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  #741  
Old 05-23-2017, 04:02 PM
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CALPERS
CALIFORNIA
https://www.wsj.com/articles/only-ro...3370?mg=id-wsj

Quote:
Only Robots Can Tally What the Largest U.S. Pension Fund Pays in Fees
Calpers turns to algorithms after official admits staff ‘can’t track’ certain fees on their own

The nation's largest pension plan has 380 people overseeing roughly $320 billion in assets. But when one of its top officials was asked during a board meeting how much in performance fees was paid to private-equity managers, he had to acknowledge no one knew.

"We can't track it today," said Wylie Tollette, the chief operating investment officer of the California Public Employees' Retirement System, at the 2015 meeting. The disclosure surprised board member JJ Jelincic, who said: "If you can't track them they are kind of hard to manage."

Only algorithms could find the answer. A software program developed by outside firms determined at the end of 2015 that Calpers had paid $3.4 billion in performance fees over the past quarter-century to the private-equity firms that managed its money. In 2016, that number was $490 million.

......
"If you're using software to deal with the complexity in your portfolio maybe you should simplify your portfolio first," said Marc Levine, chair of the Illinois State Board of Investment, which oversees $20 billion for state employees, judges and lawmakers.

The complexity is the result of a push by public pensions to boost investment profits as a way of filling funding gaps that make it more difficult to fulfill future obligations to retirees. Of the 73 largest state-sponsored plans, 44 had more than 20% of their assets in alternative investments such as private equity, hedge funds, real estate and commodities as of 2014, according to a recent report from The Pew Charitable Trusts.

These alternative investments can be more difficult to value when compared with stocks and bonds, and typically mean higher fees for investors. The added complexity also makes it more difficult to be transparent about what is being paid, according to Pew, which estimates that $4 billion in fees paid by the 73 plans had not been reported publicly.

Some public pensions say computer models can help manage their complex portfolios and predict how their assets will behave in different economic environments. Grouping investments by risk rather than type, they said, exposes dangers that might otherwise remain hidden.

"You can look at your portfolio and say 'Oh wow, I've got a lot more inflation risk than I should have or a lot more credit risk than I should have," said Robert T. Bass, a BlackRock Inc. managing director, who provides software that conducts this analysis for pension funds. "Maybe I should take that down a little.'"

In Fairfax County, Va., new software programs allow public pension fund managers to plug their assets into a computer and ask what they should buy if, say, they want better protection against inflation.
.....
In California, Calpers turned to computer models to understand its private-equity costs. Calpers has roughly $26 billion invested with private-equity firms, which buy companies with the goal of earning more in a later sale or public offering. They typically charge pension-fund clients a management fee of 1% to 2% of assets and a performance fee of as much as 20% of the gains when they sell companies for a profit.



Calpers was long unable to separate one set of fees from the other, relying in part on a set of spreadsheets to keep track of the data. The information was also stored in a range of different formats, making it difficult to aggregate and analyze.

It took five years to develop a new data-collection system that relies on private-equity managers to fill out new templates describing their various fees. A data and accounting firm then compiles the information and feeds it into the software program.

The new quantification is changing the way Calpers operates, one official said. It is "motivating us to explore alternative ways of investing in private equity that might have less of a fee burden," Mr. Tollette said in an interview.

But the system hasn't solved every problem; not all private-equity managers give Calpers the data it needs.

Some critics also say the way Calpers presents the new data can be confusing. Earlier this month, for example, Calpers showed its board a chart illustrating that management fees and expenses paid for investments had fallen to $638 million in fiscal 2016 as compared with $1.04 billion in fiscal 2011.

But that $402 million difference excluded $121 million in management fees and "partnership expenses" such as legal and auditing costs, referencing these additional charges in a footnote. Calpers in a press release last week touted the drop without mentioning the extra charges.

A spokesman said Calpers will correct the press release.

