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  #1311  
Old 09-26-2017, 05:02 PM
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yeah, it only took me about a decade to realize that's a better way.
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Old 09-27-2017, 05:57 PM
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http://www.retirementsecurityinitiat...h_pension_debt

Quote:
New Report Shows the Dire Reality Facing Municipalities with Pension Debt

Spoiler:

By Chuck Reed, RSI Chair



Analysis published this week by J.P. Morgan’s Chairman of Market and Investment Strategy Michael Cembalest demonstrates the growing risk to public employees and retirees as many municipal debts outweigh revenues.

Following up on his 2016 tri-annual credit review of U.S. states, Cembalest has added the largest U.S. cities and counties to the mix in his latest review, The Arc and the Covenants 3.0. By calculating what local governments currently spend on bonds, pensions and obligations related to underfunded pensions and retiree health benefits (termed OPED) and what they would be spending over 30 years assuming a 6 percent rate of return, Cembalest has determined that U.S. cities and counties are substantially more debt-ridden than states and have some difficult choices ahead in order to meet their future obligations.

Using a calculation called “IPOD” (short for I=interest on bonds, P=pension payments, O=OPEB payments and D=defined contribution payments, all divided by municipality revenues), Cembalest looks at current IPOD ratios and, more importantly, full accrual IPOD ratios required to service all future obligations accrued to date. And the result is dismal. To meet the full accrual IPOD ratio, many municipalities will need to significantly increase taxes, cut services or increase public worker contributions.

For example, in my home state of California, to meet its future commitments, Oakland would have to increase taxes by 22 percent, or cut spending on services by 22 percent, or increase worker pension contributions by 462 percent. In Sacramento, policymakers would have to increase taxes by 19 percent, or cut spending by 18 percent, or raise workers’ contributions by 301 percent. And there’s municipalities in far worse shape, such as Houston, which would have to raise taxes by 26 percent, or cut services by 23 percent, or increase worker contributions by an outstanding 772 percent.

So, what happens if these governments choose to ignore the crisis, to maintain the status quo and do nothing? Municipalities may continue to rely on elevated investment returns, but that would require almost impossibly high annual returns for 30 years and it’s that short-sighted optimism that helped get our country into its current pension debt crisis.

According to Cembalest, at a more conservative and realistic return rate of 6 percent, municipalities would see their pension funding ratios decrease. For example, Houston’s current 23 percent funded ratio would fall to 15 percent; Cincinnati, Ohio’s would go from 60 percent funded to 49 percent funded; and Los Angeles County’s would drop from 87 percent to 79 percent—and that’s only if municipalities maintain their current contributions.

If contribution levels fall, the funding gaps will only widen, putting at risk the retirements of many public employees. As Cembalest noted, public sector workers “have earned the benefits they accrued and which were granted by state and local legislatures, and have the right to expect them to be paid.” I couldn’t concur more.

Unfortunately, the situation is dire for many municipalities around the country and this report only further reflects the tremendous debt burden faced by our country due to overpromising benefits and underfunding pension systems and the risk it places on public employees and taxpayers.

Moving forward, pension reform can no longer be prolonged by state and municipal policy leaders while liabilities accumulate. To maintain benefits for current retirees, ensure a fair retirement for future workers and deliver government services to taxpayers without significantly increasing revenues, the debt crisis needs to be addressed now.
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  #1313  
Old 09-27-2017, 06:02 PM
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CALIFORNIA

http://californiapolicycenter.org/ci...local-budgets/

Quote:
Cities facing fiscal mess plead with CalPERS as pensions consume budgets

Spoiler:
By Steven Greenhut
September 26, 2017

Sacramento – If you ask the union-controlled California Public Employees’ Retirement System about the state’s looming pension crisis, you’re likely to get this answer: What pension crisis?

But the story was much different at CalPERS’ own Finance and Administration Committee meeting held Sept. 19. City officials from across California warned CalPERS board members about the dire fiscal situation their cities face because the pension debt is consuming larger portions of local budgets. The energetic discussion included 18 speakers, many of them local officials who trekked to Sacramento.

