Headlines about "Actuarial - funding of pensions"

Gathered from the web by the editors at BenefitsLink.com.
CalPERS Looks at Investments in Job-Creating Infrastructure
"In a happy convergence, pension funds are moving into infrastructure to reduce inflation and market risk, while deficit-ridden governments are deep in bond debt and looking for new ways to rebuild and expand crumbling public works.... Part of the 'fiduciary' duty of pension boards to protect pension recipients may extend to preserving the financial health of governments, the pension plan sponsors, through infrastructure investments needed to maintain and improve the economy." (Calpensions)

[Opinion] Public-Sector Pensions: The Transition Costs Myth
"Public-sector employees -- who enjoy their generous retirement benefits -- and the pension industrial complex of plan managers, pension actuaries, and investment advisors don't like DC plans. They're pushing back with a novel argument: DB pensions' massive unfunded liabilities create 'transition costs' that make shifting to DC plans unfeasibly expensive. In other words, the more broke DB plans become, the more we have to stick with them.... Pension advocates rely on financial disclosure rules generated by the [GASB] regarding how quickly a DB plan must pay down -- or 'amortize' -- its unfunded liabilities." (The American Magazine)

Actuarial Reality of 2003 Enhanced Pension Formula Comes Crashing Down on One California County
"Pensions for career Sonoma County government workers have more than doubled in the past decade, led by sheriff's deputies and other public safety workers who by 2011 were retiring with an average of more than $94,000 a year.... Taxpayer costs for county pensions, including payments on bond debt, meanwhile, have risen 401 percent in the past 12 years, to $87.2 million a year." (pressdemocrat.com)

[Opinion] Wall Street Journal and Credit Suisse 'Union Pension Bomb' Is Long on Drama, Short on Insight (PDF)
"The May 15, 2012 Wall Street Journal editorial entitled 'The Union Pension Bomb' and the Credit Suisse report to which it refers may provide an eye-catching headline, but it contains numerous factual inaccuracies and misleading statements regarding multiemployer plans.... Rather than acknowledging the long-term nature of pension obligations and the market fluctuations that will produce periodic and transitory periods of over- or underfunding, [the editorial] chose to capitalize on the anomalies produced by artificially low interest rates, overly influenced by monetary policies intended to stimulate low-cost borrowing, at the expense of those institutions and individuals whose long-term financial survival is dependent on savings and historically dependable fixed income instruments. The sensationalism of these conclusions may play well to those whose interests are served by eliminating any sense of corporate responsibility to the workers whose efforts are as much a contributing factor to the companies' success as those who provide the capital, but no one should be fooled by this shameless and opportunistic characterization of the current rates as market driven 'risk-free' rates, appropriate for such conclusions." (National Coordinating Committee for Multiemployer Plans)

Kansas House and Senate Agree on Changes to State Employees Pension Plan
Rather than a 401(k)-type plan, a defined contribution account will be established for newly hired employees to which the state will credit 5.25% in guaranteed earnings on both employee and employer contributions, with additional credits possible if the existing KPERS plan has an investment return of more than 8%. (WSLS)

Florida Agency Says Legislators Should Consider Increase in Required Employee Contributions to Pension Fund
"The staff of the [State Board of Administration], which manages investments for the $121.6 billion [Florida Retirement System (FRS)] fund, advised the House and Senate leadership of potential problems this week. In a required annual review of the FRS actuarial valuation, the financial analysts also said the state could consider cutting the fund's 7.75 percent expected earnings target by a half-percent." (The Florida Current)

Can Ford's Lump-Sum Buyout Technique Work for Other Pension Plan Sponsors?
"Ford is offering to make a one-time, voluntary lump-sum payment to nearly all of its salaried retirees by the end of 2013. It appears to be the first such program to specifically target retirees without being part of a broader plan termination, experts say. According to those same experts, the impact on HR departments could be substantial, especially in areas of due diligence, communications and education, if this becomes a trend." (Human Resource Executive Online)

Houston Sues Firefighters Pension Board to Open Its Books
"The Legislature created Houston's firefighters pension system and gives it the authority to unilaterally establish what taxpayers owe the system each year. Fund representatives are not even obligated to meet with city officials to discuss possible changes to the system." (The Houston Chronicle)

