Headlines about "Government plans - state and local - misc"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] Unforeseeable Emergencies and Hardship Withdrawals: What Every 457 Plan Administrator Needs to Know
Excerpt: "The circumstances that constitute an unforeseeable emergency (UE) should be based on facts and made on a case by case basis. The IRS has not provided guidance on what is adequate documentation to validate the UE request and this has created some uncertainty among administrators about whether they are requiring enough documentation from plan participants who are applying for a UE. NAGDCA recently spoke with Cheryl Press, a Senior Counsel for Tax Exempt and Government Entities at Chief Counsel IRS, regarding the feasibility of using self-certification to satisfy the regulations regarding distributions from a section 457 plan for unforeseeable emergencies." (National Association of Government Defined Contribution Administrators)
West Virginia Senate Committee Votes Down Retiree Health Benefit Proposal
Excerpt: "Legislation to freeze the state's gas tax at its current rate, and to allow cities to close out critically underfunded police and firefighter pension funds are on track for passage, as a brief special legislative session enters its third day Thursday. However, one piece of Gov. Joe Manchin's special session agenda was in trouble Wednesday: a proposal to give school boards and other local governments a one-year reprieve from having to carry massive unfunded liabilities for future retiree health benefits on their financial books. Backers of the legislation (HB405, SB4405) believe it would benefit county school boards that will be selling bond issues next year in order to draw down federal economic stimulus funds for school construction and renovation." (The Charleston Gazette)
Pension Plan Moves Forward in West Virginia Legislature
Excerpt: "Police and fire pension plans across the state are suffering from funding shortfalls. The pending bill would allow municipalities to close such plans to new hires, freezing those unfunded liabilities. Among the ailing municipalities, officials have said Huntington is hurting the worst. More than 20 percent, or $8.8 million, of Huntington's $42 million budget is going to pension costs this year. Under the current funding method, those costs will rise to $12.4 million a year by 2015 and will not reach their ceiling until they hit approximately $20 million a year between 2020 and 2022, according to the city's finance department." (Herald-Dispatch.com)
Teachers Who Move Between States Suffer Pension Hit
Excerpt: "A 30-year veteran public school teacher who moves and splits employment between two state retirement systems is at risk for losing well over one-half of his or her pension wealth, according to new study. A news release said the research was from economists Robert M. Costrell of the University of Arkansas and Michael Podgursky of the University of Missouri-Columbia. Costrell and Podgursky examined pension funds in six states and found that compared to a neutral cash balance system, the type of defined benefit pension system which covers almost all public school teachers redistributes about half the pension wealth of an entering cohort of teachers who subsequently retire in their mid-50s from those who leave the system earlier." (PLANSPONSOR.com; free registration required)
Cost to Provide Health Care Coverage Much Higher for State and Local Governments Than for Private Industry
Excerpt: "The cost of providing health care coverage is much higher for state and local governments than it is for employers in private industry, according to research from the Bureau of Labor Statistics (BLS). The survey, New Health Participation and Access Data from the National Compensation Survey, found that in state and local governments, the average per-employee health care cost was $6,430 in 2008, compared with $3,527 for the private industry. The BLS provided two reasons for this." (Wolters Kluwer)
[Guidance Overview] Florida Retirement System Classification As 'Special Risk' Not Necessary to Invoke Heart/Lung Presumption, According to District Court
Excerpt: "On October 8, 2009 the Florida First District Court of Appeal issued an opinion holding that Florida Retirement System classification as 'special risk' is not necessary to invoke the heart/lung presumption in Section 112.18(1), Florida Statutes. However, almost immediately thereafter the Court ordered the opinion withdrawn (see C&C Newsletter for October 15, 2009, Item 2). Now, the Court has released its opinion, correcting some apparent factual inaccuracies, but coming to the same conclusion. An analysis of the more recent opinion follows. Crystal sought review of an order from the State Retirement Commission, which oversees the Florida Retirement System, denying his claim for disability retirement. He claimed that his total and permanent disability due to hypertension was presumed to be by accident suffered in-line-of-duty under Section 112.18(1), Florida Statutes." (Cypen & Cypen)
Florida State Senator Wants to Get State Government Out of the Pension Business