“In Hayward, 68 percent of our unfunded pension cost is retiree benefits,” said Hayward City Council member Sara Lamnin, who pointed out that “this means the promises of the past weren’t paid for, frankly.” Hayward’s future is really troubling. She said that “over the next three fiscal years, the city of Hayward’s revenue is projected to grow 1.4 percent, but our cost for PERS is going to go up 30.5 percent.” Lamnin wasn’t asking for someone to rescue Hayward. Officials just want to know how bad the damage will be. “We ask you for data,” she said.

Oroville Finance Director Ruth Wright said her Butte County city has been forced to cut its workforce by a third and negotiated cuts in police salaries by 10 percent. Oroville expects its cash flow to be gone in three to four years, she said. “We’ve been saying the ‘bankruptcy’ word.”

These city officials were there to support state Sen. John Moorlach, R-Costa Mesa, who sent a letter to the CalPERS board of administration requesting detailed answers to two seemingly straightforward actuarial questions.

First, Moorlach wanted to know the financial effect of moving employees from “their current tiers to a PEPRA tier on a going-forward basis.” That would mean providing them with the slightly-less generous pensions offered after the 2013 reforms went into effect. Moorlach also wanted the pension fund to study the cost savings if cost-of-living adjustments to retirees were temporarily suspended until the fund’s liabilities are stabilized. No one is proposing any cuts, but Moorlach was just seeking cost comparison data.

.....
The League’s Dane Hutchings noted a shocking statistic: “I have members who by all accounts are considered financially healthy cities” but their financial models “suggest that by fiscal year ’27-’28 as much as 94 cents of every current dollar of payroll will be allocated to CalPERS contributions.” That’s without accounting for new hires or raises in the coming decade.

Lodi City Manager Steve Schwabauer said his city’s pension costs are expected to double by 2022, which is the equivalent of a fire station and “all of my parks and recreation and all of my library.” These are ominous warnings from actual city officials.

.....
“Yes, it’s painful for employers to deal with those rising costs,” said Jai Sookprasert, a California School Employees Association lobbyist. “It’s doubly more painful for the employees. What part of negotiate, talk to your employees is not clear? … Really, data? This is just data? … Is it data or conjectures?”

So, learning actuarially sound information about what different benefit levels might do to unfunded liabilities is now just a conjecture, at least in the view of some union officials. Apparently, it’s better for local officials not to know what different options will mean for their budgets. They should just pay up and quit their complaining.

.....
Now CalPERS and its union allies typically claim that there’s no pension crisis and that Gov. Jerry Brown’s modest PEPRA reform will right the ship. Apparently, there’s no need to worry about what these hard-pressed city officials are saying. But what will they say 10 to 15 years from now, as pension costs gobble up majorities of local budgets and services will be slashed and burned?

For now, denial is the easiest course. CalPERS had a good year with investment returns of 11.2 percent. Likewise, the Democratic-controlled state Legislature totally ignored the pension liabilities and the arguably even-larger problem surrounding soaring retiree-medical costs during its recently concluded legislative session. But the problems only are going to get worse, and other cities are going to hit the fiscal wall.

“The unions will say it wasn’t our fault. We didn’t vote for it. You guys voted for it,” said Sen. Moorlach in an interview Monday. He was shocked by their audacity. No doubt, they’ll also be blaming Wall Street and stingy California taxpayers. But by then the state and cities could be in full crisis mode. Will CalPERS still be in denial if dozens of cities are using about the “b” word?


PALO ALTO

http://padailypost.com/archives/850

Quote:
City pension woes hit home as shortfall hits $405 million


Spoiler:


As the city of Palo Alto looks for ways to reduce its massive employee pension shortfall, residents might soon start feeling the impact, officials said.

City services could be reduced. Pay and benefits for city employees might be affected. And the pension gap could influence how often the city hires outside contractors to perform services.

The city doesn’t pay pension benefits for the contractors, and so outsourcing might make sense in more situations, city council members said during a meeting of the City Council Finance Committee this month.

During the meeting, City Manager Jim Keene warned council members about challenges that may arise from tackling the pension issue.