Auditor: San Diego Pension Initiative Overstates Savings
"[T]he measure aims to hold steady city workers' pensionable salaries over the next five years to save on pension costs. But voters can't mandate city employee salaries at the ballot box so the measure provides a strong recommendation for City Council to impose the freeze. The pensionable pay freeze is so essential to the initiative's savings that with it supporters can claim the measure saves $1 billion over 30 years and without it opponents can claim it saves $0." (Voice of San Diego)

Considerations in Preparing Disclosure in Official Statements on a Government Bond Issuer's Pension Funding Obligations (PDF)
"The overall point of the disclosure of pension funding obligations is to indicate whether the state or local government will likely struggle in meeting such obligations without making difficult financial decisions. One of those decisions may be related to the payment of debt service on bonds. Thus, in circumstances where there is expected to be financial strain caused by an issuer's pension funding obligations, being clear and plain about this point to investors is very important." (Pension Disclosure Task Force, National Association of Bond Lawyers)

Is Stock Market Recovery Providing Light at the End of the Tunnel for State and Local Pensions?
"The stock market's rebound from its depths in the recession has lifted pension assets substantially over the past two and half years ... The effects of the recovering market haven't yet shown up in most state pension funds' financial reports, but they will over the next few years. When most funds estimate their available assets, they phase in the impact of investment gains and losses over several years in order to minimize year-to-year changes in the amount of money that the state must deposit in the fund." (Center on Budget and Policy Priorities)

[Opinion] PBGC: Protector or Predator?
"[The three Dewey & LeBoeuf] plans PBGC has taken over are all cash balance plans that cover only past and current partners and they are relatively well funded.... What's the PBGC doing taking over a plan for partners-only, one of which is reported to be over-funded? Is this agency, strapped for cash itself, looking to prey on these lawyers by appropriating the approximately $150 million in assets in the plans and having to pay out substantially less (based on PBGC calculations) in monthly installments at later dates?" (Burypensions Blog)

CalPERS Ignores Governor Brown, Rejects Immediate Application of Lowered Earnings Assumption
"The power of CalPERS to give the governor and the Legislature an annual bill that must be paid can be a friction point. In the dispute over paying off part of the new rate increase over 20 years, board members said they were giving lawmakers an option. 'We voted for the phase-in option to make things less painful for all employers during these difficult economic times,' said ... the CalPERS board president. 'If the Governor feels the state can make the payment in full, then I'll be happy to have someone come pick up his check today.'" (Calpensions)

PBGC Sues to Take Over Pension Plans of Dewey & LeBoeuf
"Last week, the agency said it would seize control of three Dewey pension plans covering 1,776 current and future retirees that the PBGC said were underfunded by $80 million.... Dewey is liquidating and winding down outside of bankruptcy, according to the lawsuit. Many of the firm's associates were told on May 10 that Tuesday would be their last day." (The New York Times; free registration required)

CalPERS Begins Applying Lower Earnings Assumption for Country's Largest Pension Plan
"The disagreement was over the pace at which [the California Public Employees' Retirement System, or 'CalPERS'] is lowering its assumptions about future investment returns from 7.75 percent to 7.5 percent, called the discount rate.... When the rate of return assumption goes down, governments must contribute more. The [CalPERS] board agreed to phase in the change over two years at a onetime $137 million savings ($78 million general fund), but [Governor Brown] had wanted the board to drop the discount rate immediately." (The Sacramento Bee)

Spring 2012 Report of Results from the Segal Survey of Calendar Year Multiemployer Pension Plans' 2012 Zone Status
"[T]he proportion of calendar-year multiemployer pension plans in the green zone declined by four percentage points between January 1, 2011 and January 1, 2012: from 66 percent to 62 percent. In addition, the survey found that the average [PPA '06] funded percentage for those plans decreased by three percentage points over that period: from 89 percent to 86 percent. Prior to the market downturn that began in late 2008, more than three-quarters of calendar-year plans (83 percent) were in the green zone and the average PPA'06 funded percentage was 97 percent." (Segal)