Excerpt: "The Republican state senator from New Port Richey has re-filed his bill that would rename the Public Employee Optional Retirement Program the 'Retirement Investment Program' for public workers. The name change signals a new pension philosophy -- leaving the safe, relatively low-paying assurance of a 'defined benefit' pension for the market-driven, possibly more profitable 'defined contribution' retirement system. Under Fasano's 91-page bill (SB 660), all new employees would have to join the defined contribution plan after Jan. 1, 2011. All current Florida Retirement System members, whether they work for the state or one of the hundreds of school boards and local governmental units whose pension funds are invested by the State Board of Administration, would still be guaranteed their regular pension benefits. The PEOPR allows employees to manage their own retirement money in 20 investment options -- including safe money market and bond funds or riskier stocks." (Tallahassee Democrat)
Utah's Public Employee Retirement System Must Change, Says Lawmaker
Excerpt: "Change appears to be in the cards for Utah's retirement system, perhaps including one revolutionary option of doing away with the nearly century-old pension system altogether for new hires and replacing it with individual 401(k)s. 'Something has to be done in my opinion. How does it look? What should we do?' are questions that remain, said Sen. Dan Liljenquist, R-Bountiful, chairman of the legislative committee that oversees retirement. But the push for change was met with a unanimous chorus of opposition from public employee unions that urged lawmakers Thursday to go slow and give the current pension system a chance to recover from its battering by the economic downturn." (The Salt Lake Tribune)
CalPERS Board Votes to Tighten Disclosure Rules for Middlemen
Excerpt: "The beleaguered board of the California Public Employees' Retirement System tightened rules requiring outside investment managers to disclose information about the sales intermediaries who help them do business with the $200-billion pension fund. Today's unanimous vote comes as CalPERS tries to contain growing controversy over the huge fees paid to the middlemen, so-called placement agents. . . . The new CalPERS policy would expands on a disclosure plan created in May that required fund managers to detail whether they used placement agents, the fees paid to them and their contractual relations. Today's action would make fund managers list all campaign contributions or gifts made to board members by placement agents, putting CalPERS rules in line with a new state law that applies to all government worker pension funds. At the same time, the 13-member board, meeting as the Investment Committee, rejected a proposal that external fund managers be hit with big monetary penalties if they fail to fully disclose the existence or details of their dealings with placement agents." (Los Angeles Times)
[Guidance Overview] IRS Further Extension of Effective Date of Normal Retirement Age Regulations for Governmental Plans (PDF)
1 page. Excerpt: "The IRS recently published Notice 2009-86, which further delays the effective date for governmental plans to plan years beginning on or after January 1, 2013. This extension will provide the IRS with additional time to consider comments received with respect to the effect of the normal retirement regulations on governmental plans. . . . Plan sponsors should review their plan documents to determine if their plan's current definition of normal retirement age complies with the new IRS regulations. If a plan amendment is required and Prudential Retirement provides document services for your plan, we will work with you to ensure that your plan complies with the extended amendment deadline." (Prudential Retirement)
Lawmaker Says Utah's Retirement System Must Change
Excerpt: "Change appears to be in the cards for Utah's retirement system, perhaps including one revolutionary option of doing away with the nearly century-old pension system altogether for new hires and replacing it with individual 401(k)s. 'Something has to be done in my opinion. How does it look? What should we do?' are questions that remain, said Sen. Dan Liljenquist, R-Bountiful, chairman of the legislative committee that oversees retirement. But the push for change was met with a unanimous chorus of opposition from public employee unions that urged lawmakers Thursday to go slow and give the current pension system a chance to recover from its battering by the economic downturn." (The Salt Lake Tribune)
Double Dippers May Cost Utah Public Retirement System $900 Million in Coming Decade
Excerpt: "A state audit recommends the Legislature do away with double dipping by public employees, a practice in which retired workers go back to work and collect their salary and pension. Auditors reported Wednesday that the practice would cost the pension fund covering public employees nearly $900 million over the coming decade. 'It seems the Legislature has opened these doors,' said House Speaker David Clark, R-Santa Clara. 'I don't know that we should be surprised when we create that significant financial incentive that people are taking advantage of it. ...There needs to be and should be significant changes.' Auditors recommended legislators change Utah's law to suspend the pension of any retiree who returns to work for the state or municipal work force until the employee ultimately retires. But it's unclear if the state can change the rules for those who already have retired and been rehired into the system." (The Salt Lake Tribune)
Colorado Public Employees' Retirement Association Officials Disclose Plan to Fix Pension Fund
