BenefitsLink logo
EmployeeBenefitsJobs logo

Subscribe to Newsletters



Search the News


Featured Jobs
Client Service Representative for Retirement Plan
401(k) Administrator
Pension Assistant
ESOP Administrator
DC Plan Administrator
Client Relationship Manager
Search all jobs
 
Get the BenefitsLink app for iPhone and iPad LinkedIn
Twitter
Facebook

Benefits in the News > By Subject >

Government plans - state and local - misc


View Recent Headlines Now Viewing Excerpts and
Recent Headlines

[Opinion] Pension Crisis Too Big for Markets to Ignore
"Unfunded pension obligations have risen to $1.9 trillion from $292 billion since 2007.... [In] 1952, the average public pension had 96 percent of its portfolio invested in bonds and cash equivalents. Assets matched future liabilities. But a loosening of state laws in the 1980s opened the door to riskier investments. In 1992, fixed income and cash had fallen to an average of 47 percent of holdings. By 2016, these safe investments had declined to 27 percent." (Bloomberg)
Illinois Governor Vetoes Bill to Help Improve Funding Ratio for Two Chicago Pension Plans
"The measure ... was intended to improve the pension plans' funding ratios to 90% each by 2057 through higher contributions for certain employees and increased city contributions. The bill required that Chicago begin making contributions on an actuarial basis to both pension funds in 2023.... The bill would also have raised payroll contributions for participants of both pension funds hired after Jan. 1, 2017, to 11.5% from 8.5% ... Illinois faces roughly $130 billion in combined unfunded pension liabilities across its five state retirement systems." (Pensions & Investments)
Managing Risk While Investing for Governmental Retirement Plans
"[T]here is lasting confusion arising from the fact that these big state-run plans are not subject to [ERISA]... 'But this cannot be taken as these plans having free reign to invest however they please,' [George Michael Gerstein, of Stradley Ronon Stevens & Young] warns. 'They are all subject to state law -- and these state laws vary tremendously. Some are very strict and lay out very specific requirements as to how state money can be allocated.... Many have at least some restrictions on certain vehicles or transactions.' " (planadviser)
[Opinion] Stupid Public Pension Trends: Divestment Expands
"Once the California politicians are done going through removing all the deplorables from being considered from pension investments, they'll be left with some artisanal gluten-free bread company in Vancouver.... [P]oliticians have no fiduciary duty to the pension funds.... In some of these cases, the 'dirty' investments should not be invested in, because the financial outlook is bad. But in some of the cases the depth of analysis seems to be 'we think this stuff is bad, so obviously it can't keep making money.' " (STUMP)
[Guidance Overview] GASB Omnibus Statement Addresses Pension and OPEB Issues
"The issues covered by GASB Statement No. 85, Omnibus 2017, include: ...Timing of the measurement of pension and other postemployment benefits (OPEB) liabilities and related expenditures recognized in financial statements prepared using the current financial resources measurement focus ... Recognizing on-behalf payments for pensions or OPEB in employer financial statements ... Simplifying certain aspects of the alternative measurement method for OPEB." (Governmental Accounting Standards Board [GASB])
Annuity Options in Public Pension Plans: The Curious Case of Social Security Leveling
"Social Security Leveling is an annuity option that allows participants to receive a level income before and after age 62. The retiree receives a larger pension benefit prior to age 62, but then the pension benefit is lowered at age 62 when the individual is expected to claim Social Security benefits. This option is not uncommon in public pension plans ... . [O]ne-third of all [North Carolina public sector] retirees selecting a single life annuity between 2009 and 2014 opted for Social Security Leveling.... [The authors] see higher rates of ex post 'regret' in the annuity choice among those choosing the level income option." (National Bureau of Economic Research [NBER])
Urban Institute Provides Online Public Pension Simulator
"Covering 14 million state and local government employees, public pension plans typically provide lifetime retirement benefits that are based on years of service and the salary earned near the end of a career.... The public pension simulator shows how much state and local government retirees would receive in pension benefits, how much governments will pay for those benefits, and how costs and benefits would change under various pension reforms. Calculations depend on various user-set assumptions." (Urban Institute)
CalPERS Forced to Declare Southern California Agency in Default of Pension Obligations
