Headlines about "Government plans - state and local - investments of"

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] Ohio Public Retirement Systems Need Overhaul, Not More Tweaks
"$72 billion. That's the collective unfunded liabilities of Ohio's five defined-benefit public-pension plans. That's more than Ohio's biennial budget. Under current law, three out of the five plans never will be able to pay off those liabilities. Those are the stakes." (Columbus Dispatch)

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)

[Opinion] What If 'Say on Pay' Rule Applied to Public Pension Consultants and Managers?
"Say on Pay gives shareholders [of large private corporations] a vote on executive compensation at least every three years. Paradoxically, the financial performance of many public pension funds in the past decade has been downright dismal and deserves equal attention from stakeholders. If these were private companies, their stock market prices would be running a course similar to what happened to many of the banks and Wall Street brokerage houses in recent years." (Governing)

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] That Which is Unsustainable Will Go Away: Pensions
"Assuming the pension funds are managed conservatively, how much money would have to be set aside to fund a single pension/benefits payout of $120,000 a year and one of $60,000? The yield on 10-year Treasury bonds is less than 2%, about in line with the average dividend on stocks. That means that a conservatively managed portfolio of stocks and bonds now yields around 2%.... To fund 100 senior retirees and 200 less-senior retirees, the city pension fund would need $1.2 billion, roughly equal to 10 years of the city's entire general-fund annual budget. To fund 600 retirees, the fund would need $2.4 billion." (Business Insider)

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)

CalSTRS Brings Shareholder Derivative Suit Agains Wal-Mart Directors
"[T]he California State Teachers' Retirement System owns about 5.3 million shares in Wal-Mart, worth about $313 million. Although that is a small stake -- far less than 1 percent -- the suit was filed on behalf of Wal-Mart itself against people the pension plan identified as having failed in their duties to the company.... [The plan] has never brought such a lawsuit before.... [It] asks that damages from the result of any violations be awarded to Wal-Mart, and that the company reform and improve its corporate governance and internal procedures.... Since derivative suits ask that damages be returned to the company, there is not usually a great monetary reward for plaintiffs." (The New York Times; free registration required)

Bill Encourages Public Pension Plans to Put California Projects First; Advances on Unanimous, Bipartisan Vote
"Senate Bill 955, a bill allowing public pension funds to prioritize investments in California infrastructure projects over out-of-state projects, passed on a unanimous, bipartisan vote in the Senate's Public Employment and Retirement Committee today." (Studio City Patch)

GAO Reports on State Efforts to Improve Sustainability of Government Pension Plans
"35 states reduced pension benefits by either adjusting the benefit formula, raising the age or service requirement, or reducing postretirement increases -- or a combination of more than one of these.... 24 states adjusted the benefit formula, 29 states raised the age or service requirement, and 18 states reduced postretirement increases. Due to legal restrictions these changes tend to apply only to future employees[.]" (Deloitte)

[Opinion] Illinois is the Public Pension Basket Case You Forgot About
"My biggest fear ... is that the same 'debt lunatics' sounding the alarm on debt (it's not a debt crisis but an unemployment crisis!) calling for savage austerity will use Illinois' pension basket case and countless others to kill defined-benefit plans, reducing coverage, increasing pension poverty and exacerbating economic inequality. This is the crime of the century, one that will end up costing societies a lot more over the long-run." (Pension Pulse)

California Teachers' Pension Plan Shortfall Grows
"The unfunded liability climbed 13 percent to $64.5 billion as of June 30, according to a report from actuaries released Monday. The system had about 69 percent of assets needed to cover promises to current and future retirees at the end of fiscal 2011, down from about 71 percent a year earlier." (San Francisco Chronicle)

Public Pension Funds: Tens of Billions at Significant Risk
"To meet ambitious investment return targets, some public pension funds must now swing for the fences. But many are down two strikes already, due to their previous big bets with hedge funds." (Elliott Wave)

Public Pension Pitfalls: What Municipal Budget Troubles Mean for Bond Investors
"Retirement benefits for public workers are at the heart of the conflict between state and local governments and the unions representing their workers -- and how that conflict gets resolved will affect investors in the municipal bonds issued by those states and cities." (The Washington Post)

Critics Say Virginia's Pension Reform Was Rushed Through
"Virginia localities, teachers and employee groups are urging Gov. Bob McDonnell to veto or amend what they call a slapdash, last-minute overhaul to the state's $54 billion pension fund." (Washington Times)

Should Public Pensions Be Invested in Infrastructure?
"A big-city labor leader, an investment expert and a long-time senior public start talking about public-employee pensions.... They agreed that the first objective in pension investments should be to assure that the money would be there to pay benefit obligations when they come due. But they also agreed that ... pensions should invest in a way to address the enormous infrastructure needs of state and local government and that doing so could, in fact, earn the funds a more than adequate return." (Governing)