“We haven’t at all talked about the real-life realities … about implementing changes that force reallocations,” Keene said. “Even outsourcing in and of itself can be quite challenging to the community — particularly when you’re not in a crisis mode. We all just know human nature. The thing is, ‘why are you guys doing all of this? Why do I have to have a contract street sweeper? It was so much better when Public Works did it.’ There will be a hundred issues
like that, potentially.”

The city of Palo Alto’s shortfall for covering employee pension costs shot up by nearly 20% in one year, reaching $405 million as of June 2016, according to new data that was presented to the Finance Committee.

The $405 million figure is an increase from a pension shortfall of $338 million as of June 2015 and $250 million in mid-2014, according to the projections by the California Public Employees Retirement System, or CalPERS. The new figure is close to double the amount of the city’s $210 million general-fund budget for this fiscal year.

.....
City attempts to reduce the debt

Chief Financial Officer Lalo Perez told council members that they could decide to “bite the bullet” and pay off a large portion of the pension gap in a short time. The question would be how such a move would impact city services, he said.

The city has been reducing pension benefits to new employees over the last several years by increasing the pension eligibility age and decreasing the amount paid.

Another issue is how much the worker pays toward their pension, Keene noted.

“The distribution of the cost between the employee and employer is not set in stone,” Keene said. “That can be renegotiated and actually, in some ways we’re behind some other jurisdictions as far as shifting more of the growth and the increasing cost to the employee.”


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  #1314  
Old 09-27-2017, 09:48 PM
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CALIFORNIA

SAN RAFAEL
http://www.marinij.com/general-news/...despite-ruling
Quote:
Pension watchdog to continue San Rafael lawsuit despite ruling

Spoiler:

A Marin man who is suing San Rafael over city employee pension “enhancements” he claims were approved illegally in 2002 and 2006 said he will file an amendment to his complaint after a judge ruled last week that his claim was too late.
“I fully intend to amend,” David Brown of Mill Valley said Tuesday.
City officials, however, said they doubted whether such an action would be successful in preventing the case from being dismissed.
…..
Marin Superior Court Judge Paul Haakenson ruled Sept. 20 that Brown’s complaint was outside the three-year statute of limitations. Haakenson did not rule on the substance of Brown’s suit, which was that San Rafael violated government code 7507 requirements for public notice and disclosure when officials approved nine separate “enhancements” — or extra pension benefits — for firefighters, police and other city workers in 2002 and 2006.
Brown had argued that a new statute of limitations clock started ticking each time a subsequent pension payment was made — constituting, he said, an exception to the statute of limitations called the “continuous accrual” doctrine.
Haakenson initially agreed, but then reversed his opinion after arguments by Epstein earlier last week.
“In the court’s analysis, the alleged wrong here occurred, and was completed, when the city bound itself and the taxpayers to make such pension payments,” Haakenson wrote in his Sept. 20 opinion. “That is, the alleged wrong occurred at the time the city council entered into labor contracts promising the subject pensions.”
…..
Brown said Tuesday his issue is not with the 2002 and 2006 pension enhancements themselves — it’s that, he claims, they were approved without public notice and scrutiny, in alleged violation of government code 7507.

If his lawsuit were ultimately successful, and the July 1, 2016, labor contracts that include the same enhanced pension benefits from 2002 and 2006 were nullified by the court, the city could always negotiate and approve new contracts — as long as they “look the taxpayers in the eye and say, ‘Here’s what we’re going to pay them,’” Brown said.


LOS ANGELES
DISCOUNT RATE

http://www.latimes.com/local/lanow/l...926-story.html
Quote:
L.A. pension officials deliver another financial blow to the city budget

Spoiler:
A Los Angeles pension board voted Tuesday to scale back its long-range investment projections, creating yet another budget problem for the city’s elected officials.

The City Employees’ Retirement System board, which oversees pension benefits for thousands of city workers, voted unanimously to cut its assumed rate of return — the yearly earnings expected from the agency’s investment portfolio — to 7.25%, down from 7.5%.
The decision is expected to shift $38 million in retirement costs onto the general fund budget, consuming funds that would otherwise pay for basic services. And it comes at a time of increased concern over the city’s growing pension burden.

