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Revisiting the 'Retirement Crisis' and Retirement Legislation in 2022

"[In] one crucial respect our models may fail us: experts have worked out a set of recommendations for asset allocation and income spend-down in retirement, and a set of projections for building those models, which fall apart if our new low-interest world continues, ... rather than being a temporary situation that resolves itself as we recover from the pandemic."

April 15, 1981: A Snapshot in Retirement Policy History

"It's no surprise that politicians and number-crunchers were worried about Social Security in 1981, and state and local governments have been kicking the can with respect to their pension funds for far longer than these 39 years. But it's startling that even on a wholly arbitrary day, there's so much material to illustrate this. And it's still important to bear in mind how very longstanding these issues are when debating them now."

Does Multi-Employer Pension Reform Belong In A 'Phase Four' Coronavirus Bill?

"[It] is entirely within established precedent to include pension legislation in larger bill. BUT -- that's only the case for legislation that has bipartisan consensus. The Butch Lewis Act does not have this consensus."

Aon Buys Willis Towers Watson: Another Waypoint in the Demise of Employer Pensions

"[T]he reporting on this merger doesn't even mention these firms' actuarial practices as a relevant part of their businesses, nor does the company's presentation on the merger mention the relevance of its actuarial practice except as a part of general expertise in retirement.... [It's] just another sign of the times: employer-sponsored pensions are so much on the decline that they're virtually irrelevant, as far as the business of actuarial valuations is concerned."

Sears' Bankruptcy, the PBGC's Debt and Your Retirement

"[T]he very feature of pension plans that once made them attractive to employers -- those employers' ability to be flexible in their contributions, paying more into the fund to reduce tax liabilities when available cash permitted and paying in only the minimum when finances were tighter -- has produced a situation where the need to cope with an underfunded pension has added to the strain of a troubled company, even to the extent, in this case, of necessitating entering into special agreements with the PBGC in 2015 ... to 'ring-fence' certain assets to satisfy its minimum contribution requirement."

The Bottom Line: Illinois' Public Pension Debt Is a Moral Issue

"[In] the same way in which it is not good enough for politicians merely to promise that they themselves will not be corrupt, it is also not enough for them to promise that they themselves will not sink the state/city further into debt by no longer promising benefit hikes, bigger COLAs, larger multipliers. In order to leave behind the legacy of corruption, the politicians of Chicago and Illinois and the city and state as collective entities, and the people of Illinois, must commit to saying, 'the time of passing costs on to our children and grandchildren is over.' "

Will Illinois Botch Local Pension Consolidation?

"[A]ll these pension systems are placed on a funding schedule to reach 90% funding at some point in the 2040s or 2050s, varying by plan. But the Tier 2 liabilities will become an ever greater share of the liabilities, so the relatively small portion of the liability attributable to them in 2019 is not a meaningful measure of the long-term impact of restoring the benefit reductions for new hires.... [T]he 'savings' due to increased investment earnings will not be shared by all police and fire plans uniformly; plans for larger cities will gain less because they are now in a better position than the smaller-asset plans."

Actually, the Central States Pension Plan Is Fully Funded

"There is another 'Central States' -- the Midwest Pension Plan sponsored by the Central States Joint Board ... [and] it's fully funded.... [U]nlike the Central States/Teamsters mob connections which ... resulted in such a corrupt management of their funds that the union was stripped of its ability to control those funds in 1982, the Central States Joint Board seems to have suffered no ill effects and may even have seen unexpected benefits: because pension funds were (partially) kept at the bank ($16 out of $93 million), its assumed asset return was 6% per year in 1999 and for six years thereafter, considerably lower than the average rate used that year, 7.2% (or, at median, 7%)."

Senators Introduce Proposal for Multiemployer Pension Rescue

"Senators Chuck Grassley (R-Iowa) and Lamar Alexander (R-Tenn.) ... released a proposal to rescue struggling multi-employer plans and the multi-employer arm of the PBGC itself, which is otherwise anticipated to become insolvent in 2025.... [T]he Multiemployer Pension Recapitalization and Reform Plan ... is a complex set of reforms intended to get the system past its current crisis and provide stability moving forward."

No, Public Pension Reform Experiments Have Not Failed

"It is entirely possible for a state or city to properly fund a Defined Benefit pension plan; it just takes discipline ...  But it is only a Defined Contribution program that can wholly remove from legislators the temptation to ask (OK, require) future generations to pay for this year's benefit accruals ... Only a Defined Contribution ensures that the retirement benefit is always by definition 100% funded. And only in a Defined Contribution program is the benefit defined up front and transparent to all."