"The transparency has not increased," said Mr. Jelincic last week, the board member who first asked about the private equity data in 2015. "In fact, to some extent, it has decreased."
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Old 05-23-2017, 04:03 PM
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FEDERAL

https://www.cato.org/blog/trump-budg...deral-pensions

Quote:
Trump Budget to Cut Federal Pensions
By CHRIS EDWARDS SHARE
The Trump administration’s 2018 budget to be released tomorrow will include a range of proposed spending cuts. The budget will call for cuts to food stamps, Medicaid, and other entitlement programs. These reforms come on top of proposed cuts to discretionary programs released in March.

There is more good news. The budget will propose cuts to the fat benefit packages received by federal workers. An April CBO report found that benefits for the government’s civilian workers were 47 percent higher, on average, than for comparable private-sector workers.

One cause of the excess is that federal workers receive both a defined-benefit and defined-contribution pension plan. Pensions and other benefits for the 2.1 million federal civilian workers cost taxpayers about $80 billion a year (excluding postal workers). So federal benefits are a good place in the budget to tap for savings.

The Washington Post reports that the Trump budget will propose these reforms:

Increasing the required worker contribution to defined-benefit (DB) pension plans.
Basing DB benefits on the average of the top five salary years rather than the top three.
Ending cost of living increases for DB payouts.
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  #743  
Old 05-23-2017, 04:05 PM
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HUNTINGTON, WEST VIRGINIA

http://www.herald-dispatch.com/news/...6d14a24dc.html

Quote:
Council reviews pension fire plan

HUNTINGTON - Following the April release of Huntington's 2016 audit, which showed several recipients in city's fire pension plan had been overpaid, the local firefighters pension board and Municipal Pension Oversight Board have yet to determine how to address the overpayments.

During a Huntington City Council Finance Committee, Blair Taylor, executive director of the Municipal Pension Oversight Board, informed council members that since the audit was released, the board has been able to view the findings but has not met to discuss them.

He added that there still is a great deal the audit did not reveal, including when the miscalculation occurred, the number of people receiving more than is statutorily owed, the total amount of the overpayments and how that affects the pension fund.

Taylor said the Oversight Board is scheduled to meet June 15 and may or may not discuss Huntington's situations at that time.

Overpayments to recipients in Huntington's fire pension plan were first brought to light in April.

At the time, City Manager Cathy Burns said city officials had discovered that roughly 50 fire department retirees had been overpaid anywhere from $300 to $1,000 a month.

She cited a confusing and unclear state code as a possible reason for the miscalculations.

Taylor quoted several portions of the code to council members Monday, including how pensions are to be calculated and the fiscal responsibly of the city when it comes to pension payments.

During his briefing, Taylor also admitted that the code is "extremely complicated," which is why the Oversight Board has sought to implement features that would help alleviate some of that confusion.

In 2012, the Oversight Board tasked an actuary with creating a calculator on an Excel spreadsheet that would assist the local pension board in calculating pensions. This spreadsheet allows municipalities to input the necessary data regarding pension calculations and then calculate the correct payments.

While the local firefighters pension board has begun using this correct calculation provided for firefighters who have retired after July 5, 2016, the incorrect formula is still being used on the 50 or so accounts the city has already identified.

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  #744  
Old 05-23-2017, 04:07 PM
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NEW SOUTH WALES, AUSTRALIA
CRIMINAL OFFICIAL

http://www.theaustralian.com.au/nati...af5dfb63337507

Quote:
Move to wipe out Obeid pension

The NSW government has introduced legislation to close a loophole that has resulted in convicted former state Labor MPs Eddie Obeid and Ian Macdonald continuing to receive taxpayer-funded parliamentary pensions.

NSW Premier Gladys Berejiklian today introduced a bill that seeks to strip former politicians of pension entitlements if they are convicted of a serious criminal office committed during their term in office — even if they are charged after leaving the parliament.

The government has been under pressure to change the law since Obeid, a former Labor government minister, was convicted of misconduct in offence in December and sentenced to five years in jail.

Macdonald, another former Labor minister and colleague of Obeid, was convicted of the same offence in March and faces possible jail time when he is sentenced this year.