Another pension agency, which oversees benefits for thousands of retired firefighters and police officers, recently reduced its own rate of return and recalculated the expected lifespan of its beneficiaries. Meanwhile, growth in the overall city payroll is also expected to push pension payments upward.

Those issues, taken together, will add an additional $170 million in retirement costs in next year’s budget, city analysts say.
…..
That view was not shared by Jack Humphreville, one of the city’s Neighborhood Council Budget Advocates, who said board members missed the chance to adopt a more realistic investment assumption. Garcetti’s appointees focused too much on shielding the city budget from additional costs and not enough on safeguarding the long-term health of the retirement system, Humphreville said.

“Their primary fiduciary duty should only be to the pension plan,” he said. “That’s what the law says.”

The board was presented with three scenarios for changing the agency’s economic assumptions. Garcetti’s four appointees backed the proposal with the smallest impact on the budget.

Tuesday’s vote comes as Garcetti and the City Council face a series of daunting financial challenges. Retirement costs are on track to consume $1.3 billion of the general fund within two years, according to a recent forecast. At the same time, city leaders have made long-term legal commitments on sidewalk repairs and other spending.

The city’s budget woes have been serious enough that earlier this year, Garcetti and the council considered a plan — later shelved — to borrow money to cover the city’s ongoing legal bills.

The retirement board, frequently referred to as LACERS, relies on three sources of funding: contributions from city employees, earnings from its investment portfolio and payments from the city budget. The lower the investment return, the larger the payment typically needed from the budget to cover the system's benefits.

The retirement system has experienced wild swings in its investments in recent years. After the last recession, the agency seesawed from double-digit losses to double-digit gains. Although this year’s return was 13.3%, it was 0.5% the year before that.
Still, officials see the long-term trend as moving steadily downward. As a result, the board has repeatedly reduced its assumed rate of return, taking it from 8% down to 7.75% in 2011, then to 7.5% in 2014.

This time, the LACERS board struggled for nearly three months before making a decision. The agency’s consultant recommended taking the assumed rate of return down to 7%, a move that would cost the city budget $51 million to $84 million next year, depending on the inflation assumption chosen by the board.

City pension officials advised board members they could also seek a smaller decrease — but only if a fresh review of the agency’s long-range economic assumptions is conducted again next year.
Board member Michael Wilkinson, who represents retired city workers, pushed for the board to a move to 7%, arguing it would be “dangerous” for the agency to rely on a higher, and less realistic, number. Wilkinson’s proposal was defeated on a 4-2 vote, with all of the mayor’s representatives voting to reject it.
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  #1315  
Old 09-27-2017, 09:49 PM
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KENTUCKY

http://www.courier-journal.com/story...kay/699352001/
Quote:
Rep. James Kay wants lawmakers to own up to pension problems by living with it themselves
Spoiler:
FRANKFORT, Ky. — As Kentucky lawmakers prepare to tackle pension reform, they're also considering the impact the commonwealth's struggling retirement systems will have on the next budget and whether legislators' pensions should be handled differently than those of other public employees.

During a Monday meeting of the legislature's Public Pension Oversight Board, state Rep. James Kay, D-Versailles, emphasized the importance of seeing legislators own up to their responsibility after years of underfunding the state's retirement systems.

Of the state's retirement systems, the Kentucky Teachers Retirement System and Kentucky Retirement Systems are the biggest. The pension plan for legislators isn't administered by either of them, and it isn't nearly as underfunded as the plans managed by KRS or the teachers' system.

Kay said Monday that he supports ending the separation between legislators' pensions and those of other government workers.

A local citizen who spoke during the meeting agreed with Kay, telling the pension oversight board, "Treat yourselves the way you treat us. That's all I ask."
….
Republican state Sen. Joe Bowen of Owensboro, who co-chairs the pension oversight board, indicated Monday that legislators' pensions may be affected by some of the forthcoming reforms, although lawmakers haven’t yet determined what those reforms will be.