Longtime Chief of Colorado State Pension Plans Resigns, Calls 401(k) Savings Model a 'Failure'
"We can no longer talk in terms of 'plain vanilla' defined benefit or defined contribution plans. Instead, we see a blending of features to meet the unique needs of particular jurisdictions. However, pooling of investment and longevity risk in a base-defined benefit plan remains the low cost provider of a retirement dollar.... The real story is that Americans in general are unprepared for retirement. They typically have no resources to support them if they should become unable to work, let alone sustain them in retirement. The 401(k) experiment is a failure. The social service cost implication of this situation is not being acknowledged and will become a huge burden in the future [said Meredith Williams, former executive director of the Colorado Public Employees� Retirement Association]." (Governing)

At April Meeting, GASB Simplifies Accounting for State Retirement System Liabilities (PDF)
"At the Governmental Accounting Standards Board (GASB) meeting April 18th through the 20th, the Board voted to greatly simplify the manner of apportioning the underfunding of typical state retirement systems among the individual participating employers. But the Board retained its original proposal that those apportioned liabilities should appear as liabilities on each participating employer's balance sheet beginning as early as 2014.... What remains uncertain is what the precise effects [will be]. Of particular concern and uncertainty will be the impact of the additional liabilities on public bond markets, on the rating agencies, on legal or contractual limitations on liabilities on the part of such participating employers, and whether efforts to enact specific state laws reallocating liabilities or reducing benefits will come about as a result." (Groom Law Group)

[Opinion] Text of Letter to Congress by American Benefits Council and Others, Urging DB Funding Interest Rate Stabilization (PDF)
"The undersigned organizations, which represent thousands of pension plans providing retirement benefits to millions of workers and retirees, urge immediate Congressional action to stabilize funding interest rate rules for private-sector pension plans. Without legislation to adjust for current economic conditions, the current plan funding regime will undermine job retention and growth and limit companies' ability to invest in capital improvements needed to be competitive worldwide and to maintain the economic recovery here at home. Moreover, failure to address on-going funding issues will threaten the long-term retirement security of workers and retirees." (American Benefits Council)

401(k) Option Still a Sore Point in Kansas Public Employees Retirement System Talks
"A six-member legislative panel negotiating House-Senate differences on reform of the state's public employee pension system plans to meet again Tuesday after House members have mulled over a Senate offer of a cash balance plan.... [T]he Senate isn�t offering employees even an option of a 401(k)-style plan coveted by conservatives.... [A Kansas Representative] said that while the guaranteed benefit that the cash balance provides would likely be more attractive to older employees closer to retirement, younger employees, if given the choice, might want to take on the risk of a 401(k)-type plan for the shot at a higher return. " (cjonline.com)

Employer Agrees to Restore $1.3 Million to Employee Retirement Plan
"In a consent judgment entered this month in the U.S. District Court's Central District in Los Angeles, officers of ... Western Mixers Inc. agreed to restore $802,901 to participants' accounts within 10 days. During the course of the investigation leading up to the lawsuit, the company repaid to the plan $485,000 of the total funds identified as missing. The consent judgment fully recovers unpaid contributions and unauthorized withdrawals, plus interest." (Employee Benefits Security Administration)

Drastic Ohio Public Pension Overhaul Biggest in State History
"Retirees will see their cost of living allowances cut and workers will be told to put in more years, pay more money into the system and accept a lesser benefit at the end of a long career, if the bills become law. Pension officials, who have been begging lawmakers to take action for nearly three years, say the changes are needed to shore up their finances for the long haul and to allow them to avert drastic cutbacks in health care benefits for current and future retirees." (Dayton Daily News)

Providence Pension Reforms Will Save $19 Million Over the Next Year
"The new [Providence ordinance] halts COLAs until city pensions are 70 percent funded ... caps individual pensions at 150 percent of the state's median household income and cracks down on the liberal awarding of disability pensions. And it calls for employees to continue paying into the pension system as long as they continue to accrue benefits, rather than stopping after 25 years as they can now.... [These changes echo those adopted at the state level Last November, when] Rhode Island also went after COLAs, providing them only once every five years until 80 percent of expected pension expenditures are funded.... [T]he state raised the retirement age to the age at which workers are eligible for Social Security ... [scaled] back the traditional defined-benefit portion of the pension plan and [added] a defined-contribution element that requires workers to contribute 5 percent of salary to an individual retirement account, matched by a 1 percent employer contribution." (Governing)

