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  #1541  
Old 10-16-2018, 11:23 AM
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WASHINGTON

https://www.ai-cio.com/news/washingt...returns-10-04/

Quote:
Washington State Investment Board Returns 10.04%
The returns beat pension system peers and are the result of the investment organization’s large commitment to private market investments.


Spoiler:
The $100 billion Washington State Investment Board (WSIB) posted investment returns of 10.04% for the 12-month fiscal year ending June 30 net of fees, outpacing the returns of other large public pension plans in the US, show data provided to CIO.

The investment board’s returns beat bigger rivals like the $360 billion California Public Employees’ Retirement System (CalPERS), which had an 8.6.% return, the $223 billion California State Teachers’ Retirement System (CalSTRS), which had a 9% return, and the $160.4 billion Florida Retirement System, which posted an 8.99% return.

The Washington State Investment Board also beat its own custom benchmark of 9.67% and the Wilshire Trust Universal Comparison Service median rate of return of 8.49% for US pensions with at least $1 billion in assets.

How did Washington State Investment officials beat its peers? The system issued no press release on the returns and Chief Investment Officer Gary Bruebaker was on vacation and unavailable for comment.

Washington State Investment Board officials have said in the past that the system’s major allocation to private markets has been an advantage in seeing better returns than other pension systems. Private equity and real estate make up almost 40% of the system’s assets under management, a figure unheard of at other public pension plans.

An analysis by CIO backs that up, showing the system’s large allocation to private markets compared to peers was a key factor in its outsized returns.

Private equity, for example, was WSIB’s biggest-producing asset class in the June 30 fiscal year, with a 15.84% return. The pension organization’s allocation to private equity is also big, $20.6 billion, the second-largest allocation in the US next to the $27 billion private equity program run by CalPERS.

However, what’s even more striking is that private equity makes up 20.6% of the total assets under management at the Washington State Investment Board co-mingled pension trust. CalPERS officials have struggled to maintain an 8% private equity allocation, and as of July 31, the private equity allocation percentage of the total fund had shrunk to 7.6%

The WSIB, which was a pioneering investor in private equity back in 1981, continues to maintain its high allocation to the asset class even as demand to get into funds run by the best-producing private equity players has increased. Private equity general partners have turned away some institutional investors because their funds have been oversubscribed.

WSIB’s second-largest returns in the June 30 fiscal year came from real estate, which produced returns of 14.84%. It also had a large real estate asset class in the comingled pension trust, its $17.1 billion real estate asset class, which makes up 17.2% of its total portfolio.

That compares to CalPERS, which has a $31.9 billion real estate portfolio, but it only accounts for 8.9% of the total portfolio. The Washington State Investment Board’s real estate portfolio is one of the largest percentage-wise of any pension plan in the US.

WSIB’s real estate portfolio also did better than that of CalPERS and most other pension plans.

While Washington State produced real estate returns of 14.84% in the June 30 fiscal year, CalPERS’s overall real estate portfolio, for example, saw returns of 6.8%.

The Washington State Investment Board’s third-best producing asset class was public equities, which produced returns of 11.42%. But this is where the pension is different than other US public pensions. Its $34.6 billion allocation to public equities makes up only 36.4% of the overall pension plan assets under management. Most pension plans in the US have a more than a 50% allocation to equities even as plans have reduced exposure and embraced more private market investments.

The Washington State Investment Board’s worst-performing large asset class was fixed income; the $21.8 billion portfolio produced just a 0.02% return in the June 30 fiscal year.

The Washington State Investment Board’s one-year results are no fluke. It has constantly outperformed other pension plans over the three- and five-year periods. Over a three-year timeframe ending June 30, the pension plan saw an 8.62% return compared to the Wilshire database of public funds median return of 7.18%.

Over a five-year period ending June 30, the WSIB saw a return of 9.5% compared to the Wilshire database median of public pension plans of 8.23%.

The WSIB did slightly underperform the Wilshire pension database on a 10-year basis, which includes the ending period of the great financial crisis. Its aggregated 10-year returns were 6.61% compared to the Wilshire’s median return of 6.69%.


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Old 10-16-2018, 11:23 AM
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NEW HAMPSHIRE

https://www.ai-cio.com/news/new-hamp...-8-87-billion/

Quote:
New Hampshire Retirement System Grows to $8.87 Billion
Fund has beaten up to 90% of its peers over the past quarter-century.