"The [CalPERS] Board of Administration [on March 15] declared the East San Gabriel Valley Human Services consortium in default and terminated its contract after it failed to pay more than $400,000 to fund its pension plan.... [P]ension benefits will be reduced by approximately 63 percent for 191 members and 24 percent for six members hired after pension reform went into effect in 2013, effective July 1, 2017, if the consortium fails to pay." (CalPERS)
Public Pension Assets Quarterly Update, Q4 2016
"As of the fourth quarter of 2016 (December 31), public pension assets were a record $3.86 trillion, up approximately 1.3 percent, from $3.81 trillion as reported for Q3 2016....The Federal Reserve reported in March that the combined value of defined benefit plan assets held by state and local governments as of Q4 2016 increased by 5.5 percent, to $3.86 trillion, from $3.66 trillion as of Q4 2015." (National Association of State Retirement Administrators [NASRA])
Puerto Rico Oversight Board Approves Fiscal Plan with Pension Changes
"[Puerto Rico's Financial Oversight and Management Board] and the government will take 30 days to work out a specific plan to be finalized by June 30, 2017, based on funding existing pension obligations on a pay-as-you-go basis, liquidating assets and using general fund revenues; enrolling all active members and new hires in defined contribution accounts to pay for future benefits; and progressively reducing total pension benefit payments by 10%. The oversight board has projected that Puerto Rico's three main pension plans could run out of money by fiscal year 2018." (Pensions & Investments)
In Puerto Rico, Teachers' Pension Fund Works Like a Ponzi Scheme
"In Puerto Rico ... the pension funds are so short of cash that money contributed by working teachers basically flows straight out to retirees. None of Puerto Rico's current teachers can expect to get their money back, because the fund is due to run out of money in 2018, long before they retire.... [T]his structure is legal in Puerto Rico because of a complicated series of changes in the law brought about in recent years by the island's financial crisis." (The New York Times; subscription may be required)
The State of State Teachers' Pension Plans
"Teachers' pension plans have always rewarded long-serving veterans at the expense of short-termers. But now, as more and more plans develop shortfalls, states have been imposing cost-cutting measures, and recent research shows that the newest hires are bearing the brunt of the changes, raising questions of fairness." (The New York Times; subscription may be required)
[Opinion] Attention, South Carolina: Closing a Pension is Never a Good Idea
"South Carolina lawmakers unanimously voted to increase contributions to state pension plans -- a system that supports 1 out of every 9 South Carolinians ... However, ... a last-minute amendment added a stipulation that the plans be closed to new employees once full funding has been achieved.... South Carolina legislators need look no further than the states and cities that have closed their pension systems to learn of the costly ramifications that follow." (National Public Pension Coalition)
Indiana House Advances Bill for Offering 401(k)-Style Plan to New Teachers
"Under [the proposed] plan, teachers new to the system could choose the traditional hybrid plan or the 401(k)-style account. A teacher's employer would be required to contribute an amount equal to 3 percent of the teacher's salary to the new defined-contribution plan, and teachers could contribute up to 10 percent of their salary. The bill would also allow teachers to change their minds after three years and use the pension-style plan going forward." (Indianapolis Business Journal)
Illinois Senate Passes Contribution Bill for Chicago Teachers Pension Plan
"The Illinois Senate on [Feb. 28] passed a bill approving additional state contributions to the $9.5 billion Chicago Public School Teachers' Pension & Retirement Fund, totaling $436 million for the next two fiscal years.... The passage of the current bill is dependent on the passage of 11 other bills affecting the state's fiscal 2018 budget. Four of those 11 bills were also passed by the Senate[.]" (Pensions & Investments)
CalPERS Investment Priority Shifts to Avoiding Loss
"Despite a low funding level little changed since massive investment losses nearly a decade go, CalPERS is focusing on avoiding another big loss, not risky attempts to maximize investment earnings.... CalPERS also sped up its 'risk mitigation' policy this month, lowering the trigger for tiny cuts of .05 to .25 percent in the earnings forecast used to discount future pension obligations. Now cuts will occur when annual earnings are 2 percent above the forecast, not 4 percent." (Calpensions)
In Puerto Rico, Pensions' Decline Pits Retirees Against Lenders