Public Pensions Funds Find Riskier Investments Fail to Pay Off
"[A] number of retirement systems that have stuck with more traditional investments in stocks and bonds have performed better in recent years, for a fraction of the fees." (The New York Times; free registration required)

Public Pension Plan Assets Decline for First Time Since 2009
"The country's 100 largest public employee retirement systems in 2011 experienced their first year-over-year decrease in total assets since 2009, according to the Census Bureau.... Assets totaled $2.61 trillion in the fourth quarter of 2011, up 3.2% from the previous quarter, but down 1.1% from a year earlier." (Pensions & Investments)

[Opinion] American Fidelity Assurance Company ? Low Fees for Us; High Fees for Educators
"[W]hen it comes to plan fees, this Oklahoma City-based firm behaves one way at home and another way on the road. Let's compare the retirement plan AFA offers its employees with the retirement products they pitch in California." (403bWise.com)

Finances of Selected State and Local Government Employee Retirement Systems, 4th Quarter 2011
"This quarterly survey provides national summary statistics on the revenues, expenditures and composition of assets of the 100 largest state and local public employee retirement systems in the United States. These 100 systems comprise 89.4 percent of financial activity among such entities, based on the 2007 Census of Governments." (Census Bureau)

Lone Star State's Local Pension Plans Hit Long-Term Benchmarks, Report Finds
"The TEXPERS report found that most [Texas] municipal pension plans outperform the Wilshire median public fund for previous 10- and 15-year time periods, both as of Sept. 30." (Pensions & Investments)

[Guidance Overview] Municipalities Betting on Pension Bonds to Save the Day?
"The argument for the bonds is almost always that they will fill a short-term budget hole and allow the city to maintain benefits for retirees. But market experts say the risks and long-term costs are frequently ignored. Along with the interest rate payments and investment risks with which the bonds freight governments, they also provide another argument for opponents of public pensions, increasing the possibility that such benefits could be lost altogether." (Pension Pulse)

CalPERS Reform a Wake-Up Call for Pensioners
"The overseers of California's largest pension fund are taking a modest and overdue step toward reality. The board of CalPERS, which oversees retirement plans for most state workers, is shaving estimates of future earnings ... The decision reflects prudent investment advice and newfound caution. But it means something else: With CalPERS earning less, state and local agencies will have to contribute more to cover obligations to retirees." (San Francisco Chronicle)

N.C. Sues BNY for $95 Million Lehman Investment
"North Carolina officials ... accused Bank of New York Mellon Corp. of making an unauthorized $95 million investment in Lehman Brothers Holdings Inc. for the state and joking about the investment bank's precarious footing just days before it collapsed." (Reuters)

Two Ohio State Pension Funds Sue Bank: Overcharges Alleged on Stock Trades Made on Foreign Exchanges
"A lawsuit filed [March 12 by the Ohio Attorney General] asserts that the Ohio Police & Fire Pension Fund and the School Employees Retirement System paid millions in apparent overcharges on the trades." (The Columbus Dispatch)

[Guidance Overview] Massachusetts Creating Country's Largest Open Multiple Employer Plan
"The rumor is that only not-for-profits with 20 or fewer employees will be permitted to join the plan as adopting employers but this limitation is not contained in the text of the bill. The bill defines 'not-for-profit' as eligible non-governmental organizations incorporated under Code section 501(c). There is no requirement for commonality among the employers or that they are related in any way[.]" (The Pension Protection Act Blog)

New York Cities Borrow from Pension Funds to Make Payments Into Pension Funds
"Across New York, state and local governments are borrowing $750 million this year to finance their contributions to the state pension system, and are likely to borrow at least $1 billion more over the next year. The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year." (Union Watch)

[Opinion] Structural Factors of the Municipal Pension Crisis
"Public employee pensions are sinking local governments. Over the last four years, they have even pushed some municipalities into bankruptcy ...While distressing, this shouldn't be surprising, since many of the causes for the pension crisis are structural." (OpenMarket)

Illinois' Public Pensions Worse Than Numbers Show
"Illinois' pension problems could be worse than the numbers show. Years of under funding or borrowing to pay the annual pension obligation, coupled with a recent change in how liabilities and assets are calculated, have led to the problems." (The Southern)

New Pension Plan Passes Wyoming House and Senate
"Senate File 97 would require state employees hired after August 31, 2012 to work until 65 instead of 60 to receive full benefits at same time reducing their pension. [The bill's sponsor] says change is necessary to raise funding." (KGWN TV)

Wall Street Fees Surged As Pension Fund Sagged
"According to a report released today by the Independent Democratic Conference (IDC), fees paid to Wall Street firms managing the State Pension Fund surged 163 percent during the last five years even though pension fund investments faltered. The report states the fee increases cost almost $758 million while the pension fund had a net negative investment return during that time." (Patch.com)