Under the existing Parliamentary Contributory Superannuation Act, NSW politicians are entitled to a life pension if elected before 2007.

They can be stripped of their taxpayer-funded parliamentary pension entitlements if charged with offences related to their positions while in office — but their entitlements continue unaffected if they are charged after resigning from parliament.

https://www.msn.com/en-au/news/austr...nge/ar-BBBr2C7

Quote:
The New South Wales Government will introduce legislation to strip former politicians of their super pensions if they are convicted of a serious offence after they leave office.

Currently only politicians who are convicted while they are in office lose their pension.

Former minister Eddie Obeid was jailed for misconduct in public office last December, and the Government announced it would change the laws as soon as Parliament resumed.

Six months after they flagged the changes, nothing had been done and an ABC News report two weeks ago revealed the Berejiklian Government was coming under increased pressure to take action.

"Unless these changes are made, politicians convicted of serious criminal offences will be able to live off their taxpayer-funded pension entitlement and that's just not fair," NSW Premier Gladys Berejiklian said.

The legislation means Obeid will lose his pension, estimated to be worth more than $100,000 per year.

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  #745  
Old 05-23-2017, 04:08 PM
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PENNSYLVANIA

http://columbiamontourchamber.com/20...port-from-ifo/

Quote:
Legislation to Pay Down Pension Debt Earns Support from IFO

It’s been relatively quiet over the last several weeks on lawmakers’ plans to address Pennsylvania’s bloated and unsustainable public pension systems. However, earlier this month the state’s Independent Fiscal Office filed an actuarial note to a bill (H.B. 778) that would tackle the pension crisis in part by paying off the current unfunded liabilities of the State Employees Retirement System ($19.5 billion) and the Public School Employees’ Retirement System ($42.7 billion) within about 20 years.

The actuarial report projects increased costs in the short-term with the potential for “significant” long-term savings. It indicates that under H.B. 778, PSERS contributions would initially increase by 17 percent, and then by approximately 35 percent until the unfunded liability is satisfied. SERS initial contribution would be about $90 million lower for the first five years, after which they would be higher than the estimated contribution rates under current law until the SERS unfunded liability is satisfied. All told, these provisions could save as much as $18 billion.

The IFO notes in its report: “The projections show that the savings over the entire projection period are much more significant on a cash flow basis than when they are measured on a present value basis. This occurs because the bill shifts the timing of employer contributions to pay down the unfunded accrued liabilities, and the savings that occur at the back of the projection period are valued much lower when measured by current dollars.”

In its review of H.B. 778, Milliman – the actuarial firm used by the IFO – voiced support for the bill’s reduction of the amortization period (the length of time it will take to pay down the unfunded liability) because it would help to improve security, protection from adverse experience and intergenerational equity.
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Old 05-23-2017, 04:09 PM
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http://www.dailyrepublic.com/solano-...ers-in-a-bind/

Quote:
Government pensions leave retirees, taxpayers in a bind

Underfunded pensions, mainly for government employees, are a disaster waiting to happen, and the concern about underfunded pensions is rising daily as the number of newspaper articles on the topic increases.

While most corporate employers shifted from pension plans to 401(k) plans after the early 1980s, governments still offer pensions to employees. Those pensions have left retirees and taxpayers in a bind that has fueled political battles while continuing to enrich investment consultants and managers. The result is that overly optimistic estimates of investment returns, which determine how much governments must pay to fund the balance, have left many plans massively underfunded even as the plan administrators and advisers who managed them received huge fees.

Those most likely to be hurt and hurt the most are retirees and taxpayers. The money to pay future retirement benefits to government workers such as firefighters, policemen and teachers comes from two sources: contributions made by governments to the funds, (from taxes) and investment growth. The more the funds’ investments grow, the less taxpayers must contribute.

To ensure that there will be enough money to pay retirees’ benefits later, contributions must come in every year, but the calculation of how much depends on future investment returns. Thus, the assumed future rate of return on investment is critical. The higher the assumption, the less taxpayers must contribute.