"As Puerto Rico attempts to sort out its tangled financial web, retirees may face bigger cuts than those in past U.S. municipal insolvencies ... Public pensions ... owe $45 billion in benefits ... [T]he pensions have almost no cash and a nearly 100 percent funding shortfall that is thought to be the largest ever for comparably-sized U.S. public pensions. Paying pension benefits out of the island's general fund, on a pay-as-you-go basis, could cost Puerto Rico $1.5 billion a year." (The New York Times; subscription may be required)
Detroit Mayor Proposes Trust Fund to Cover Future Pension Payments
"Under the plan, fund deposits and interest earnings would total $377 million by the end of fiscal 2023 ... Detroit, which exited the biggest-ever municipal bankruptcy in December 2014, has already set aside $70 million for the higher pension payments. The court-approved bankruptcy exit plan had projected city pension payments to spike to $111 million beginning in fiscal 2024 after years of minimal or no payments by the city. But a subsequent actuarial analysis pegged the payment spike at $200 million or more." (U.S. News & World Report)
Investment Return Volatility and the Los Angeles Fire and Police Pension Plan (PDF)
51 pages. "[This report examines] the potential implications of investment return volatility for the Los Angeles Fire and Police Pension Plan (LAFPP) ... one of five plans [selected] to analyze in detail.... [If] LAFPP's investment-return assumption is approximately correct over the long run, the plan has very little risk of becoming severely underfunded in the next thirty years, even if investment returns vary significantly from year to year.... Under plausible alternative investment-return assumptions, the risks of severe underfunding remain small but the city's contribution risks are greater." (Rockefeller Institute of Government)
Public Pension Plan Investment Return Assumptions (PDF)
"This brief discusses how investment return assumptions are established and evaluated, [and] compares these assumptions with public funds' actual investment experience ... [A] 25 basis point reduction in the return assumption, such as from 8.0 percent to 7.75 percent, will increase the cost of a plan that has a COLA, by three percent of pay (such as from 10 percent to 13 percent), and a plan that does not have a COLA, by two percent of pay." (National Association of State Retirement Administrators [NASRA])
CalPERS Passes Risk Mitigation Plan to Further Lower Assumed Rate of Return in the Future
"The new plan puts focus on reducing the investment portfolio's vulnerability to a market downturn but won't go into effect until the fiscal year that starts July 1, 2020. Its implementation will follow the completion of staggered decreases over the next three fiscal years ending June 30, 2020, that will take CalPERS' rate of return to 7% from the current 7.5%." (Pensions & Investments)
CalSTRS Cuts Misreported Pensions for Hundreds of Teachers
"Triggering at least two lawsuits, CalSTRS has cut the pensions of hundreds of retired teachers because extra work or pay was misreported as earnings for pensions, not for a 401(k)-style individual investment benefit with a guaranteed minimum return. An annual audit sample last year found overpayments to 87 retirees from 18 school districts totaling $237,854. The pensions of the retirees will be cut to the corrected amount and overpayments will be recovered by an additional 5 percent cut." (Calpensions)
[Opinion] Public Pensions: Actuarial Assumptions and Professional Ethics
"The essential question is this: is there any set of actuarial assumptions for valuing public pension liabilities that would be so bad no ethical actuary could take that assignment? ... [A]lmost always those assumptions are given to the actuaries, when it's a public pension. Sure, the actuaries can make recommendations, and sometimes the real decision-makers will go along with it (or the actuaries give assumptions that the clients want to hear). But the actuaries act, essentially, as really expensive calculators when it comes to public pensions. It seems that the profession has no interest in trying to change that role." (STUMP)
[Opinion] Moving Maryland Workers Into a 401(k) Plan Would Harm Retirement Security
"Maryland Governor Larry Hogan recently proposed creating a 401(k)-style defined contribution plan for state employees. Future state employees would have the option of participating in this plan instead of the traditional defined benefit pension plan. Current state employees would not be able to switch to the new 401(k)-style plan and future teachers would not have the option to participate. The problem with the governor's plan is it would do nothing to address the unfunded liability in Maryland's pension system and would harm the retirement security of future state employees." (National Public Pension Coalition)
Jacksonville Police, Fire Unions Reach Tentative Pension Deal
