Reviving Our Pension Backgrounders for Texas Journalists

On July 2, 2010, TEXPERS began blogging for the purpose of explaining how pension funds work and examining issues which needed reality checks. We were then coming out of the 2008-09 market calamity that was sparked largely by collateralized debt obligations, meaning high-risk mortgages. 

We shared our blog posts over several years with Texas and national journalists, in the hope of shedding light on cloudy, complicated public employee pensions. The many opponents to defined benefit plans for public employees were taking their shots, through the media, at these plans. As we worked our way through debunking critics, many journalists let us know that they kept our writings handy for times when they had questions. In sum, we succeeded in becoming reporters’ go-to source for issues involving public employee pensions in Texas.

For us it is 2010 all over again. We now see the need to re-ignite our efforts, for you. The critics of defined benefit plans have already started their ‘sky-is-falling’ campaign against public employee pensions. We hope you will view their claims with some skepticism, and give us the chance to refute them. 

Here’s some reasons you should give us the benefit of the doubt. In 2008, the Dow Jones Industrial Average closed at 8,776 and many did not think it would ever again achieve its previous all-time high of 14,164. Earlier this year, the DJIA reached an all-time high of 29,551.  

The key here is that pension funds for public employees invest for the long-term. They may have a 30-40 year time horizon for investments. They don’t panic and sell at the bottom. They know that markets can get side-swiped by pandemics or other shocks. But markets have a solid history of coming back. Strong. Knowing this, pension funds and their investment managers are the strong hands of the market, providing stability and new cash infusions at the best possible time.

We have been working to keep Texas reporters apprised of how pension funds can recover, over time, with the tried-and-true method of dollar-cost averaging.  Our yearly reports on the improvements in amortization periods of Texas pensions have chronicled their success at putting the 08-09 crisis behind them.

Over the next 10 years we are sure we will be chronicling how they put the 2020 pandemic market behind them as well.

With that in mind, we hope you will check in with us when you see some alarmist press release come across your desk. The opponents to public employee defined benefit plans often get things wrong and fundamentally don’t understand how these systems function. They don’t know that most public employees don’t receive Social Security for decades of work. They don’t know that defined benefit plans are deferred compensation that is earned by public employees. They don’t understand the implicit value of keeping public employees on the job delivering civil service over decades.

We do understand those dynamics and we will working to share them with you, again.