.....
Then there are the fees. Both consultants and investment managers charge high fees. These fees come from pension funds and, ultimately, from taxpayers, unless they default on the promises to retirees. The whole operation becomes a vicious circle.

Many of the high-profile hedge funds have abysmal results, yet large amount of gains have gone to them as fees. The fact that hedge funds and private-equity funds have performed terribly for their investors along with high fees is no secret. In fact it is well documented. Yet pension funds continue to patronize these investments.

The reasons are plainly political. Lowering the assumed rate of return would draw the wrath of taxpayers. Cutting pensions to retirees would be a disaster for them. Note that this situation has already started, even in California. Politicians don’t want either to happen, though perhaps for different reasons. So they “kick the can down the road.” If many government pension funds fail to have sufficient funds to pay their retirees, the burden will suddenly fall on state governments and ultimately on the federal government.

The reality of the numbers is a sobering reminder that the needs of retirees, who are the ultimate investors, the taxpayers, who are the guarantors, and the desires of investment advisers and managers are not always aligned. We could use some strong leadership in this area.

Mark Sievers, president of Epsilon Financial Group, is a certified financial planner with a master’s in business administration from the University of California, Berkeley. Contact him at mark@wealthmatters.com.
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Old 05-23-2017, 04:10 PM
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KENTUCKY

https://www.usnews.com/news/best-sta...r-pension-debt

Quote:
Kentucky Needs $700 Million More Per Year for Pension Debt
Independent consultants say Kentucky taxpayers need to spend an extra $700 million each year to keep their troubled public pension systems afloat.

FRANKFORT, Ky. (AP) — Independent consultants say Kentucky taxpayers need to spend an extra $700 million each year to keep their troubled public pension systems afloat.

That's on top of the nearly $2 billion taxpayers are scheduled to spend on all of the state's retirement systems in the fiscal year that begins July 1.

State lawmakers were briefed on the report Monday. It's the second of three commissioned studies of the state's pension system. The final report will detail recommendations about how the state can raise the necessary funds.

Kentucky has one of the worst-funded public pension systems in the country. Last week, the governing board of the Kentucky Retirement Systems lowered long-held investment assumptions, which added an extra $2 billion to the state's debt.

Overall, the state's unfunded liability is more than $30 billion.

"Whatever we do is not going to be fun. It's not going to be easy. People all over are going to be mad," said Republican Sen. Chris McDaniel, the chairman of the state Senate's budget-writing committee.

The report from PFM Group Consulting said that since 2006, all of the state's retirement systems combined spent $6.9 billion more than they took in. The reasons included lawmakers not spending as much on the system as they should have, bad assumptions from the retirement systems governing boards and a crippling economic recession in 2008.

The result: The retirement system that covers most state workers has just 13 percent of the money it needs to pay out benefits over the next 30 years, making it among the worst-funded systems in the country. Several lawmakers wanted to know how another unforeseen recession would impact the system.

"A significant downturn actually wouldn't make that much of a difference because there's hardly anything there to lose," said Michael Nadol, a managing director for PFM Group Consulting.

http://www.bereaonline.com/2017/05/r...in-the-nation/

Quote:
The PFM Group today presented an alarming report to the Public Pension Oversight Board detailing the factors that made Kentucky’s pension systems the worst funded systems in the United States. The report revealed that the systems have had a combined $6.9 billion negative cash flow since 2005 as benefits paid to retirees plus program expenses greatly exceeded appropriated funding. According to the report, if this negative cash flow is not corrected, the ability to make payments to current and future retirees is at risk.
.....
According to the report, if the past patterns of underfunding the required contribution were followed, KERS-NH would become insolvent by FY 2022. The Teacher’s Retirement System (TRS) could become insolvent in twenty-seven years if the ARC is not fully funded and the necessary investment returns are not met.