"Police and firefighter union leaders came to a tentative agreement ... with Mayor Lenny Curry that paves the way for Jacksonville to become the first major city in America that offers only 401(k)-style plans to all future employees, and moves closer toward a plan that seeks to pay off the city's staggering $2.85 billion pension debt." (jacksonville.com)
Retiree Benefits: A Tale of Two Cities (States)
"Many states' combined costs -- pensions, other post-employment benefits (OPEBs) such as health insurance, and payments on all government bonds -- appear manageable. More worrisome are the eight states with the highest combined costs: Illinois, New Jersey, Connecticut, Hawaii, Kentucky, Massachusetts, Rhode Island, and Delaware. [States with high pension burdens also tend to have high costs for retiree health benefits].... [T]he picture overall [for cities] is a mix of a handful of deeply troubled jurisdictions and many where the costs appear manageable. The eight major cities with the highest total cost burdens range from the predictable -- Chicago and Detroit -- to surprises such as Wichita, Kansas, and Portland, Oregon." (Squared Away Blog, by the Center for Retirement Research at Boston College)
[Opinion] The Pension Monster that Devoured Education
"The retirement fund for teachers, CalSTRS, last week lowered the rate it expects to receive on investments. Gov. Brown's budget calls for $153 million more to offset the rate change.... CalPERS, which covers non-teacher [state] employees, also projects greater funding concerns because of promised pension and healthcare costs. According to [one] report, what school districts must contribute to CalPERS could double in just six years. On top of the troubles for local school districts, last month the University of California Regents agreed to a 2.5% tuition increase, in part, to cover pension costs." (Fox&Hounds)
Michigan Leads Effort to Shift State Workers Away from Defined Benefit Plans
"Struggling under the weight of pension and health care obligations, Michigan lawmakers appear ready to take another whack at public employee benefits -- a move that reflects renewed determination to shift workers to 401(k)-style retirement systems, even if it happens in baby steps.... After ending pensions for new state workers in the late 1990s, Republican legislators are now considering moving all newly hired teachers and local government workers to 401(k)-type plans and cutting municipal retiree health benefits. Just one other state, Alaska, has ended teacher pensions." (The Washington Post; subscription may be required)
[Opinion] California Pension Reform Has Made a Difference
"[E]mployees hired after January 1, 2013, are required to contribute more to their pensions, and must also work longer before they can retire and begin to receive the benefits promised by their employers.... Based on valuations as of June 30, 2015, here's what that means: Cost savings for the state range from 1.2 percent of payroll for miscellaneous plans and up to 5.1 percent of payroll for safety plans. Cost savings for plans in the schools pool are about 1.7 percent of payroll." (CalPERS)
Connecticut Legislature Approves Plan to Restructure State Pension Obligations
"The deal includes reducing the assumed rate of return to 6.9% from 8%; transitioning to level dollar amortization from level percent of payroll over five years; maintaining 2032 as the payoff date for [about $4.3 billion in] unfunded liability accrued through Dec. 31, 1983 ... and extending the amortization period for the balance of the unfunded liability to 2046 from 2032." (Pensions & Investments)
Public Pension Funded Ratio Falls Back During Q4, Landing at 70.1% (PDF)
"During the fourth quarter the deficit increased from $1.338 trillion to $1.392 trillion. As of December 31, the funded ratio stood at 70.1%, down from 71.1% at the end of September.... The total pension liability (TPL) increased from $4.620 trillion at the end of Q3 to an estimated $4.659 trillion at the end of Q4." (Milliman)
CalSTRS Lowers Earnings Forecast from 7.5% to 7%
"The lower earnings forecast was phased in over two years to ease the impact on about 80,000 teachers hired since 2012 who get lower pensions under a cost-cutting pension reform. Their CalSTRS rate will increase by 1 percent of pay, up from the current 9.21 percent of pay. The rate increase is expected to take $400 a year from the average salary of $40,000 for the new teachers." (Calpensions)
Appropriateness of Risk-Taking by Public Pension Plans (PDF)
36 pages. "Policymakers can take two important steps that might temper future risk-taking. First, they should explore ways to change and counter the incentives and institutions that encourage U.S. public pension funds to take risk. Second, public pension funds should ensure that they analyze and communicate the risk they are taking, in ways that can be understood not just by their boards, but by the governments that contribute to their funds, and by the public that ultimately bears the risks they take." (Rockefeller Institute of Government)
[Opinion] California Crumbling?
