teacher pensions, and teacher

2 strikes across the nation lay bare the deep economic insecurity of millions of teachers as well as their dire financial challenges in saving for retirement; and WHEREAS, lacking a near-term federal solution to the retirement security crisis, 0 states have introduced legislation and nine states have enacted laws designed to improve retirement security by expanding access to retirement savings plans, the development of which the AFT resolved in to support; and WHEREAS, while these innovative state plans represent real progress and will improve retirement savings, they will not adequately address the crisis because of various limitations, including legal limitations imposed on state-based plans, which could be remedied through a federal solution; and WHEREAS, the National Retirement Security Project and its proposal for guaranteed retirement accounts (GRA) offers a clear road map to achieving greater security in retirement for millions of Americans, creating a national plan offering access to pooled, professionally managed, portable, individually owned retirement accounts for workers, funded by automatic contributions from both employers and employees, with participation available to all workers, including those in alternative work arrangements; and WHEREAS, for workers covered by pensions, the AFT defends and advocates for defined-benefit pension plans as the preferred standard for retirement security, and pushes to ensure that adequate funds are contributed to meet benefits now and into the future; and WHEREAS, guaranteed retirement accounts will be available to all workers, and, for those lacking a pension, a GRA may function as that third essential element of retirement security, along with savings and Social Security; and WHEREAS, low investment and administrative fees are essential to ensuring that the value of retirement savings remains with the account holder, and transparent, responsible oversight and governance through a representative board of trustees are critical to the viability and accountability of the program to plan participants; and WHEREAS, a poll of,000 voters funded by the AFT demonstrated that more than 0 percent of Americans support the creation of a guaranteed retirement account: RESOLVED, that the American Federation of Teachers will continue to support efforts at the state and national levels to improve and strengthen the federal Social Security program; and RESOLVED, that the AFT will continue to fight to ensure that the retirement security promises made to educators and other public employees are kept by maintaining full funding for defined-benefit pension plans because these plans are deferred

3 wages, and represent many workers sole retirement savings, since educators are frequently exempt from Social Security; and RESOLVED, that the AFT will support the National Retirement Security Project and its goals to educate the public about guaranteed retirement accounts as a means to achieve improved retirement security for millions of American workers; and RESOLVED, that the AFT will continue to support state efforts to enact state-based supplemental retirement plans in order to extend retirement savings opportunities to private sector employees who currently lack access to low-cost, professionally managed retirement plans overseen by a board of trustees; and RESOLVED, that all workers must have a guaranteed retirement income for life that allows them as well as their spouses or partners to maintain their standard of living after a lifetime of work, and that prevents all Americans from falling into poverty as they age; and RESOLVED, that the AFT reaffirms its support for retirement security for all, including the three essential elements a defined-benefit pension, Social Security and savings based on shared risk and shared responsibility among employers, employees and government, and reaffirms its support for empowering plan trustees to implement responsible investment and funding policies.. CONTROLLING THE HEDGE FUND THREAT TO PUBLIC PENSION FUNDS Committee recommends concurrence. 0 WHEREAS, financial managers have used aggressive tactics to convince public pension funds worldwide to invest billions of pension dollars into largely unregulated hedge funds; current public pension investments in hedge funds total $0 billion, according to Chief Investment Officer magazine ( Public Pensions Still Hungry for Hedge Funds ), representing nearly 0 percent of all hedge fund capital; and WHEREAS, reporting by Bloomberg ( Hedge-Fund Mediocrity Is the Best Magic Trick ) confirms that hedge funds are extremely risky investment vehicles and that their rates of return underperform, thereby costing workers pension funds billions in revenue; and WHEREAS, hedge funds and other large pools of private money pose a serious threat to our communities: Since the 0 financial crisis, private sector enterprises, while promising cities and counties help to repair their crumbling infrastructures, have increasingly taken

4 0 0 over public services like emergency care, water supply and firefighting, often with negative effects for the populace. Chicagoans, for example, well remember the scandalous deal made by the city to hand over parking meter administration to a private sector enterprise, with the result that taxpayers have little to show for it, apart from rising parking rates and the burden of being saddled with a bad contract for the next years; and WHEREAS, as the New York Times ( In American Towns, Private Profits from Public Works ) has reported, citizens of Bayonne, N.J., saw water rates rise nearly percent after a Wall Street investment fund began to manage the city s water system. In a measure of residents distress, people are falling so far behind on their water bills that they face liens being placed against their homes; and WHEREAS, underperformance, high risk and high fees are the reasons that unions and public employee pension funds are now questioning whether to continue to invest in hedge funds. Consider: The Illinois State Board of Investment (ISBI) decided to remove hedge funds from the board s investment portfolio because they were confusing and underperforming, with unjustified high fees. As a result of this withdrawal, according to Chief Investment Officer magazine ( ISBI Chair Explains Why Illinois Ditched Hedge Funds ), the state has saved $ million per year in money manager fees; The $ billion New York City Employees Retirement System (NYCERS), which had invested in hedge funds since 0, voted to liquidate its $. billion allocation as soon as practicable due to exorbitant fees and weak returns; In the United Kingdom, the RBS Group Pension Fund, which manages pensions for current and former employees of the Royal Bank of Scotland and is one of the largest pension funds in the UK, has been steadily divesting from hedge funds, part of a risk-reduction strategy that has helped it beat its investment benchmarks; In the Netherlands, Dutch pension fund PFZW announced that it has completely divested from hedge funds, citing poor performance, high cost and complexity as the reasons for discontinuing; State pension funds in New Jersey, Rhode Island and Kentucky have all slashed their hedge fund investments by more than half; and The California Public Employees Retirement System (CalPERS), which was one of the first pension funds to invest in hedge funds, zeroed out its hedge fund portfolio in, pulling out $ billion in investments, citing high fees and weak performance as the reasons:

5 0 0 RESOLVED, that the American Federation of Teachers will partner with community organizations to inform city governments about the threat from hedge funds and private equity firms; and RESOLVED, that the AFT will provide our state federations with information about the implications of weak hedge fund performance and the actions taken by pension funds in Illinois, New York, California and other states to liquidate their poorperforming hedge fund investments; and RESOLVED, that the AFT will call for full transparency among both hedge funds and private equity firms, including public reporting, whenever public sector retirement funds are involved. 0. LIFT THE CAP ON SOCIAL SECURITY Committee recommends concurrence as amended below: 0 WHEREAS, under the Roosevelt administration, Social Security was enacted as an insurance program to provide financial support to retired workers and to surviving dependents of workers who die or who are incapacitated; and WHEREAS, for several generations, Social Security has been credited with reducing poverty among retired workers, particularly women; and WHEREAS, wages, pensions and financial security have been reduced for the average private sector employee, and attempts are underway to reduce job security in a similar way for public sector workers; and WHEREAS, only the wealthiest households are able to save the recommended 0 percent of annual income for retirement; and WHEREAS, retirement security is being replaced by retirement insecurity through stagnating wages, poorly designed retirement plans and contingency and part-time employment, and many economists, including Teresa Ghilarducci of the New School for Social Research, predict an impending retirement crisis; and WHEREAS, those retiring without adequate income will rely on Social Security benefits for an increasing proportion of their income; and WHEREAS, the trustees of the Social Security Trust Fund have advised that, after, the fund will no longer pay 00 percent of benefits; and WHEREAS, cutting Social Security benefits by raising the retirement age further erodes retirement security:

6 RESOLVED, that the American Federation of Teachers will support the augmentation of the Social Security Trust Fund by calling upon Congress to eliminate the cap on Social Security wages, currently at $,00,00, and urges its locals to do the same.. MEDICARE PART D AND PRESCRIPTION DRUG COSTS Committee recommends concurrence as amended below: 0 WHEREAS, Medicare Part D costs about $0 billion a year and is on track to double by as benefits under the Affordable Care Act improve and baby boomers retire; and WHEREAS, a significant chunk of that money is wasted on overpayments to drug companies; and WHEREAS, when Part D began, millions of patients were shifted over from Medicaid, the state-federal program for low-income people that gets far lower drug prices than Medicare; and WHEREAS, the Medicare Modernization Act banned Medicare from negotiating the way Medicaid and the Department of Veterans Affairs do with drug makers to get lower prices; and WHEREAS, lawmakers insist the job be done by private insurance companies; and WHEREAS, the Medicare Modernization Act was written with significant input from the pharmaceutical industry to prohibit the government from negotiating prescription costs to ensure Medicare would not be allowed to cut into its profits; and WHEREAS, greedy drug companies, such as Mylan, maker of EpiPens, and Turing Pharmaceuticals, maker of AIDS drugs, have unethically gouged consumers by consciously and significantly raising the costs of life-saving drugs: RESOLVED, that the American Federation of Teachers will lobby the president and Congress to create a uniform drug benefit within Medicare and allow Medicare to negotiate for the best prices; and RESOLVED, that the AFT will lobby the president and Congress to promote legislation providing for government negotiations for drug costs; and RESOLVED, that the AFT will lobby the president and Congress to facilitate Medicare recipients purchasing safe and affordable prescription drugs from other countries; and

7 RESOLVED, that the AFT will lobby the president and Congress to create a consumer report card to evaluate Medicare Part D prescription drug plans.. OPPOSE AND REJECT MCTEACHER S NIGHTS Committee recommends referral to Executive Council. 0 WHEREAS, McTeacher s Night is promoted as a fundraiser, when, in fact, it is a thinly veiled marketing tactic by which McDonald s sells its products and promotes its brand to students and their families; and WHEREAS, McDonald s exploits school funding shortfalls in order to market and profit from the sale of junk food to children, undermining public institutions and teachers; and WHEREAS, McDonald s marketing disproportionately affects students with low socio-economic status and students of color, and contributes to the growing epidemic of diet-related disease; and WHEREAS, when educators volunteer at McTeacher s Nights, workers in the community (who are often low-income earners) may lose work hours, affecting their income and contributing to poverty: RESOLVED, that the American Federation of Teachers will publish an article on our opposition to, and rejection of, McDonald s McTeacher s Nights program for exploiting public schools and teachers to market junk food to our students; and RESOLVED, that the AFT will write a letter of concern directed to the president and CEO of McDonald s regarding the harmful effects of McTeacher s Nights, which local associations can submit to local media outlets where McTeacher s Nights programs are active; and RESOLVED, that the AFT will write a letter to the presidents of the National PTA, the National Parent Teacher Organization (PTO), and local PTAs, PTOs, Parent Teacher Student Associations and Parent Teacher Student Organizations, urging them to stop all partnerships with McDonald s on McTeacher s Nights; and RESOLVED, that the AFT will encourage state and local affiliates to re-evaluate McTeacher s Nights and to support state and local legislation and policies aimed at protecting children and students from junk food marketing; and

8 RESOLVED, that the AFT will support legislative and policy initiatives at the state and local levels to curb junk food marketing that targets children.