New Jersey Pension Reform Lawsuit Tossed
"A federal lawsuit brought by New Jersey public employee unions in an attempt to overturn last year's pension and benefit reforms has been tossed out of court." (Asbury Park Press)

Support Drops for Kansas 401(k)-Style Pension Plan for Public Workers
"[Kansas] Gov. Sam Brownback's support has kept alive a proposal to start 401(k)-style pension plan for new Kansas teachers and government workers even as other Republicans in the Legislature lose interest. Public employee groups, their allies and increasingly skeptical GOP legislators have all but killed chances that Kansas will start a retirement plan similar to ones now common for private companies as a way of controlling the state's long-term pension costs." (Statesman Journal)

[Opinion] Getting Pension Systems to Work As They Should Will Be One of the Toughest Tests Governments Face in Coming Decades
"It demands something they are notoriously bad at: thinking ahead. I'm not saying governments don't understand the problem. Many have started to address it. The trouble is, they're framing the issue too narrowly, and adopting fixes that are unlikely to stick. Getting on top of this issue will require more radical thinking. In many countries, options that have been taken off the table will need to be put back on." (Bloomberg)

Stockton, CA Teeters on the Edge of Bankruptcy
"The city's pay-as-you-go approach for retiree health benefits is foundering amid shrinking revenues and rising health care costs. To start socking away money for future costs now, [the City Manager] said, 'we would have to dedicate about 30 percent of our payroll to fund this -- there's just no way.'" (ContraCostaTimes)

A Pension Plan That Works for All
"What [New York Gov. Andrew] Cuomo is proposing -- and what the public employee unions are fighting tooth and nail -- is actually a better deal for many workers than the current system.... The state and city universities have been living under a retirement system very similar to Cuomo's reform plan since the mid-1960s." (New York Daily News)

Pension Funds Are For-Profit
"California's Constitution clearly states the California Public Employees' Retirement System's (CalPERS) singular motive is to make profits.... However, CalPERS board members are not content to merely try to maximize profits. Instead, CalPERS board orders account managers to deviate from the profit system in favor of environmental, social, and corporate governance (ESG) principles." (OpenMarket.org)

U.S. Pension Woes Worsening?
"No matter what happens with pension assets, it is fair to conclude that states need to implement pension reforms. Pension expenses cannot continue to grow fivefold in a low return environment, it's a time bomb waiting to blow up. And the same concerns are being voiced in the private sector." (http://pensionpulse.blogspot.com/2012/03/us-pension-woes-worsening.html)

Salary 'Spiking' Drains Public Pension Funds, Analysis Finds
"'[S]alary spiking' was banned in 1993 by CalPERS, the state's largest public employee retirement system, to help control spiraling costs. But 20 of California's 58 counties ... do not participate in CalPERS and their employees may legally continue to spike their salaries.... [P]artial data from Ventura and Kern counties ... shows that spiking is affecting pension systems already staggered by massive obligations." (Los Angeles Times)

GAO: Most public pension plans have enough assets to last at least 10 years
"Most state and local public retirement systems 'currently have assets sufficient to cover their benefit commitments for a decade or more,' despite suffering significant investment losses from the recent economic downturn, according to a [GAO] report released March 2.... '[E]ven if these plans received no more contributions or investment returns, most large plans would not exhaust their assets for a decade or longer, since they hold assets at least 10 times their annual expenditures[.]'" (Pensions & Investments)

[Opinion] State Health Insurance Mandates Now Total 2,262, Costs Go Up for Everybody
"Based on our annual analysis, mandated benefits currently increase the cost of basic health coverage from slightly less than 10 percent to more than 50 percent, depending on the state, specific legislative language, and type of health insurance policy." (The Council for Affordable Health Insurance)

To Pay New York Pension Fund, Cities Borrow From It First
"[C]ities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money." (The New York Times; free registration required)

Ensure your Plan Participants are Prepared for a Secure Retirement
Defined Contribution Conference, March 11-13, in Miami. Learn from your peers through presentations and discussions on plan design, communications, investment options and more. FREE registration for qualified plan sponsors. (Pensions & Investments)

Avoid the Common Mistakes Affecting Plan Loans Webcast
Earn CE credit while ERISA expert, Charles Lockwood, JD, LLM, explains the administrative issues that affect plan loans. Have questions? Charles will address them either during or after the webcast. March 22nd at 2pm EST. (ASC)

Public Pension Plan Investment Returns (PDF)
"For fiscal year ending June 30, 2011, state and local government retirement systems had a median investment return of 21.6 percent. With a slow economic recovery and ongoing global market volatility, it is important to keep in mind that a long-term focus is an overarching factor in public pension investment strategies and projections. This issue brief discusses how investment return assumptions are established and evaluated and compares these assumptions with public funds' actual investment experience." (National Association of State Retirement Administrators)