Excerpt: "Employees, employers and retirees of the Colorado Public Employees' Retirement Association will be required to make financial concessions as part of a plan being recommended to the lawmakers as a way to help fix the ailing pension program. . . . The recommendation, approved by the PERA board in October, will require a gradual increase in employee and employer contributions over a four-year period. It also will put a cap on the cost-of-living adjustment for all retirees, members and inactive members. The plan, being dubbed '2/2/2 Plus' will be presented to the Legislature for its consideration during the upcoming session." (The Pueblo Chieftain)
[Guidance Overview] IRS Extends Effective Date of Phased Retirement Regs for Governmental Plans Until 2013
Excerpt: "In Notice 2009-86, the Internal Revenue Service extends to plan years beginning on or after Jan. 1, 2013, the time by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age. Those regulations were issued on May 22, 2007. Thus, the 2007 regulations will be effective for a governmental plan (as defined in IRC Sec. 414(d)) for plan years beginning on or after Jan. 1, 2013, but in the case of nongovernmental plans, the regulations were effective as of the date of publication." (Wolters Kluwer)
[Guidance Overview] California Supreme Court Hears Pension Trustees' Case
Excerpt: "The California Supreme Court last week heard a case that may be of great significance for trustees on pension boards in California. The case, Lexin v. Superior Court, arose out of a decision by the San Diego Employees' Retirement System (SDCERS) board of administration to approve an increase in pension benefits for city employees and at the same time allow the pension fund to be underfunded. The San Diego County district attorney brought criminal proceedings against certain members of the board, alleging a violation of Government Code section 1090. The questions to be decided in the case is whether the petitioners' service on the Board of the San Diego Retirement System, as it related to an increase in pension benefits for members of the system, violate the conflict of interest provisions of Government Code section 1090, and subject them to criminal prosecution, or did the non-interest exemption of Government Code section 1091.5?" (National Conference on Public Employee Retirement Systems)
Largest Iowa Public Workers' Union to Vote on Unpaid Days
Excerpt: "Iowa's largest public employee union will vote this month on whether to take five unpaid days off and sacrifice about $75 a month in retirement contributions in exchange for an agreement that none of its members will be laid off for seven months. A 'yes' vote by the American Federation of State County and Municipal Employees would save $26.4 million and 479 jobs, some held by workers who are not dues-paying AFSCME members. Those jobs are spread across many state departments, including human services, revenue, public safety and corrections." (The Des Moines Register)
California Legislature Tries to Block Steep Cut in Its Pay and Perks
Excerpt: "The attorney general is asked to determine whether an 18% pay reduction and car allowance cuts are illegal. Capitol managers say a citizens panel that decided the reductions exceeded its authority." (Los Angeles Times)
State and Local Pension Gap May Be $1 Trillion
Excerpt: "U.S. state and local government pensions are underfunded by $1 trillion and may need to seek federal guarantees for their debt, according to Orin Kramer, chairman of New Jersey's Investment Council." (Bloomberg)
Lawyer in New York Pension Fraud Case Agrees to Settle
Excerpt: "Lawrence Reich, the attorney whose case sparked multiple investigations into pension fraud last year, has agreed to pay more than $240,000 to the New York State attorney general's office to settle his case. Under the deal, Reich agreed to forfeit any claims to pension credits earned after he was falsely reported as a full-time employee of five Long Island school districts at the same time." (Newsday.com)
Springfield Missouri Voters Approve Tax to Top Up Underfunded Firefighter Pensions
Excerpt: "The city's proposed 3/4-cent sales tax to bolster the underfunded Police and Fire Pension Fund passed with 54.6 percent of the vote." (Springfield Business Journal)
California Supreme Court Justices Question Conflict-of-Interest in San Diego Pension Case
Excerpt: "The California Supreme Court sounded ready yesterday to end the prosecution of six former city of San Diego pension board trustees, a move that could shut down part of a long-running legal battle. At a hearing that lasted more than an hour, the justices seemed skeptical about the case filed in 2005 by the county District Attorney's Office against the board members, charging them with breaking the state conflict-of-interest law." (SignOnSanDiego.com)
Christie Victory Could Mean Reform for New Jersey Pensions
Excerpt: "The pending arrival of the first Republican governor in New Jersey since 1997 also has renewed hope among some Democratic lawmakers that they can overhaul the state's pension system for public employees, which is underfunded by more than $34 billion." (Bloomberg)
Prichard Alabama Files Bankruptcy Over Pensions
Excerpt: "I have looked at every opportunity available to obtain money to help fund the retirement plan for the City of Prichard. After careful review of all of our options, bankruptcy protection seems to be the only solution left at this time. Over the past 50 years, the pension plan was amended by the Legislature more than fifteen times, and always the economic burden on the City was increased. . . . After several lawsuits filed by pensioners, it has forced us to come to this decision . . . ." (WKRG)
Will Rising Required Benefit Plan Contributions Encourage Collapse of the Municipal Bond Market?