.....
The largest contributing cause was “negative amortization” caused by using a “level percentage of payroll” funding method and inaccurate assumptions about payroll growth. This “actuarial back-loading” accounted for 25 percent of the growth in the retirement systems’ unfunded liabilities.
Underperforming investments relative to assumed rates-of-return and market benchmarks were responsible for 23 percent of the growth in unfunded liabilities.
Changes to actuarial assumptions intended to align with revised expectations contributed to 22 percent of the current recognized unfunded liabilities.
Failing to fund the ARC caused 15 percent of the growth in unfunded liabilities.
Nine percent of the growth is attributable to granting, but not paying for, retiree cost of living adjustments (“COLAS”).
While these factors contributed to each individual system’s unfunded liability growth, the individual factors had different impacts on each system. Actuarial back-loading was responsible for 32 percent of TRS’s unfunded liability growth while failing to fully fund the ARC created 28 percent of the problem for KERS-NH.
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Old 05-23-2017, 04:11 PM
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MASSACHUSETTS
MBTA

https://www.bostonglobe.com/business...KPL/story.html



60 percent?!

oh COME ON
https://commonwealthmagazine.org/tra...n-concessions/

Quote:
MBTA unions pressed for pension concessions
State officials warn T retirement fund could run out of money

STATE TRANSPORTATION OFFICIALS on Monday pressured the MBTA’s major unions to agree to concessions that would reduce retirement payouts by about $1 billion over the next 18 years and prevent the authority’s pension fund from running out of money.
The officials said their analysis indicates the T’s pension fund is paying out more money than it is taking in in contributions and investment returns, that investment returns are unlikely to pick up significantly, and that a legislative bailout is unlikely.

Transportation Secretary Stephanie Pollack said emphatically that the state has no commitment to bail out the T pension fund. “The basic message is that this is a private retirement fund without a backstop,” she said.

John Englander, the MBTA’s legal counsel, said there are only three real options for addressing the authority’s pension problem. He said changes to the design of the pension plan can be negotiated with the T’s unions through collective bargaining or, if negotiations fail, via binding arbitration. He also said the Legislature could choose to provide extra funding to cover the cost of MBTA pensions.

But in a presentation to the Fiscal and Management Control Board, T officials listed a taxpayer bailout as one of several “bad choices” for responding to the pension crisis. The other bad choices included raising fares and reducing capital investments in the T.
James O’Brien, president of the Carmen’s Union, the T’s largest union, agreed in December to wage and work rule changes in return for job protection for his members. But on Monday O’Brien, a member of the MBTA’s Retirement Board, accused the T of manipulating the pension data to present an unfair picture of the situation. He also sounded as if he was unwilling to make major concessions.

“The MBTA warns it may no longer be able to honor the promises it made its employees,” he said. “Where I come from, a promise is a promise.”

According to T officials, the agency’s pension fund has received $640 million in investment returns and $741 million in contributions over the last decade. Over that same time period, however, the agency has paid out $1.699 billion in benefits, resulting in a net outflow from the pension fund of $958 million.

.....
MBTA workers also collect both pensions and Social Security. A state worker hired after April 2012 who works 25 years and retires at 65 at a wage level of $80,000 would receive a pension of $44,000 a year. An MBTA worker with the same employment history would receive an MBTA pension of $49,200 plus $19,800 in Social Security payments for a total of $69,900.

Another concern for the MBTA is the less-than-stellar investment returns. The T Retirement Board had a 6.2 percent return in 2016, missing its target of 7.75 percent. By contrast, the state’s pension fund had a 7.6 percent rate of return, slightly higher than its target of 7.5 percent.
Despite lackluster returns in 2015 and 2014 of .7 percent and 4.8 percent, respectively, the T pension fund’s rate of return over the last five years has averaged 8.4 percent, above the target rate of 7.75 percent. Still, a consultant hired by the T, Evan Inglis, said the pension fund’s target rate of return of 7.75 percent was overly positive. He predicted returns were unlikely to average more than 4 percent over the next decade.


http://news.wgbh.org/2017/05/22/poli...rcent-10-years

Quote:
MBTA Pensions Heading For Trouble: Assets Down 23 Percent In 10 Years

Faced with a report that the MBTA's pension fund will need about $1 billion over the next 18 years to remain solvent and fulfill its obligations, the T's Fiscal and Management Control Board on Monday was presented with three options.