"We need to be the first one in line for any changes," he said.

Kentucky's pension crisis will play a significant role not only during Bevin's anticipated special session but also during next year's regular session, when legislators must approve a budget for the next two fiscal years.

Representatives for the state's retirement systems presented fresh budget estimates for fiscal years 2018-19 and 2019-20 to the pension oversight board on Monday. Both KRS and the Teachers' Retirement System indicated that they'll each need significant increases for each of those fiscal years to meet their obligations.


http://wfpl.org/pension-systems-requ...o-stay-afloat/
Quote:
Pension Systems Request Big Chunk Of Kentucky Budget To Stay Afloat
Spoiler:
The heads of Kentucky’s ailing pension systems are requesting that the state pay about $1.3 billion more into the funds over the next two years, further straining the state’s cash-strapped budget.

Collectively, the retirement systems for Kentucky’s state workers are among the worst-funded in the nation.

The amount of money needed to keep the systems afloat has snowballed in recent years due to historic underfunding from the legislature, poor investment performance in the wake of the recession and stagnant wages for state employees.

But David Eager, the executive director of Kentucky Retirement Systems, the agency that manages most state worker pension plans, said, “we can see the light at the end of the tunnel.”

“It’s very small, it’s a long way away and it’s going to take a lot of effort to get there,” Eager said. “But for the very first time we’re going to see some projections of the unfunded [liability] flattening out. So we’re not digging ourselves any deeper, we’re flattening out. That’s great news.”
….
David Eager, executive director of KRS, told the Public Pension Oversight Board on Monday that about 6,000 state workers are currently eligible to retire with full benefits.

He said if “they retired tomorrow,” the system would have to come up with between $90 million and $100 million more per year to make up for the lost contributions from state worker paychecks.

“We can handle that, we wouldn’t want it to go on for a long period of time, but it wouldn’t be catastrophic,” Eager said.

Eager said retirements are up more than 13 percent compared to last year.
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Old 09-27-2017, 09:49 PM
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NEW JERSEY
http://www.nj.com/politics/index.ssf...ons_sound.html

Quote:
Phil Murphy's latest pension funding plan? It sounds a bit like Christie's.

Spoiler:
NEWARK -- Democratic candidate for governor Phil Murphy said Monday that he would increase the state's annual payments to public worker pensions well above those made by Gov. Chris Christie, but was vague about how much more he'd spend, and when.

"We have to get there as fast as possible," said Murphy. "But this is a state right now which is '0' for three: We don't grow enough, we're profoundly unfair, and when the economy works, it works for very few."

In July, Christie committed to making a $2.5 billion state contribution to the $73.6 billion New Jersey Pension Fund, with about $1 billion coming from the proceeds of the state lottery.

On Monday, Murphy promised that he would continue to fund the pension at least as much as Christie had.

"At a minimum, we'll continue the progress that's being made right now," Murphy said.

According to the latest rankings from George Mason University's Mercatus Center, there isn't a single U.S. state in worse fiscal shape than New Jersey. The Garden State ranks last in its July 2017 survey when it comes to cash on hand, budget, long-run solvency, trust fund solvency and service-level solvency.
….
Christie has thus far made one-tenth of the contributions recommended by actuaries, putting the state on track to make a full payment in 2023.

Meanwhile, Murphy has campaigned on a promise to eventually fully fund state worker pensions, but on Monday said little about how and when that full-funding would occur.

"The answer is: As quickly as possible, and we'll be very clear about it if we get elected in terms of what the plan looks like," said Murphy, speaking to reporters after a campaign pep rally at Weequahic High School in Newark with Shaquielle O'Neal.

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Old 09-27-2017, 09:52 PM
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RHODE ISLAND

DISABILITY
http://www.providencejournal.com/opi...pension-system

Quote:
Editorial: Protect R.I.’s pension system

Spoiler:
In an evening of rapid-fire voting this month, the House and Senate stuck it to the taxpayers again, on behalf of powerful special interests at the State House. Gov. Gina Raimondo, fortunately, seems poised to veto their latest attack on the integrity of Rhode Island’s pension system.