[Guidance Overview] Foreign Parent Company Was Properly Joined in PBGC Suit Against U.S. Subsidiary's Pension Plan
"The [U.S. District Court for the District of Columbia found that] PBGC's claims against Asahi were not based on the pension plan's termination or underfunding, but were predicated solely on Asahi's status as a member of the controlled group through its acquisition of Metaldyne. The court [ruled] that, notwithstanding the absence of any affirmative conduct by Asahi with respect to the U.S. subsidiary's pension plan, personal jurisdiction for the purpose of determining liability under ERISA attached once Asahi became a member of the Metaldyne controlled group." (Haynes and Boone)

[Opinion] Text of Comments by ASPPA on Use of 401(k) Plan Forfeitures as Safe Harbor Contributions
"ASPPA respectfully requests that the IRS consider issuing additional guidance clarifying that forfeitures can be used to fund ADP safe harbor contributions. Furthermore, ASPPA requests that the IRS consider issuing additional guidance clarifying that forfeitures may be used to fund ADP safe harbor contributions that are qualified automatic contribution arrangements." (American Society of Pension Professionals & Actuaries)

Arizona Public Workers to Be Reimbursed for Increased Pension Contributions
"The new legislation [returns the Arizona State Retirement System] contribution rate back to an equal 50/50 split between the state and its workers. The bill also appropriates $40 million to state agencies and school districts to reimburse employees for the return to the old formula.... The state law that went into effect on July 1, 2011, increased the portion of contributions state employees must make to their pension from 50% to 53%, while lowering the state's portion to 47%." (PLANSPONSOR.com)

Chicago Mayor Proposes Freeze in Pension Cost-of-Living-Adjustments, Wants to Raise Retirement Age
"The changes that the mayor outlined to reduce the city's unfunded pension liability by a projected 40 percent mirror the reforms proposed by Gov. Pat Quinn to solve the state's pension crisis. But [the mayor]'s 'roadmap to retirement security' go even further[.]" (Chicago Sun-Times)

A False Objection When Public Employers Consider a Switch from DB Plan to DC Plan: 'GASB Won't Let Me' (PDF)
"Defined Contribution, Cash Balance and Hybrid plans are all proposals that tie benefits more closely to contributions.... In the legislative arena, such proposals face a set of objections commonly called Transition Costs -- claims that structural reforms will raise employer costs in the short run, even if they lower them in the long run. Advocates for traditional pensions argue that it would be especially unwise to incur these Transition Costs in times of fiscal duress, and legislatures, with short time horizons and balanced budget requirements, are deterred by these claims from undertaking structural reform. This paper examines the most common of these claims, that structural pension reform requires an acceleration of payments to amortize the old plan's unfunded liability." (Laura and John Arnold Foundation)

Buyout Offer is Risky Gamble for Ford's Pension Plan
"[One attorney says], 'I think this will come back to bite Ford. Plan assets gain when people die 'on time' or earlier than the actuarial projection, thereby leaving money in the plan. If you take all the unhealthy ones out of the picture, you may have a larger potential liability in the end because you have to put more money into the system in order to fund the benefits for longer-lived retirees.'" (CFO)

Pension Funding Index, April 2012 (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans dropped by $39 billion during April 2012.... The deficit increased to $267 billion from $228 billion at the end of March, and the funded ratio fell from 85.0% to 82.9%. April's funded status decrease, the first of 2012, was due primarily to a decrease in the corporate bond interest rates that are the benchmarks used to value pension liabilities." (Milliman)

California Pension Nightmare Worsens: Thousands More Are Joining '$100,000 Club' Annually
"Juxtapose the recent headcount of 12,119 [retired California government workers receive pensions in excess of $100,000] next to the at 9,812 released in June 2011. That mental image of California sliding into the Pacific Ocean under the weight of these pension obligations is becoming ever more real. Look at thes trend lines." (Wall Street Pit)

Analysis: Public Pension Fixes Face Stout Legal Challenges
"Any quick fixes would be hard to carry out. Each state has its own constitution, courts, case law and retirement systems that affect how they can try to rein in pension costs.... There are at least eight lawsuits nationwide contesting attempted pension fixes, such as one in Florida that is aimed at saving $1 billion a year by reforming public pensions. These lawsuits generally are brought by public sector unions." (Chicago Tribune)