"[W]hen CalSTRS or CalPERS lower their long-term expected return assumptions, contribution rates necessarily go up.... [That] means teachers and other public-sector workers and the state government need to pay more into the pension system to sustain the pension system over the long run. More money for pensions means less money for other services and that's where things get hairy." (Pension Pulse)
Maryland Governor Proposes 401(k)-Style Retirement Plan for State Employees
"Maryland Gov. Larry Hogan (R) ... proposed legislation to allow state employees to pay into a 401(k)-style retirement plan instead of the state's public-pension system ... The plan would give future state employees the option of participating in a 'defined contribution' program in which they and the state would each contribute an amount equal to 5 percent of pay toward individual retirement accounts." (The Washington Post; subscription may be required)
CalSTRS May Set State and Teacher Rates for the First Time
"Actuaries are recommending that one of the state's oldest public pension systems, the California State Teachers Retirement System formed in 1913, lower its investment earnings forecast from 7.5 percent to 7.25 percent. If the newly empowered CalSTRS board adopts the lower forecast next week, state rates paid to the pension fund would increase by 0.5 percent of pay, an additional $153 million bringing the total state payment next fiscal year to $2.8 billion.... The new rate-setting power is sharply limited. But it's a big change for CalSTRS which, unlike nearly all California public pension funds, has lacked the power to raise employer rates, needing legislation instead." (Calpensions)
California Court Affirms that PEPRA Does Not Limit County's Right to Repeal COLA Pickup
"[T]he San Joaquin County Correctional Officers Association (CCOA) argued that PEPRA shielded its members, by prohibiting the County from eliminating a pension 'pickup' prior to 2018. The Court ... found that the County could eliminate the pickup at any point, as long as it did so in accordance with collective bargaining laws." [San Joaquin County Correctional Officers Assoc. v. County of San Joaquin, No. C079413 (Cal. App. Dec. 20, 2016)] (Liebert Cassidy Whitmore)
Public Pension Funds Continue to Recover from Recession
"The average funded level of the surveyed plans has increased from 71.5 percent in 2014 to 74.1 percent in 2015 to 76.2 percent in 2016.... [W]hen looking at returns from the past 3 years (8.6%), 5 years (8.3%), and 20 years (7.9%), the pension funds have achieved returns close to or exceeding 8 percent. When looking at the past 10 years, the investment rate of return was 6.2 percent ... [M]any are lowering their actuarial assumed rate of return to account for continued weakness in the market." (National Public Pension Coalition)
[Guidance Overview] New California Law Requires Public Pension and Retirement Systems to Disclose Compensation and Expenses
"[S]tarting January 1, 2017, each California public pension and retirement system ... must require vehicles in which the system has made 'alternative investments' to provide certain information related to those alternative investments, including information regarding fees and expenses borne directly or indirectly by the system, and investment performance. Each California public pension and retirement system must also disclose this information, at least annually, at a public meeting." (Sidley Austin LLP)
CalPERS Explains Impact to Employer Contributions Due to Reduction in the Assumed Rate of Return
"The result is two-fold: an increase in the normal cost of pension benefits and an increase in the unfunded accrued liability (UAL). This not only means an increase in employer contributions, but for those employees who are 'new members' under the Public Employees' Pension Reform Act of 2013 (PEPRA), they too will see an increase in member contribution rates as these members are required by law to pay 50% of the normal cost of their retirement benefits." (Liebert Cassidy Whitmore)
[Opinion] The Dallas Pension Fiasco Is Just the Beginning
"It's tempting to see the generous pension structure and bad investment decisions in Dallas as making it a special case. Detroit was seen by many as a special case when it went into bankruptcy in 2013 as it had seen its population fall by 25% in a decade.... Growing debt and pension obligations are signs of what is to come for many local and state governments who have been living beyond their means for decades." (ValueWalk)
[Opinion] Environmentalism Provides Moral Cover for New Taxes to Fund Pensions
"There are two intertwined themes that define unionized government in California. First, funding government retiree pensions will soak up every new source of tax revenue they will ever collect. Second, cloaking new taxes and fees -- and new agencies -- in the virtuous raiment of environmentalism will deflect criticism and demonize critics." (PensionTsunami)
[Opinion] Future of California Pension Reform Now Up to State Supreme Court
"Two appellate courts recently ruled that state lawmakers may alter retirement benefits for current employees.... That's a radical departure from decades of rulings suggesting pension benefits could not be reduced.... Whether the Supreme Court agrees will profoundly affect California lawmakers' ability to slow soaring retirement costs strangling state and local governments. It also might enable practical unions to negotiate changes for current employees, depending upon how broad the decision is." (San Jose Mercury News)