"The MBTA Retirement Fund is in danger of running out of money. Even as financial markets have fully recovered from the downturn in 2008 and 2009, fund assets at the T are down 23 percent in the last 10 years," MBTA Acting General Manager Brian Shortsleeve said. "The coming years will require increasingly large taxpayer contributions as well as MBTA employee contributions to keep the fund afloat."

An MBTA lawyer on Monday told the FMCB that the T's possible paths forward include negotiating changes to pension agreement terms through the collective bargaining process with its largest union, pursuing arbitration or asking the Legislature to step in.

As MBTA pension assets have declined by 23 percent in the last decade, the contribution from the T has increased 135 percent from $37 million in fiscal year 2007 to $87 million in the current budget, according to the T.

.....
Shortsleeve suggested that the way the T pension plan is set up may need to change to help keep it solvent. He said the plan provides an incentive for T employees to retire younger, and half of MBTA employees retire and begin to draw on their pension while in their 50s. He also noted that T retirees "earn significantly more in post-retirement pension benefits than state employees and teachers at all ages."



http://www.wbur.org/news/2017/05/22/...-weigh-options

Quote:
Ballooning Pension Gap Forces MBTA To Weigh Options
.....
Without action, the funded level is expected to fall below 50 percent within five years, according to the T report, and the fund would need $3 billion in funding to meet its obligations through 2035.

Part of the problem is that since 2010 the T has had more retirees drawing from the pension fund than employees paying into it. Now, there are 899 more retirees drawing money from the pension than there are employees paying into it, according to the T.

"The difference needs to be made up in investment returns or the value of the pension will fall, that's just simple math," he said. But he also acknowledged that "market returns will not be enough to save the fund."

The fund got a 6.2 percent return on its investments in 2016, according to preliminary figures, a 0.7 percent return in 2015, and a 4.8 percent return in 2014 — each falling short of the fund's 7.75 percent target return. In 2012 and 2013, respectively, the fund saw returns of 14 percent and 16.4 percent.

James O'Brien, president of the Carmen's Union Local 589 and a member of the MBTA Retirement Fund board, addressed the FMCB and suggested the T is fudging its numbers to cut costs.

"The MBTA again presents carefully selected statistics in an attempt to justify its goal of cutting the amount of money MBTA retirees will have to live on. The means of doing this is to disparage the MBTA Retirement Fund and say it is performing badly," he said. "The truth is the 30-year average return is over 9 percent and the five-year average return is over 8 percent. The MBTA projects a 4 percent return over the next 10 years to scare people. Why else present a figure that does not accurately reflect the historical returns of the fund?"

Evan Inglis, an actuary who helped the MBTA compile the report presented Monday, said he arrived at the projection of 4 percent annual growth for the next 10 years based on the pension fund's investment mix, investment strategy and the state of the economy.

.....
The state pension fund managed by PRIM reported a 7.6 percent return in 2016, compared to the T pension fund's 6.2 percent return.

Gov. Charlie Baker has previously recommended the MBTA Retirement Fund be merged into the account managed by PRIM, and his fiscal 2018 budget proposal included an outside section allowing such a merger. The House and Senate have both included the provision in their own budget proposals as well.

https://www.ai-cio.com/news/massachu...eds-3-billion/

Quote:
Massachusetts Bay Transportation Authority Fund Needs $3 Billion

The Massachusetts Bay Transportation Authority Retirement Fund reportedly requires $3 billon in additional funding, $1 billion of which will likely have to come from taxpayer contributions, to avoid becoming insolvent by 2035.

Brian Shortsleeve, chief administrator and acting general manager of the Massachusetts Bay Transportation Authority (MBTA), told The Boston Globe that benefits paid to retirees have exceeded money coming in from the transit authority, worker contributions, and investments over the past 10 years.