Time to Tighten Rules on U.S. Pensions
"Last year was tough for U.S. pension plans -- both private and public. But while it looked like private plans were hardest hit, this is merely a matter of appearances. Public plans are in much worse shape, though lenient accounting rules allow them to paint a misleadingly rosy picture of their funding status." (The Brookings Institution)

An Analysis of Risk-Taking Behavior for Public Defined Benefit Pension Plans
"[G]overnment accounting standards strongly affect public fund investment risk ... Unlike private pension plans, public funds undertake more risk if they are underfunded and have lower investment returns in the previous years ... pension funds in states facing financial constraints allocate more assets to equity ... [also] a change in CalPERS portfolio beta or equity allocation is mimicked by other pension funds. Finally, the results offer mild support of a public union effect." (Upjohn Institute)

[Opinion] Politicians put taxpayers at risk chasing gain for pension plans
"Politicians are setting up taxpayers and government workers for an even bigger crash by forcing retirement funds into risky investments, chasing gains required to pay promised benefits. That means trillions of dollars in higher taxes to provide no services or millions of betrayed public workers who will not get pension checks." (Watchdog.org)

The State and Local Pension Crisis
"In the private sector, gains and losses of pension funds must be smoothed over seven years ... - ten years when requested by the plan's administrators. By contrast, in the public sector, gains and losses may be smoothed over 30 years. This means that public funds can incur greater near-term deficits than private plans, because projected gains 30 years hence can be used to offset near-term losses, at least on paper." (RealClearMarkets)

California Teachers' Retirement Fund Commits $500 Million to Infrastructure
The California State Teachers' Retirement System is ... committing $500 million to roads, utilities and more. [T]he recent economic crisis demonstrated ... the need for greater diversification in [the fund's] investment portfolio, in areas that would also serve as a hedge against inflation[.] (The Sacramento Bee)

Facebook's Corporate Governance Rules a Concern for CalSTRS
"Facebook's corporate governance rules, which give shareholders little say in how the social networking website would be run as a public company, are raising the hackles of one of the largest U.S. investors, the California State Teachers' Retirement System." (Reuters via The New York Times; free registration required)

Lower Your Earnings Assumption, Milliman Tells Second-Largest Public Pension Plan
"'There is a less than 50 percent probability that the current assumption' of 7.75 percent will be met [by the California State Teachers' Retirement System] 'over the long term,' Milliman actuaries wrote in their report." (Bloomberg)

Public Pensions Pile on Risk to Beat Underfunding
"Public sector pension fund investors and their fund managers react differently to an underfunded status than their private sector peers, Nancy Mohan and Ting Zhang at the University of Drayton found in research . . . [G]overnment accounting standards 'strongly affect risk-taking behavior', as most pension plans used higher return assumptions to discount their pension liabilities." (aiCIO)

[Opinion] California Public Pension Funds Should Disclose When Investment Earnings Miss The Mark
"Investment earnings are expected to provide two-thirds or more of the money needed to pay pensions in future decades. Critics say earnings forecasts, 7.75 percent a year for CalPERS and CalSTRS, are too optimistic and conceal massive taxpayer debt." (Capitol Weekly)

AFSCME Plan Files 21 Shareholder Proposals
"The plan proposals are designed to protect and enhance the economic value of its long-term investments. They would require greater director accountability, independent corporate board leadership and greater transparency in the companies in which the plan invests." (PLANSPONSOR.COM)

Pension Fund Sues MetLife Claiming False Data Punished Stock
"MetLife Inc. . . . was sued by a Michigan police and firefighters pension fund for allegedly misleading investors about its finances, triggering declines in the stock price." (Bloomberg L.P.)

[Opinion] Who Knew? 80% Funding Target for Pension Funds Just An Urban Legend
"People refer to one report or another to substantiate their claim that some presumed experts actually made this assertion (including a GAO report and a Pew Center report that both cite unidentified experts), but nobody actually names these alleged 'sources.'" (WPRI.com)

Internal Bank Papers Show Worry over Florida Pursuit of Pension Fraud
"An informer in a state fraud case against Bank of New York Mellon Corp. offered prosecutors an inside look at how the bank allegedly scrambled to contain a government investigation into whether the bank overcharged Florida's state and local pension funds, among others, to execute currency trades." (Tampa Bay Times)

Quarterly Summary of the Finances of Selected State and Local Government Employee Retirement Systems (PDF)
"For the 100 largest public-employee retirement systems in the country, total holdings and investments were down in the third quarter of 2011 following four consecutive quarterly increases." (U.S. Census Bureau)

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