The bill in question, sought by firefighters unions, would establish the presumption that a firefighter’s heart disease was caused by the job. Firefighters already get such tax-free pensions if they can show that ailment was actually job-related. This bill would make it virtually automatic, whether the job had anything to do with it or not.

The change is expected to cost taxpayers an extra $2.3 million to $2.8 million a year. That’s $46 million to $56 million over the next 20 years — at a time when budget deficits are ballooning and the state’s schools and bridges are crumbling.

It is little wonder that General Treasurer Seth Magaziner and municipal officers are pleading for a veto.

Under existing law, doctors can testify that poor eating habits or excessive smoking were key contributing factors to a firefighter’s heart disease. The new legislation, by contrast, “would require Rhode Island pension funds to award accidental disability benefits to firefighters with heart conditions even when the available evidence, including the opinions of examining physicians, do not conclude such awards to be warranted,” Mr. Magaziner warned.
The bill would prevent the state Retirement Board, which scrutinizes such pensions, “from considering the opinions of independent medical experts, and from considering other factors that can cause heart conditions, such as tobacco use,” he noted.

While we strongly believe that the public has a duty to support firefighters who injure themselves irreparably on the job, disability pensions must be reserved for those who deserve them. Otherwise, the public will not have enough money to maintain such pensions.

CRIMINAL OFFICIALS
http://www.providencejournal.com/new...er-cianci-aide
Quote:
R.I. Supreme Court hears appeals over pension of former Cianci aide

Spoiler:
In 2002, Frank E. Corrente was convicted on racketeering and corruption charges that muddled his right to his $5,881.30-a-month pension.

PROVIDENCE, R.I. — Is Frank E. Corrente, a former city employee who was convicted in the “Operation Plunder Dome” case, entitled to pension benefits?

It’s a question that has been kicked up to the state’s highest court. And after more than 20 years of debate, Corrente, 88, may get an answer.

Corrente was Mayor Vincent “Buddy” Cianci Jr.’s director of administration in the 1990s. He worked in that job for almost 10 years, and after he retired in 1999, he received a monthly pension benefit of $5,881.30 based on a gross salary of $91,656.58, according to court documents.

In 2002, he was convicted on racketeering and corruption charges that muddled his right to that money. A jury found that Corrente, recently featured in the hit podcast “Crimetown,” took payoffs while working for Cianci from a business man working undercover for the FBI.

But before joining Cianci’s City Hall team, Corrente worked as a financial specialist in the controller’s office starting in June 1967. He was promoted to the city controller position in 1981, and retired in April 1987. At that time he was awarded a monthly pension of $1,852.61 based on a gross salary of $42,098.45. He gave up those monthly benefits when he returned to work for Cianci, lawyers said.

Supreme Court justices met Tuesday to review a few things:

— An appeal from Corrente, who wants, at minimum, a tax credit for the money he already paid to the government for the pension that was revoked. He is being represented by John B. Harwood, former speaker of the Rhode Island House of Representatives, who argues the Retirement Board’s decision to deny Corrente’s request is “an arbitrary and capricious decision ... [that] lacks any degree of exercising common sense.”

— A cross appeal from the Retirement Board, represented by Raymond A. Marcaccio, who argued that Corrente should not receive the credit because there is no evidence that any taxes were taken from his pension payments from 1999 to 2002.

— A second cross appeal from Mayor Jorge Elorza and the city, represented by John D. Plummer. Plummer, following up on an initial “intervention” from then-Mayor David Cicilline, argues Corrente is not entitled to any pension. He is requesting a new Superior Court trial.

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Old 09-27-2017, 09:53 PM
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MOUNT CARMEL, PENNSYLVANIA

https://www.newsitem.com/articles/pe...n-right-track/

Quote:
Pension pause has put borough on right track


Spoiler:
As Pennsylvania’s pension system was headed for a crisis over the past decade, so, too, was Mount Carmel Borough’s.

It reached a breaking point in December 2012 when council members voted to freeze the pension plan for non-uniformed workers (those who are not police officers, which currently numbers 10) because the borough was $250,000 behind in funding it.