Excerpt: "[In a report entitled 'Dark Vision: The Coming Collapse of the Municipal Bond Market', Frederick J. Sheehan] notes that 'spending is rising and revenue is collapsing' for all levels of government. Pension fund losses will require governments to double their contributions to pension plans . . . ." (Phillip Greenspun)
[Guidance Overview] San Diego Public Pension Conflict-of-Interest Case Makes It To State Supreme Court
Excerpt: "Public employee pension boards throughout the country are watching the case carefully, as it could affect the makeup of pension boards nationwide. The issue is whether the six San Diego pension board members voted to allow the city to underfund its pension plan in return for higher pension payouts. Defense attorneys argue it was not a 'quid pro quo,' and the defendants are not guilty of conflict of interest. The votes resulted in a billion dollar pension deficit that the city then hid from investors." (KPBS)
Key Characteristics of Public Employee Pension Funds, Revised October 2009 (PDF)
22 pages. Excerpt: "The Public Fund Survey is an online compendium of key characteristics of the nation's largest public retirement systems and is sponsored by the National Association of State Retirement Administrators and the National Council on Teacher Retirement for the purpose of increasing knowledge and understanding of the public pension community. . . . This year's Summary is the first following the sharp drop in global investment markets that occurred in 2008. . . . The fall in asset values has caused aggregate funding levels to move downward from 86.7 percent in FY 07 to 85.3 percent in FY 08." (National Association of State Retirement Administrators)
U.S. Census Bureau Report: Finances of Selected State and Local Government Employee Retirement Systems
Excerpt: "Finances of Selected Public Employee Retirement Systems is a quarterly survey that provides national summary data on the revenues, expenditures, and composition of assets of the largest public employee retirement systems. This survey currently consists of a panel of 100 retirement systems, which comprise 89.4 percent of financial activity among such entities. After a census has been taken, it is considered best practice to reselect the largest 100 retirement systems." (U.S. Census Bureau)
IRS Delays Retirement Age Rule for Public Pension Plans
Excerpt: "The Internal Revenue Service has given sponsors of state and local government pension plans a second extension to comply with an IRS rule that defines the 'normal' retirement age for a pension plan. In Notice 2009-86 published Wednesday, the IRS said public plan sponsors generally will have until Jan. 1, 2013, to comply with the rules. The IRS originally set a Jan. 1, 2009, effective date, but last year delayed the effective date to Jan. 1, 2011. The IRS said the latest extension is intended to give the agency and the Treasury Department more time to consider comments made by public plan sponsors on the impact of the regulations." (Business Insurance)
City of Tallahassee, Florida, Adds Domestic Partner Benefits
Excerpt: "City officials in Florida's capital city have extended the city's employee benefit package to employees' domestic partners. The Tallahassee Democrat reported that the policy change provides employees' same- or opposite-sex domestic partners the same benefits currently available to married employees' spouses. The city's change will allow city employees to include their partners for health, dental, vision and other benefits coverage." (PLANSPONSOR.com; free registration required)
After Revoking Lawyers' Public Pension Benefits, New York Comptroller Has to Pay Them Back
Excerpt: "After issuing more than a dozen press releases since 2008 touting his crackdown on alleged fraud in the state pension system by private attorneys, Comptroller Thomas DiNapoli has quietly restored the benefits to the 62 attorneys who had them revoked. The surprising move came after two recent court rulings in Albany found that DiNapoli didn't provide the attorneys due process before stripping them of their pensions and credits in the system." (The Ithaca Journal)
[Guidance Overview] Government Plans Get Two-Year Reprieve on NRA Rule
Excerpt: "The Internal Revenue Service (IRS) has agreed to give governmental plans two more years to comply with final regulations on participant distributions upon reaching normal retirement age (NRA). An IRS news release said the rules will now be effective for plan years after January 1, 2013, instead of January 1, 2011 . . . . The tax agency said the latest move, announced in Notice 2009-86, does not change the effective date for non-governmental plans." (PLANSPONSOR.com; free registration required)
[Official Guidance] Text of IRS Notice 2009-86: Notice of Extension Until 2013 for Governmental Plans to Comply with NRA Distribution Regulations (PDF)