California State Pension Costs Doubled After Rate Increases
"State payments to CalPERS next fiscal year are expected to total $6 billion, nearly double the $3.2 billion paid six years ago before a wave of employer rate increases.... [S]tate payments to CalSTRS for the fiscal year beginning in July are expected to be $2.8 billion, nearly double the $1.5 billion paid three years ago when a rate increase began. Meanwhile, what had been the fastest-growing annual retirement cost in the budget, retiree health care for state workers, only increased by about half during the last six years, going from $1.5 billion in fiscal 2011 to $2.2 billion next year." (Calpensions)
NCPERS Public Retirement Systems Study, 2016 (PDF)
39 pages. "Responding funds report the total cost of administering their funds and paying investment managers is 56 basis points ... a decrease of four basis point from 2015.... Almost 40 percent of responding funds have lowered their actuarial assumed rate of return, and nearly an additional 30 percent are considering lowering in the future.... Aggregated 10-year returns are reported at 6.2 percent.... The aggregated average funded level is 76.2, up from 74.1 in 2015 and 71.5 in 2014." (National Conference on Public Employee Retirement Systems [NCPERS])
How Public Pension Plan Investment Risk Affects Funding and Contribution Risk (PDF)
"[The authors] modeled the finances of [a] prototypical pension fund over thirty years, assuming that employers pay full actuarially determined contributions.... [P]lans faced a fundamental trade-off ... If they moved into riskier assets, the risk to the pension fund would increase significantly but government contributions would remain low.... If instead ... the plan lowered assumed investment returns, the risk to the pension fund would remain minimal, but employer contributions would have to triple, and would stay high for all thirty years of the simulation period." (Rockefeller Institute of Government)
A Second California Court Says Public Employee Pension Set at Hire Can Be Cut
"A second appeals court panel has unanimously ruled that the public pension offered at hire can be cut without an offsetting new benefit, broadening support for what pension reformers call a 'game changer' if the state Supreme Court agrees.... The two appeals court rulings are contrary to previous rulings known as the 'California rule': The pension offered at hire becomes a vested right, protected by contract law, that can only be cut if offset by a comparable new benefit, erasing any savings." [Cal Fire Local 2881 v. California Public Employees' Retirement System (CalPERS), No. A142793 (Cal. Ct. App. Dec. 30, 2016)] (Calpensions)
Dallas Police and Fire Pension Members May Have to Pay Back Funds
"The city has agreed to put in an additional billion dollars over 30 years, but they're proposing a series of bitter pills to make up the rest of the nearly $4 billion shortfall. The bitterest pill: A proposal to take back all of the interest police and firefighters earned on Deferred Option Retirement accounts, or DROP. That would amount to an additional billion dollars saved." (WFAA)
[Opinion] Pension Obligation Bonds: Portents of Bankruptcy
"It is no coincidence that the worst funded public pension systems (NJ, IL, CT, PR) all tried the [pension obligation bond (POB)] gambit not because it made any fiscal sense but because they chose not to look at immediately unpleasant alternatives (i.e. cutting benefits or affording honest contribution amounts). The POB money suddenly appeared in trust assets making the plans seem better funded which would theoretically reduce future contributions. In practice, in New Jersey at least, future contributions were reduced anyway as politicians simply chose to pick their contribution numbers with expediency as the primary determinate." (Burypensions)
Pension Obligation Bonds No Long-Term Fix for Public Pensions (PDF)
"Bond proceeds have been most frequently used to shore up pension funded ratios, effectively substituting a debt for a pension liability.... [S]tructural pension reform [is] the most prudent and creditworthy approach to addressing the growing liability, and the issuance of POBs can be merely a tactic that delays a long-term solution." (Standish)
California Court Upholds 2013 Law That Cut Buying Pension Credits
"The lawmakers' action in eliminating the right of public employees to buy additional retirement credits was 'wholly reasonable' and did not violate any binding promises made to the employees, the [court said] ... A lawyer for a firefighters union that challenged the law said it would probably seek review by the state Supreme Court, which has already agreed to consider another case cutting back on public pensions.... [The] case affects a pension system for 1.6 million state and local employees, although the ruling deals only with those who were employed when the law took effect in 2013[.]" [Cal Fire Local 2881 v. California Public Employees' Retirement System, No. A142793 (Cal. Ct. App. Dec. 30, 2016)] (San Francisco Chronicle)
Pennsylvania Governor Proposes New Retirement System Compromise