Now, nearly five years later, borough council members have voted to unfreeze the plan, retroactive to Jan. 1, alongside a second motion to convert it from a pension to a 401k-type retirement plan at the beginning of 2018.

• • •

The council’s action has merit on two key accounts.

First, as an employer, offering a retirement plan, though not as common as it once was, is an incentive to attract quality workers. Mount Carmel, like other public and private lower anthracite region employers, is choosing from a limited pool of quality candidates. Having a retirement plan back on the books, even if it’s not as lucrative as a traditional pension, should result in a better hire and, therefore, better service to taxpayers.

Second, the change to a 401k-style plan is prudent because the borough will have less risk. In a “defined benefit plan,” or pension, the employer puts up the money and promises a certain payout at retirement. A 401k is a “defined contribution plan,” whereby the employer specifies a percentage of an employee’s salary or a specific dollar amount, and the employee can also contribute to his or her own plan. What it adds up to at retirement is not guaranteed, but the employer, the borough in this case, knows what it will take to fund its employees’ retirement plans each year, and isn’t at the mercy of the stock market.

More and more employers are replacing defined benefit plans with defined contribution plans, primarily due to the expense and long-term obligations associated with running a defined benefit plan, according to the National Endowment for Financial Education.

• • •

In the end, Mount Carmel Borough will still be offering employees a retirement plan without placing undo burden and risk on taxpayers.

If only Pennsylvania could find a similar solution to its public pension crisis.


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Old 09-28-2017, 01:38 PM
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https://www.teacherpensions.org/blog...-united-states

Quote:
The (True) History of Defined Benefit Pension Plans in the United States

Pensions are for survivors.

That's the first thing that struck me when reading the National Public Pension Coalition (NPPC) short report, “Why Pensions Matter: The history of defined benefit pension plans in the United States of America.” It starts out like this:

Quote:
Pensions, in the broadest sense of the term, have existed since ancient Rome. Soldiers in the Roman army could earn pensions through their military service. The value of these pensions to Roman soldiers helped to maintain the power of emperors such as Augustus. Pensions for military service have continued to exist in one form or another in the two thousand years since.
This is true as far as the history goes, but it’s a telling anecdote, because it's a reminder that pensions benefit survivors. In the past, that meant surviving war. Today, that means remaining in one profession and one state for an entire career. State pension plans assume that less than one-in-five teachers will survive long enough to truly benefit from today’s back-loaded teacher pension plans.


Spoiler:
The report is a few months old now, and it has some useful historical notes, but it also includes a number of attempts to gloss over the true history of retirement savings in this country. To show where the NPPC's history bleeds into a false nostalgia, I’ve pulled out a few sections below and annotated where the report goes wrong:

.....
Quote:
Critics of public pensions often complain that these pension plans have long vesting periods and reward the longest serving employees. That is intentional. In public education, for example, most research points to teachers dramatically increasing their effectiveness during their first few years of teaching and then maintaining that effectiveness throughout their career. They do not lose their effectiveness the longer they continue in their profession. They are more likely to continue teaching at their peak effectiveness rather than decline. Structuring retirement plans to reward teachers that only teach for three or four years does not make sense because that would reward teachers who leave before reaching their peak effectiveness, often to be replaced by someone without any experience. Similarly, with firefighting and policing, there are a lot of sunk costs that go into training new recruits. It is not in the interest of these departments for their new employees to leave right after training, so their pension plans are structured to promote long-term commitment to the profession.
It’s noteworthy to see a union-backed coalition like the NPPC make their priorities this explicit. They’re essentially admitting that they only care about retirement security for those “committed” to the profession. But, because pensions don’t provide positive benefits to teachers until they’ve served for 20 or 25 years, the NPPC’s definition of “commitment” excludes the majority of people of people who enter the teaching profession. To extend the metaphor, they really only care about the survivors in a war of attrition. They’re also overstating the teacher effectiveness research a bit, but, regardless, as a matter of public policy affecting millions of workers, we should work to ensure they ALL have retirement security.