3 pages. Excerpt from press release: 'Notice 2009-86 states that the IRS and Treasury intend to extend the time by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age ('the NRA regulations') beyond the date previously announced in Notice 2008-98 . . . .These regulations were published in the Federal Register . . . . on May 22, 2007. Taking into account this extension, the NRA regulations will be effective for a governmental plan (as defined in ? 414(d) of the Internal Revenue Code) for plan years beginning on or after January 1, 2013. This notice does not change the effective date of the NRA regulations for a plan that is not a governmental plan or modify the relief previously provided in Notice 2007-69, 2007- 2 C.B. 468." (Internal Revenue Service)
Sustainable Funding Practices of Defined Benefit Pension Plans, 2009 (PDF)
3 pages. Excerpt: "Recommendation. The Government Finance Officers Association (GFOA) recommends that state and local government officials ensure that the costs of the benefits promised in public employee DB plans are properly measured and reported, in accordance with generally accepted accounting principles (GAAP)1. The GFOA believes sustainability requires that governments that sponsor or participate in a defined benefit pension plan contribute the full amount of their actuarially determined annual required contribution (ARC) each year. Failing to fund the ARC during recessionary periods impairs investment returns by depriving the fund of its opportunity to invest when stock prices are low. Long-term investment performance will suffer and ultimately require higher contributions." (Government Finance Officers Association of the United States and Canada)
Asset Allocation Guidance for Defined Contribution Plans, 1999 and 2009 (PDF)
2 pages. Excerpt: "Recommendation. The Government Finance Officers Association (GFOA) recommends that public employers as plan sponsors work actively with the plan administrators to provide investment options and education to help employees who participate in defined contribution plans attain their income replacement goals in retirement. . . . To accomplishthese objectives, the following practices are suggested: 1. To provide adequate diversification, plan administrators should ensure participants are offered a broad spectrum of investment choices that include all the major asset classes (e.g., equities, fixed income, and cash equivalents). The investment choices should include several passively managed investment options such as low-fee index funds. Another option is a family of asset allocation funds. In addition to mutual funds, plan administrators should consider lower-cost commingled funds and separate account funds asinvestment options." (Government Finance Officers Association of the United States and Canada)
Participant Education: Guidance for Defined Contribution Plans, 2009 (PDF)
2 pages. Excerpt: "The GFOA recommends that public plan sponsors make sure high-quality investment education is provided to defined contribution plan participants who are allowed to direct their investments. To accomplish this goal: 1. The plan should provide a consistent, ongoing educational program that uses a number of communication channels to address participants' different career stages and learning styles. Channelscould include one-on-one meetings, seminars, phone calls, the internet . . . ." (Government Finance Officers Association of the United States and Canada)
[Opinion] The Colorado Public Pension Fund's Board Needs to Attach Financial Values to Complex Recovery Plan It Is Presenting to Lawmakers
Excerpt: "The board of the state's financially troubled retirement fund has come up with a rescue plan that involves a good bit of fiscal pain and sacrifice. It appears to be a commendable starting point for state lawmakers in that it involves the sort of shared sacrifice we've supported in the past. Predictably, governments -- meaning taxpayers -- would be on the hook for what could be a significant part of the bailout. And while that's concerning, a more troubling element, we think, is the failure of the Colorado Public Employees Retirement Association pension board to attach financial values -- real dollars -- to the various components of the complex plan it's presenting to state lawmakers. PERA officials told us they couldn't supply such figures. The legislature ought to demand the information before moving forward with a plan to prop up PERA, which is facing $27.5 billion in unfunded liabilities." (The Denver Post)
In Search of a Fair Pension Formula: Realistic Income-Replacement Ratios in the 'New Normal' Economy
Excerpt: "The ratchet effect. Now that reality has set in, public managers are beginning the painful work of reviewing their retirement-benefits formulas. In some states, like California, their hands are tied with respect to incumbent employees. Perversely, some state laws preclude plan-design changes for incumbents who are viewed as having vested rights to the highest multiplier awarded during their entire career. The great economist John Maynard Keynes presciently called this the 'ratchet effect:' What goes up can never come down. As a result, most public managers must look first at new 'tiers' for pension benefits. This means that new hires will get a lower benefit with a lower formula and often a higher retirement age than the senior incumbents -- who happen to sit on the negotiating committees." (Governing.com)