"The proposed plan includes a mandatory, 401(k)-style plan for all new employees making at least $75,000 annual income. In addition, all employees could be given the option to participate only in a defined contribution plan at their time of hire. The plan also features a risk-sharing component for all new employees.... The $51.7 billion Pennsylvania Public School Employees' Retirement System and $27.6 billion Pennsylvania State Employees' Retirement System ... together have an unfunded liability of $60.1 billion." (Pensions & Investments)
When City Retirement Pays Better Than the Job
"[A] coterie of former El Monte civil servants [receive] one taxpayer-funded pension through [CalPERS] -- and a second through a 'supplemental' plan approved by the city council in 2000. The extra pensions, along with other sweeteners granted to El Monte employees over the years, have created one of the heaviest public pension burdens of any city in California ... El Monte's retirement costs totaled $16.5 million this year. That's equal to 28% of the city's general fund." (Los Angeles Times)
State And Local Pension Reform Since the Financial Crisis
"74 percent of state plans and 57 percent of large local plans have cut benefits and/or raised employee contributions to curb rising costs. While the majority of state and local plans reduced benefits for new employees only, 25 percent also cut benefits for current employees. The two most common benefit reductions for current employees were increases in employee contributions and reductions to the COLA.... Plans more likely to make cuts had the highest annual required contribution (ARC) as a percentage of revenue or had lower employee contributions." (Center for State & Local Government Excellence)
Committee Will Recommend Vermont Create State-Sponsored Retirement Plan for Private Sector Workers
"45 percent of Vermont businesses, employing a total of 104,000 people, don't offer workers access to a retirement plan.... State Treasurer Beth Pearce who chairs the Public Retirement Study Committee says the group will recommend that lawmakers create a public plan for businesses with fewer than 50 employees that currently don't have a way for workers to invest in their retirement." (Vermont Public Radio)
State University Is an Arm of the State, Therefore Immune from FMLA Suit
"The employee rejected the offer to be placed in an inferior position, and filed suit under the FMLA's self-care and retaliation provisions.... The district court rejected MSU's motion to dismiss her federal claim based on Eleventh Amendment immunity, finding that the university is not an alter ego of the state and so can be sued in federal court. Applying the fact-intensive, co-equal Fitchik factors -- which differ slightly from the analogous factors considered by its sister circuits -- the Third Circuit reversed in what it deemed a 'close case.' " [Maliandi v. Montclair State Univ., No. 14-3812 (3d Cir. Dec. 27, 2016)] (Wolters Kluwer Law & Business)
Agencies Warn of Massive Ohio Public Pension Shortfall
"A year that began with Gov. John Kasich telling national TV viewers Ohio public pensions are rock solid ends with another independent, outside analysis warning of an approaching calamity in the retirement system.... Where [the American Legislative Exchange Council (ALEC)] sees a $331.5 billion shortfall, amounting to 58 percent of Ohio's total economic output, [the conservative Mercatus Center at George Mason University] sees a shortfall that consumes 51 percent of state GDP and gives all of the Ohio pension funds poor odds of actually paying retirees their full benefits." (The News-Messenger; subscription may be required)
Texas Pension Fund Takes Bold Step on Fees
"The $133.2 billion Austin-based defined benefit plan is the first to adopt a new fee structure developed by its hedge fund consultant, Albourne Partners Ltd. The objective of the fee formula is to ensure that the investor consistently retains 70% of the gross alpha returns of the hedge funds in its portfolio." (Pensions & Investments)
Contingency Planning for Clients Relying on Pensions
"If the pension is funded at 85% or less, there could be cuts in the future to the cost-of-living adjustment, for example, or to health benefits. In cases like this, where the client's current retirement planning is based on receiving 100% of their pension income, build in contingency plans where the client relies only on as little as 85% of their pension." (The Wall Street Journal; subscription may be required)
CalPERS Board Cuts Assumed Rate of Return to 7%
"Chief Investment Officer Theodore Eliopoulos said at last month's finance and administration committee meeting that given diminished investment return assumptions over the next decade, 6% was a more realistic return for the coming 10 years....CalPERS' current funding ratio is 68%. Two years of poor results -- a 0.6% return for the fiscal year ended June 30 and a 2.4% return in fiscal 2015 -- have contributed to a more negative view of what CalPERS can earn over the next decade." (Pensions & Investments)

Important word about authorship:
BenefitsLink® (BenefitsLink.com) provides this page for you, containing selected hypertext links to pages on the web that our editors think will be useful or interesting to you. But BenefitsLink is not the author or publisher of those linked pages (except as expressly indicated). You should contact directly the author of any such linked pages for copyright or other information about their contents.
 
Webmaster:
© 2017 BenefitsLink.com, Inc.
Privacy Policy