Later they state:



Quote:
State and local governments offer defined benefit pensions to their employees in order to attract the best and brightest to public service. Public employees earn less on average than their counterparts in the private sector, so job benefits like pensions are a proven way to recruit top talent. Also, as discussed above, pensions play a key role in retaining employees in professions like teaching and firefighting.
This claim is not backed by research. To begin with, we don’t have good evidence on how much pensions affect teacher recruitment. Some teachers might choose to teach because of the promise of a pension, but the long wait for a decent pension also might deter some qualified candidates. Moreover, extremely high (and rising) pension costs have played a role in keeping teacher salaries flat in recent years, and those costs have also contributed to large cuts in pension benefits for new teachers.

We do, however, have evidence on pensions as a retention incentive, and it's not nearly as positive as the NPPC claims. As Kelly Robson and I showed in a recent report for Education Next, state pension plans themselves do not assume that qualifying for a pension is enough to alter teacher behavior. At the back end, pensions do have a retention effect on teachers nearing retirement age, but that comes too late to affect teacher retention rates very much. Moreover, if we care about keeping veteran teachers, then we should be concerned about the much larger “push-out” effect that pensions have on teachers who reach the normal retirement age.

Later they revisit the broader argument about retirement security:


Quote:
In the private sector, the shift from defined benefit pensions to defined contribution 401(k) plans over the past three decades has harmed the retirement security of working families. This is because most working families accumulate far less in retirement savings with a defined contribution plan than they would with a defined benefit pension.
This claim seems like it could be true, but it's not. As discussed above, there was no golden era of retirement saving. In fact, researchers have looked at multiple sources of data and found that today’s retirees are doing at least as well, if not better, than prior generations. (Lest you think anyone is cherry-picking data, the links in the prior sentence will take you to work published by the U.S. Census Bureau, the conservative National Affairs magazine, and the left-leaning Mother Jones.)

That doesn’t mean problems don’t exist—about half of all workers today still do not have access to a retirement plan at their jobs—but pension advocates are seizing on the problems of today in order to make a case for a past that never existed in the first place. It's understandable that as a trade group representing large pension plans, the NPPC doesn't want to have a conversation about why public-sector retirement plans like those offered to teachers are getting worse over time, while those offered in the private sector keep getting better. But that would be a more complete reading of the history.



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Old 09-28-2017, 01:44 PM
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UNITED KINGDOM
BREXIT
https://www.bloomberg.com/news/artic...abilities-grow

Quote:
Brexit Bill Swells on Pensions as EU Parliament Draws Red Lines
EU budget data shows pension liabilities rose 5% last year
EU Parliament calls for ECJ jurisdiction during transition

Spoiler:
Efforts to unblock the Brexit stalemate suffered two setbacks on Wednesday as data showed swelling European pension costs would add to Britain’s exit bill and the veto-wielding European Parliament dug its heels in on what kind of deal it would accept.

As U.K. and European Union officials haggle over the size of Britain’s divorce settlement, documents show the EU’s liabilities grew by almost 4 percent in 2016, with the cost of pensions for EU officials rising more than 5 percent. Higher pension costs -- already a controversial part of the bill -- will increase what the EU thinks the U.K. should pay, and risk injecting additional tension into already fraught talks.
…..
Pension Bill

With the fourth round of talks underway in Brussels -- and the breakthrough that’s needed to move on to trade talks elusive -- negotiators are discussing the Irish border, the rights of EU citizens and crucially, the divorce bill. Both sides were hoping for progress after May conceded last week that the U.K. would pay into the budget for two years after it leaves and honor its obligations more broadly.
As Davis vows to go line by line through the EU’s demands, budget documents obtained by Bloomberg showed European pension liabilities rose 5 percent in 2016 to 67.2 billion euros -- adding to the costs that the EU says the U.K. is on the hook for. Pensions were already a thorny issue and Davis said on Sunday their inclusion in the exit bill was “debatable to say the least.” Rising obligations risk irking the pro-Brexit parts of the government, who think the U.K. should pay as little as possible, or nothing, when it leaves.


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