Market Decline Could Affect Public Pensions for Several Years, According to Report
Excerpt: "The Public Fund Survey sponsored by the National Association of State Retirement Administrators and the National Council on Teacher Retirement indicates that the market decline in 2008 resulted in a median investment return for public pension funds of -25.3% for the year. According to the report, the fall in asset values has caused aggregate funding levels to move downward from 86.7% in FY07 to 85.3% in FY 08. However, the report notes that because public pension actuarial methods are designed to temper the effect of market volatility, public pensions will recognize the investment losses incurred in 2008 over several years. During this recognition period, funding levels are expected to decline, although losses may be partially offset with investment gains." (PLANSPONSOR.com; free registration required)
New York Attorney General Unveils Plan to Overhaul State Pension System
Excerpt: "New York Attorney General Andrew Cuomo unveiled his plan to overhaul the state pension system, even as the state comptroller expressed concern that there could be constitutional problems with it. . . . The proposed legislation would impose stringent limits on political contributions, require extensive disclosures from investment fund personnel, create a code of conduct, compel any licensed professional to report conflicts of interest, and would bar investment firms from using placement agents or lobbyists to get business from the state pension fund.One of the more significant proposals is to change oversight of New York's $120-billion pension fund - the state's single largest asset, Cuomo said - from the current system of sole trustee to a 13-member, bipartisan board of trustees. Currently, only three states - New York, Connecticut and North Carolina - have pension funds with a sole trustee." (Newsday)
SEC Starts Pension Fund Working Group to Prosecute for 'Pay to Play'
Excerpt: "On October 15, 2009, at the American Bar Association's Fourth Annual National Institute on Securities Fraud, David Rosenfeld, associate regional director for the Northeast Regional Office of the U.S. Securities and Exchange Commission (SEC), revealed that the SEC has established a nationwide Pension Fund Working Group to civilly and criminally prosecute pension fund managers, advisors, administrators and 'the like' where 'pay to play' contributions occur. The SEC determined that the activities emanating from New York state and municipal pension fund investments were 'very widespread' with 'common players nationwide.'" (Duane Morris LLP)
California to Sue Bank for Overcharging Two State Pension Funds
Excerpt: "California's attorney general said he will sue a 'major institutional bank' in an attempt to recover almost $200 million in illegal overcharges and penalties charged to the state's two largest pension funds. California Attorney General Jerry Brown will announce the lawsuit filing and name the bank at a news conference in Oakland today, he said in an e-mailed statement. Brown's spokesman, Scott Gerber, declined to name the bank before the announcement. The unidentified bank assessed the overcharges and penalties against the California Public Employees' Retirement System, the largest U.S. defined-benefit public pension fund, and the California State Teachers' Retirement System, according to the statement." (Bloomberg L.P.)
[Guidance Overview] California Acts to Regulate Placement Agent Influence
Excerpt: "This edition of . . . Private Equity Alert discusses the newly-adopted California law that aims to ensure transparency and accountability in the activities of placement agents that provide services to all state and local public pension funds in California." (Nixon Peabody LLP)
In Louisiana, Information on Current Public Retirement Plan Differs
Excerpt: "Legislators studying changes to the state employees retirement systems received contradictory information Monday on the cost and effects of closing the pension plan. However, the systems' benefit structure and debt load could be too costly to change at this time anyway, national retirement experts said. . . . The state House and Senate retirement committees heard from the systems and other national groups about defined-contribution plans, which are similar to 401(k)s and require employees to manage their own investments. . . . The meeting stems from a study resolution by House Speaker Jim Tucker, R-Terrytown, which seeks to determine the feasibility of establishing a defined-contribution plan for all new employees hired on and after July 1, 2010, in the four state public retirement systems." (The Advocate)
A ''Tipping Point'' for Public Pensions?