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ILLINOIS

https://www.ai-cio.com/news/illinois...m-legislation/

Quote:
Illinois State, House Introduce Pension Reform Legislation


Two bills are currently making their way through the Illinois State House and Senate that seek to bring reform to the state’s underfunded pension system.

Sen. Dale Righter (R-Mattoon) has introduced legislation that would require any new employee hired after July 1, 2018 to receive a 401(k)-style defined contribution plan instead of a defined-benefit plan with guaranteed annual increases. This includes state workers, teachers, university employees, judges, and members of the General Assembly.

“It’s no secret Illinois’ pension costs are draining tax dollars from high-priority areas,” Righter said in a statement. “But I don’t think people realize just how bad it is.”

According to Righter, pension costs in both higher education and K-12 education consume approximately 50% of all state spending in these areas, and spending on pensions take up almost a quarter of the entire state budget.

“That’s billions of dollars that can’t be spent on bettering our classrooms, hiring more teachers and staff, funding important programs, reducing tuition costs to students, constructing new buildings, or reimbursing our education system on time,” he said. “Taxpayers are being forced to subsidize a pension system that we simply cannot afford.”

Righter said that employees in the Illinois state university retirement system are the only employees who currently have the option to choose a 401(k) style defined contribution retirement package instead of a defined benefit pension. Approximately 21,000 employees select that option, he said.

.....
Over on the House side of the Illinois state legislature, Rep. Barbara Flynn Currie, (D-Chicago) has introduced a bill that would require state pension plan participants to choose between having future pay increases count toward their pensions, while forgoing the automatic 3% compounded raises in their retirement benefits, or keeping the pension raises, but giving up future pay increases that count toward retirement.

By giving participants a choice, the proposed bill is attempting to avoid conflicting with a 2015 Illinois state Supreme Court decision that ruled that, under the state’s Constitution, benefits promised as part of a pension system for public workers “shall not be diminished or impaired.”

The bill also calls for closing the General Assembly Retirement System to new members, and a buyout plan in which members of the retirement systems can cash in their benefits for a lump sum payment. It also provides $215 million for Chicago teacher pensions, and requires certain participants be required to sign up for a 401(k)-style defined-contribution program.

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Old 05-23-2017, 04:51 PM
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Mary Pat Campbell
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DALLAS POLICE AND FIRE
TEXAS

https://www.ai-cio.com/news/dallas-p...ension-reform/

Quote:
Dallas Police and Fire Pension Fund, City Agree on Pension Reform

After it looked like an agreement might never happen, the Dallas Police and Fire Pension System has signed off on a proposed bill to help fix the ailing system.

The “landmark negotiations and agreement help secure the long-term solvency and stability of the Dallas Police and Fire Pension System,” said Police & Fire Pension System Board Chairman Sam Friar in a statement.

The agreement includes a reduction to benefits, and the creation of a new retirement plan. Additionally, it calls for contribution increases from participants, and decreases to Dallas’ contribution rates. It also restricts the city’s minimum payment for the first five years, while another minimum payment will take effect for the two years after. Beyond that, the city will have a contribution rate based on 34.5% of payroll, minus overtime.

“Important amendments negotiated today secure solid, long-term funding, and guarantee that the future pension board ‘shall’ ensure that the plan is actuarially sound,” said Friar. “It’s truly a great outcome considering where we were with the potential of having no retirement for our police and firefighters.”

However, just a few days before the agreement, the Dallas Police and Fire Pension System opposed the substitute bill, saying it was only a short-term fix. But then Texas Sens. Royce West and Don Huffines announced amendments to a Senate substitute proposal, which alters the original bill from the House (HB 3158).

The fund was expected to become insolvent by 2030.

The current proposed bill, which still requires votes from the full Texas Senate and House, requires a $13 million lump sum payment from the city for each of the first five years. The contribution rates during the sixth and seventh years will be determined based on the Dallas’ hiring plan. And before July 1, 2024, the city must use a third-party actuary to determine the fund’s progress, which could lead to changes to the minimum contribution rates by the city and system members as well as the lump sum amounts.

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