State and Local Governments Belatedly Put Pension Deficits on Their Books
"The [GASB accounting] rules may raise government costs in the $3.7 trillion municipal market as investors demand more yield to compensate for higher pension risk and possibly lower ratings. Illinois became Moody's Investors Service's lowest-rated state in January because it hadn't dealt with its underfunded pensions." (Bloomberg BusinessWeek)

Bill Revising Pension Benefits Goes to Alabama Governor for Signature
"[Alabama Governor Robert Bentley], legislative leaders and David Bronner, chief executive officer of the Retirement Systems of Alabama, worked together on the proposal ... Most state employees would have to work until they are 62 to begin receiving benefits ... Currently, a state employee may retire after 25 years of service, no matter the age of the employee, or retire at 60 after 10 years of service and begin receiving benefits." (The Montgomery Advertiser)

[Opinion] Time to Control Runaway Military Personnel Costs
"[W]hile the military's retirement program serves only a small minority of the force, it provides an exceedingly generous benefit, often providing 40 years of pension payments in return for 20 years of service. As a result, the program now costs taxpayers more than $100 billion per year, an exceedingly steep price tag for a program hampered by serious flaws. This number is projected to double by 2034." (Tuscon Sentinel)

Louisiana Governor's Pension Reform Proposals Watered Down by Senate Committee
"Watered down versions of the most controversial portions of Gov. Bobby Jindal's proposed retirement overhaul are headed back to the Senate floor after passing their second committee Monday. The bills increase the amount employees contribute to the pension plans, delay the retirement age for many workers and increase the number of years used to calculate an average salary for retirement purposes." (The Times-Picayune)

Actuaries Recommend a $213 Million Increase in Annual State Pension Payments to CalPERS
"But $149 million would be added to the increase if the impact of a lower earnings forecast, dropped by the board in March from 7.75 percent to 7.5 percent a year, is not phased in over 20 years. Either way, the annual state payment to CalPERS next fiscal year would still be less than the $3.9 billion payment expected two years ago when major investment losses began to push up rates from $3.3 billion." (Calpensions)

Funded Status of U.S. Pensions Declines to 76.3 Percent in April
"The drop was due to a 4.5 percent rise in liabilities, resulting from falling interest rates, and a decline in the equity markets, according to the BNY Mellon Pension Summary Report for April 2012. BNY Mellon attributed the increase in liabilities to the 29-basis-point drop in the Aa corporate discount rate to 4.29 percent. The decline in the equity markets was the primary reason for the 0.1 percent drop in plan assets during the month, BNY Mellon said." (BNY Mellon)

[Guidance Overview] Employer No Longer Contributing to Multiemployer Plan Cannot Use Sale of Assets Exemption Under MPPAA
"In HOP Energy, L.L.C. v. Local 553 Pension Fund, the key issue decided by the US Court of Appeals for the Second Circuit was whether an employer that stopped contributing to a multiemployer pension plan ... after it sold the assets of one of its divisions to another company can use the sale of assets exemption under the Multiemployer Pension Plan Amendment Act ... to avoid the obligation to pay withdrawal liability." (Practical Law Company)

The Funding of State and Local Pensions: 2011-2015 (PDF)
"The stock market hovers around pre-crisis peaks, tax revenues have rebounded, and plan sponsors have raised employee contributions for all workers and/or reduced benefits for new workers, yet the funded status of state and local pension plans has once again slipped. ... Because of [actuarial] smoothing, the funding results looked much better in 2009 and 2010 than developments warranted, but less good than developments in 2011. In order to highlight the impact of asset smoothing in the short run and the stock market in the slightly longer run, this brief provides an update on the funded status of state and local plans in 2011 and also reports projections for the period 2012�2015." (Center for State & Local Government Excellence)

Governmental Pension Plans: Can Peter's Sponsor Borrow From Peter To Pay Peter?
"Whose skin is in the game when pension plans make loans to plan sponsors to pay pension contributions, and is the answer different if the plan sponsor is a government body? Those questions come to mind on learning that last year the highest elected officials in New York State authorized financially distressed local governments in the state to use a problematic borrowing scheme to defer a portion of their pension liabilities, by, in effect, borrowing from the state pension system to satisfy significant percentages of contributions owed to the pension trust for the retirement benefits of their respective employees." (By Alvin D. Lurie, Esq. on BenefitsLink.com)