Spoiler:
The New Hampshire Retirement System’s net assets stood at $8.87 billion following an 8.9% investment return in fiscal 2018, the organization reports.

The fund beat its 7.8% benchmark and its 7.25% assumed rate of return thanks to its positive performance in the period ended June 30. Its three-, five-, 10-, 20-, and 25-year returns were 7.7%, 8.7%, 7.1%, 6.4%, and 8.0%, respectively.

Since the financial crisis, the New Hampshire trust fund’s assets have nearly doubled.

In addition, the retirement system has outperformed 90% of its peers over the three- and five-year periods, and 80% in the one-, 10-, 20- , and 25-year periods, compared to the 237 public pension plans in the InvestorForce Public Defined Benefit Net Universe, an analytics tool by data firm InvestorForce. These funds total $464 billion in assets.

Although New Hampshire’s 2018 return was not as high as 2017’s 13.5% showing, assets increased by $581 million from the past year, when they totaled at $8.29 billion.

The plan’s best-performing asset class was domestic equities, returning a net 14.6%, followed by alternative assets (10.9%) and real estate (10.5%). International stocks, cash, and fixed income rounded out the mix at 7.8%, 1.4%, and 0.2%.

Although pleased with the results, George Lagos, the New Hampshire Retirement System’s executive director, said the fund understands the sensitivity of the markets and that results can vary dramatically any given year. “We continue to emphasize that our primary focus is to meet or exceed the retirement system’s assumed rate of return of 7.25% over the long term.”

The fund’s asset allocated 29.7% to domestic equities, 21.5% to fixed income, 19.2% in international equities, 18.6% in alternative assets, 9.2% to real estate, and 1.8% to cash as of June 30.

The retirement system’s funded ratio was 61.8%, according to its latest quarterly report.


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  #1543  
Old 10-16-2018, 03:10 PM
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ASSET MANAGEMENT FEES

https://news.ncsu.edu/2018/10/pensions-management-fees/

Quote:
State Pension Plans Would Be Better Off Avoiding External Management Fees

Spoiler:
Recent research from North Carolina State University finds that state pension plans would be better off avoiding external asset managers when investing their plans’ assets – and would carry substantially smaller unfunded liabilities if they had simply invested in a conventional index fund.

“We set out to answer three questions about state pension plans, their external management fees and the return on their investments,” says Jeff Diebold, an assistant professor of public administration at NC State and co-author of a paper on the work. “First, what influences the amount of money that state pension plans pay in external management fees? Second, do higher fees lead to better performance? And third, how would those pension plans have fared if they had taken the money spent on external management fees and invested it in a conventional portfolio, with 60 percent invested in the S&P 500 and 40 percent invested in an intermediate bond fund?”

To address these questions, the researchers turned to the Public Plans Database, where they were able to find data from 49 state-administered pension plans – spanning 30 states – regarding how much those plans spend each year on external management fees. Specifically, the researchers evaluated data on the performance of those 49 plans, spanning the years 2001-2014.

Their first finding was that if states had to begin paying more money into their pension plans, they became more likely to pay higher external management fees – though this was moderated by plan size. The effect was still seen in large pension plans, but it was less pronounced than was seen in smaller plans.

“This makes sense, in a way, because the pension plans are trying to achieve returns that outstrip the stock market as a whole,” says Jerrell Coggburn, a professor of public administration at NC State and co-author of the paper. “And larger plans may be able to negotiate better fees with external managers.”

“Unfortunately, higher fees did not lead to better performance,” Diebold says. “There was no positive relationship between what plans paid in fees and how they performed. You don’t always get what you pay for.”

For the third research question, the researchers only evaluated 42 of the 49 plans, because the evaluation required at least 10 years of data. But for those 42 plans, the researchers found that the more a plan spent on external fees, the more it lost – relative to what it would have made investing in the conventional portfolio of the S&P 500 and intermediate bond funds.

For example, the plan that spent the fourth least amount of money on external fees would have cut 5 percent of its unfunded liability if it had invested in the conventional portfolio. The median plan would have eliminated 14 percent of its unfunded liability. And the plan with the fourth highest fees would actually have recouped 44 percent of its unfunded liability – approximately $4.2 billion – if it had invested its external fees in the S&P 500 and intermediate bond funds. In this context, an unfunded liability is the amount of the pension plan’s obligation for which the plan has not set aside money.