Excerpt: "Any discussion of the serious issues affecting public pension funds today must begin with talking about what's going on in our nation. Public pensions exist within a broader societal context and are not immune from factors affecting society in general. Further, taxpayers pay for public pensions. Therefore the mood and plight of our society and taxpayers is important to take note of in discussing the challenges facing public pensions." (Benchmark Financial Services, Inc.)
Preserving Financially Sound Defined Benefit Pensions in Challenging Market Environments (PDF)
6 pages. Excerpt: "The severe decline in the financial markets has resulted in significantly higher contribution rates for many public plans at a time when sponsoring governments are under substantial fiscal stress.As a result, many governments are looking for strategies to mitigatethis impact by managing contribution rates, changing benefits, or changing actuarial methods and assumptions. This paper discusses the advantagesand disadvantages of several approaches. However, care should be taken to understand the downside of these strategies and their likely long-term impact on plan funding." (Gabriel Roeder Smith & Company)
[Guidance Overview] In Pennsylvania, New Killed-in-Service Benefit Requires Immediate Action
Excerpt: "Providing what could be significant relief for many municipal police pension plans, Governor Edward G. Rendell signed Act 51 of 2009 into law on October 9, 2009. Effective immediately, Act 51 provides for a killed-in-service benefit to be funded by the Commonwealth of Pennsylvania equal to the monthly salary of the deceased officer, adjusted annually for the cost of living. The benefit is payable to the deceased's surviving spouse or, if there is no surviving spouse, to the deceased's minor children under the age of 18. If those children are attending college, they can receive the benefit up to the age of 23." (Ballard Spahr LLP)
Corpus Christi, Texas, Police Pension Benefits Curtailed
Excerpt: "Trustees for a union-run health insurance trust voted to curtail benefits in July, citing unsustainable obligations. The plan had paid about $400 per month for her benefits, Roberts said. Now the plan will pay just a fraction of that. According to financial statements filed in 2008, the trust had roughly $2 million in assets in 2007. But the trust had incurred nearly $38 million in obligations. Since then, the obligations have risen and the assets have declined." (The E.W. Scripps Co.)
Virginia Retirement System Defers Accounting Rule to Cut Costs
Excerpt: "The board of the Virginia Retirement System agreed to an accounting change that will save the government from large contribution rate increases to fund the plan for state employees, teachers, and other public employees. The Richmond Times-Dispatch reports that the Board of Trustees voted unanimously to suspend an accounting rule that requires the state to fund the retirement plan within 20% of its fair market value. Without the change, the state would have had to raise its contribution rate for state employees and public school teachers by almost 50%." (PLANSPONSOR.com; free registration required)
Proposed Colorado Public Employees Retirement Association Pension Fund Fix Includes Greater Contributions from Workers
Excerpt: "Government workers would have to contribute more of their salaries while getting less in benefits under a plan proposed Friday to rescue the foundering Colorado Public Employees Retirement Association pension fund. PERA is facing $27.5 billion in unfunded liabilities, threatening the long-term existence of the retirement plan. The proposal unanimously approved by the PERA board Friday would require association members -- who include teachers, state-government workers, judges, college employees and municipal workers -- to contribute an additional 2 percent in the form of smaller salary hikes in the future." (The Denver Post)
Most California Voters Back Proposed Public Pension Changes to Reduce Benefit Costs
Excerpt: "Californians favor changing the pension system for newly hired state and local government employees, and most back three possible scenarios that could reduce benefits, a new poll finds." (The Press-Enterprise)
[Guidance Overview] Chart of 415, Etc., Limits Updated for News Release IR-2009-94
The chart of maximum limits subject to inflation indexing at Carol V. Calhoun's employee benefits site has now been amended to include the newly announced 2010 limits. Among other things, the chart shows limits under sections 415, 403(b), 401(k), and 457, as well as the Social Security wage base and Social Security and Medicare tax rates, for 1996-2010. (Calhoun Law Group, P.C.)