California Counties Deciding to Stop 'Picking Up' Employee Pension Contributions
"Yolo County along with many other local governments in California began, more than a decade ago, the practice of paying employees' share of pension contributions to CalPERS. The theory was that by taking on those contributions, which are a percentage of employees' salaries, cities and counties could help hold the line on future salary inflation. That backfired after 2008-09, when CalPERS suffered a 24 percent investment loss and began boosting required pension contributions." (The Modesto Bee)

States Scaling Back Worker Pensions to Save Money
"For years, state governments lured workers with the promise of lucrative pensions that provide nearly the pay that employees earned on the job. But after years of budget crunches, nearly every state has revamped public retirement benefits in an effort to shrink the long-term obligations that are billions of dollars short of what is needed to cover benefits. The moves have triggered a legal and political battle over whether states are reneging on their promises to millions of public-sector workers." (The Salt Lake Tribune)

Broken ARC, Broken Promises: Underfunded Public Pension Plans
"It divides underfunded public pension plans into two categories those whose sponsors make the full Actuarially Required Contributions (ARC) and those who do not. While state and plan bankruptcy is being discussed, the author prefers a more incremental approach for the vast majority of plans whose sponsors make the ARC each year. However for the ones who have broken the ARC and are in deep trouble he introduces a new type of Federal Supervision under the PBGC as an alternative to Federal Bankruptcy." (Stable Value Consultants)

Avoiding Surprises in Pension Contribution Liability: How Public Employers Can Anticipate and Evaluate 'Pension Risk' (PDF)
"The most significant risks include investment, inflation, and longevity risk. Left unmanaged, adverse experience from any of these can cause the retirement system to drift into a costly and perhaps unsustainable position. Certain circumstances may increase the likelihood that this may occur, including: Significant investment losses; Volatility in contribution rates; and Contribution levels that are inadequate when compared to the level of benefits promised to members." (Gabriel Roeder)

First Quarter 2012 Pension Plan Funded Status Experience (PDF)
"During [this period], the funded status of the model pension plan examined ... improved by five percentage points: from 74 percent to 79 percent. This improvement was driven by asset growth of 7 percent." (Sibson Consulting)

PBGC Statement on the Bankruptcy of Hawker Beechcraft, Inc.
"'[PBGC is] committed to working with Hawker Beechcraft and its creditors so that the company can reorganize successfully, while also maintaining the retirement security of its nearly 20,000 workers and retirees.' Collectively, Hawker Beechcraft's three pension plans are 56 percent funded, with $769 million in assets to cover $1.4 billion in benefits. If Hawker Beechcraft ended the plans, PBGC would pay $533 million of the $611 million shortfall." (Pension Benefit Guaranty Corporation)

10 Worst-Off State Pension Funds
"How bad is the funding gap? The study calls it "a matter of debate," but according to the funding-status measure prescribed by the Government Accounting Standards Board, the nation's largest 126 pension plans were underfunded by around $800 billion in 2010, while critics of GASB's accounting methods estimate the aggregate pension fund shortfall to be as much as $4 trillion." (The Street)

Pension Plan Underfunding Rises Slightly During April
"The decrease in funded status in April [and commensurate increase in the level of underfunding] was attributable to an increase in liabilities due to declining interest rates. Interest rates on high quality corporate bonds, which are used to measure the pension liability, fell 22-32 basis points during the month, as measured by the Mercer Pension Discount Yield Curve. Assets were relatively flat during the month as US equity markets were down about 0.6 percent for the month, offset by positive returns for fixed income investments." (Mercer)

Managing the Volatility of Defined Benefit Plan Funded Ratios and Contributions
"[I]t requires an in-depth analysis of asset allocation and the role it plays in creating risk within a plan. A first step to a finance team's managing against unexpected volatility is understanding the unique circumstances of the plan by identifying several key characteristics: current asset allocation, liability profile, funded ratio, contribution policy, status of the plan, the plan's 'end game,' and, most importantly, the plan sponsor's risk tolerance." (CFO)

PBGC and Bendix Reach Settlement and End Litigation on Pension Debt
"Under the settlement, PBGC won't require Bendix to put up collateral for the remaining $8.4 million in pension liability, provided the company remains financially strong until the end of the year. If the company's financial position significantly weakens during that time, Bendix will provide a letter of credit for $8.4 million." (Pension Benefit Guaranty Corporation)

Stockton, California Bankruptcy Would Public Employee Pensions and Bondholders Nationwide
"Under a new California law governing municipal distress, Stockton has entered into a mandated mediation period before it can file for bankruptcy under Chapter 9.... Stockton faces an avalanche of obligations that it cannot meet. Foremost among them are contributions to public employee pensions, as well as debt service on bonds earlier sold to fund its pension contributions." (Governing)

Text of U.S. Census Bureau Summary Report on State and Locally Administered Pensions, 2010 (PDF)
"This survey covers the following retirement system activities: revenues by state (earnings on investments, employee contributions, government contributions); expenditures by state (benefits, withdrawals, other payments); cash and investment holdings by state (governmental securities, corporate stocks and bonds, foreign and international securities, etc.); and membership information by state (number of retirement systems, total members, beneficiaries receiving periodic payments)." (U.S. Census Bureau)

[Guidance Overview] Financial Regulators Clarify Reg Z and Compensation Rules as Applied to Retirement Plan Contributions
"The Consumer Financial Protection Bureau ... recently released CFPB Bulletin 2012-02 clarifying the compensation rules applicable to loan originators under Regulation Z, 12 C.F.R. Section 1026.36. Generally, loan originators may not receive compensation, directly or indirectly, that is based on any term or condition of a mortgage transaction.... Mortgage companies receive profits based on selling mortgages, however. Often times they fund their qualified profit sharing plan, 401(k) or employee stock ownership plans (together referred to as 'qualified plans') with such profits." (SunGard Relius)

Federal Reserve Bank Is No Friend of Defined Benefit Retirement Plans
"In the past five years, the sponsors of the largest plans have poured $164.4 billion into the plans, and yet their aggregate funding shortfall has increased by $368 billion to $258.3 billion and their average funded status has fallen to 81.6% from 108.6%.... Certainly, the stock market plunge in 2008 and 2009 is partly to blame, although the losses have largely been recovered. The larger culprit is the Federal Reserve and its low interest rate policy, which has driven down the discount rate companies must use in valuing their future liabilities, and thus has increased the current value of those liabilities despite substantial corporate contributions." (Pensions & Investments)

[Opinion] How Retirement Benefits Might Sink the States
"Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state's future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, 'You won't recruit a business, you won't recruit a family to live here.' We're likely to hear more such worries in coming years." (The Wall Street Journal)

Can a Public Pension Plan File Bankruptcy? Historic Northern Mariana Islands Chapter 11 Case Might Tell
"[A motion was filed recently] on the behalf of two anonymous retirement plan participants, arguing that the plan cannot file for Chapter 11 restructuring because it's not a person under the bankruptcy code and because it's a governmental unit.... [An attorney said] that by filing for bankruptcy, the fund was permitting the local government to avoid its obligation to its retirees." (Investment News)

Ohio Lawmakers Ready to Consider Reforms for Public Employee Retirement Systems
"More than two years ago, the pension boards [of each of Ohio's five public employee retirement systems] submitted new funding plans to the General Assembly that called for employees working longer for fewer pension benefits. The proposals do not call for taxpayers to pay more. [Senate President Tom Niehaus] said legislation is being drafted based on those plans and updated." (Dayton Daily News)

[Opinion] Louisiana Pension Reform Opponents Proffer Misleading Arguments
"Critics of Governor Jindal's proposed 'cash balance' pension plan for state employees have made a number of inaccurate claims. The current retirement systems have amassed an astonishing $18.9 billion in unfunded liabilities, but reform opponents defend the status quo with scare tactics while relying on a flawed report from the Legislative Auditor. These critics claim that switching from the current defined benefit plan to a cash balance plan would increase costs to the state, drive up taxes, and even force people into poverty. In fact, this reform would put Louisiana's retirement systems on a more sustainable path, protecting state employees and taxpayers alike." (The Pelican Post)

Bill Requiring Higher Employee Contributions Under Federal Retirement Plan Advances in House
"The legislation requires current federal employees to pay 5 percent more toward their retirement over the next five years, beginning in 2013. Members of Congress would have to contribute an additional 8.5 percent to their defined benefit plan during the same time period." (Government Executive)

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