[Official Guidance] IRS Announces Pension Plan Limitations for 2010; Almost All Remain Unchanged
Excerpt: "Effective January 1, 2010, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000. . . . The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2010 at $49,000. . . . The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $16,500. The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000." (Internal Revenue Service)
CalPERS Offered Incentives to Inflate Pension Funds' Value/Plans' Benefits
Excerpt: ".A labor-friendly CalPERS board offered local governments an incentive eight years ago to boost public employee pension benefits, now called 'unsustainable' by some. CalPERS said it would reward higher benefits by inflating the value of the local government's pension investment fund, making it easier to pay for more generous pensions. Booming pension fund earnings in previous years were cited in a self-congratulatory board resolution approving the incentive in 2001. But the stock market boom had already cooled by then." (Capitol Weekly)
CalPERS Begins 'Special Review' of Fees Paid to Agents
Excerpt: "The nation's largest public pension fund, the California Public Employees Retirement System, has begun a 'special review' of fees paid by its external investment managers to so-called placement agents. The agents help outside funds to win big investment management contracts with the $200-billion pension system, known as CalPERS. The review was ordered after CalPERS received information it had requested from fund managers about the fees paid to placement agents and their lobbying and sales activities with the giant pension." (Los Angeles Times)
Court Rules Duluth, Minnesota, Free to Change City Employee Retiree Benefits
Excerpt: "A state court has sided with the City of Duluth in a long-standing dispute over the generous health benefits provided to hundreds of retired city workers. The court ruled the city is free to change the retiree's benefits to match those of current workers. State District Judge Kenneth Sandvik said Duluth can change the terms for retired workers' health care and that the city is not bound by whatever terms were in effect the day a particular worker retired. The ruling will directly affect what the city pays each year to cover retirees and members of their families, and it will make a huge difference in the city's long-running budget troubles." (Minnesota Public Radio)
California Pension Reform Group Goes After Public Employee Plan Abuses
Excerpt: "A California pension reform watchdog group is adding language to its ballot initiative that would prohibit double-dipping, the practice of retired public employees who return to government jobs and simultaneously collect taxpayer-funded retirement benefits and paychecks. The revised measure also will ask voters to ban spiking, a legal means under which employees inflate their retirement through the addition to their pension formula benefits such as car allowances, unused vacation or sick leave. Marcia Fritz, initiative sponsor and president of California Foundation for Fiscal Responsibility, said her group added the restrictions after it learned of the practices through Bay Area News Group's extensive coverage of the issue." (Contra Costa Times)
Baltimore, MD, Police, Fire Pension Costs Could Double Next Year
Excerpt: "An unusual pension benefit for police and firefighters could cost Baltimore $164.9 million next year, nearly double what the city is now paying and a figure that the city's finance director says taxpayers cannot afford. After years of calls for pension reform, board members who oversee the nearly $2 billion system said their Tuesday vote that passes the whopping bill on to City Hall is a message that the fund is close to a breaking point and needs attention." (The Baltimore Sun)
North Carolina to Target Smokers and the Obese with Higher Health Plan Costs
Excerpt: "North Carolina is set to become the second state to charge obese workers more for health insurance, the Charlotte Observer reports. Smokers will face higher costs also, as North Carolina state employees who use tobacco are slated to pay more for health insurance next year. Tobacco users get placed in a more expensive insurance plan starting next July and, for those who qualify as obese, in July 2011, according to the news report. North Carolina officials say they are aiming to improve state workers' health, which saves money in future medical expenses." (PLANSPONSOR.com; free registration required)
Arizona's Domestic-Partner Benefit Remains in Effect
Excerpt: "State employees in Arizona can take advantage of domestic-partner benefits for the next 12 months even though the Legislature's last budget took them away. The Department of Administration says the benefit will be available until October 2010, because cutting it before then might put the state in violation of contract laws. The benefit was to be cut off when the state's insurance plan began Oct. 1, but the budget won't take effect until nearly two months into the contract period. An opinion by the Attorney General's Office concluded the benefit's elimination during this fiscal year would conflict with employees' expectations." (KMSB-TV)
California Governor Signs Two-Tier Pension Law for Orange County, CA
Excerpt: "Gov. Arnold Schwarzenegger signed legislation late Sunday night that paves the way for a new two-tiered pension plan for county employees in Orange County, a move that county officials say will help reign in skyrocketing pension costs here. Under the plan current employees get to decide whether to keep their old benefits, or select a hybrid plan that features a reduced pension but also a defined contribution component, similar to a 401K. New employees will also get to choose between the two plans." (Orange County Register Communications)
The links shown above have been gathered from the web by the editors at BenefitsLink.com. Each article's publisher is shown above in parentheses. Opinions expressed in each article are those of the article's publisher, not necessarily those of BenefitsLink.com, Inc. or any web site that displays these headlines in a "frame." You should contact the listed publisher for copyright information about any particular article or to inquire into the right to use the article in any manner.