“And the losses may actually be worse than that, because the study doesn’t account for carried interest,” Coggburn says. “Carried interest refers to a percentage of any returns that external managers earn, over and above the flat fees they take for their services. And carried interest can account for around 20 percent of earnings from an external manager’s investments. We couldn’t account for carried interest because almost no plans share that information publicly.”

“This work suggests that the fees associated with external managers – and the dearth of corresponding benefits associated with those fees – contribute to an unnecessary risk of underfunding state pension plans,” Diebold says.

The paper, “The Determinants and Opportunity Costs of External Management Fees for State-Administered Pension Plans,” is published in the journal Public Budgeting & Finance.

-shipman-

Note to Editors: The study abstract follows.

“The Determinants and Opportunity Costs of External Management Fees for State-Administered Pension Plans”

Authors: Jeffrey Diebold and Jerrell Coggburn, North Carolina State University

Published: Aug. 29, Public Budgeting & Finance

DOI: 10.1111/pbaf.12207

Abstract: Private investment firms receive billions of dollars in fees to actively manage the assets held within state pension funds. We examine the determinants of the fees paid and find that more financially burdensome plans tend to pay more. The magnitude of this relationship declines as the size of the plan increases, suggesting economies of scale. These fees do not appear to be associated with higher pension fund returns. Finally, we calculate the opportunity costs of fees and estimate that most pension funds would be better financially positioned today if they had, instead, passively invested the fees in broad-based market indices.


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  #1544  
Old 10-16-2018, 03:22 PM
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CHICAGO, ILLINOIS
https://news.wttw.com/2018/10/15/chi...-public-assets
Quote:
A Chicago Pension Fix? Using Revenue from Public Assets

Spoiler:
A government policy researcher and former north suburban mayor has a new idea for paying back Chicago’s pension debt: directly depositing profits from government-owned assets into the city’s pension funds.

Michael Belsky, executive director of the University of Chicago’s Center for Municipal Finance and former mayor of Highland Park, wrote an op-ed in Crain’s Chicago Business proposing an asset transfer such as distributing excess cash from city-owned Midway Airport into a pension fund.

Belsky said revenue generated from “essential purpose assets,” such as a city water system, would still be reinvested into the asset’s infrastructure.

“You have to keep operating it and pay its debts, but if there are extra fees and excess cash, that can go towards paying down the pension,” Belsky said.

Another idea is selling city-owned real estate, which Belsky said can be placed into a pension fund and developed or sold if the property increases in value.

As for the state’s ballooning bill of $130 billion in unfunded pension liabilities, Belsky said the “lockbox” amendment to the Illinois constitution that passed two years ago would likely keep the state from paying off pensions with money raised from tollways, which he called “steady producers of cash flow.”

Since Mayor Rahm Emanuel first floated the idea of borrowing $10 billion in municipal bonds to tackle Chicago’s $28 billion of pension debt, two events have possibly jeopardized that plan.

First, Emanuel announced he would not seek re-election, dropping a political bombshell on the city, and secondly, the Federal Reserve increased its benchmark interest rate and signaled plans to continue raising rates.

Belsky joins “Chicago Tonight” to discuss possible solutions to pension problems in the city and state.
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Old 10-16-2018, 03:24 PM
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Don't have a good way to link to this:

http://ipfiusa.org/


On their front page, they have a "pension gap calculator" where it gives unfunded liability amounts, by state, and you can change the discount rate & mortality assumptions

http://ipfiusa.org/about-the-ipfi-pe...ap-calculator/

Quote:
About the IPFI Pension Gap Calculator
The Institute for Pension Fund Integrity (IPFI) is dedicated to the proper management of our nation’s public pension funds.One of the key components of proper management is ensuring that fund managers are using realistic assumptions to value their pension liabilities. Unrealistic assumptions can lead to an undervaluation of plan liabilities which in turn leads to states contributing less than they should. This process compounds over years and results in skyrocketing unfunded liabilities. In order to raise awareness of the seriousness of this issue, we at IPFI have designed the Pension Gap Calculator, which allows everyday citizens to see what happens to unfunded liabilities as you adjust two of these assumptions.

One of these assumptions is a plan’s assumed rates of mortality.A mortality rate tells you the probability that someone at a particular age will die in the next year. For example, the RP-2014 mortality table published by the Society of Actuaries says that an 85-year-old retired man has a mortality rate of approximately .0743. This means that there is just over a 92.5% chance that such a man will live an additional year.

The calculator shows what happens if we decrease these retiree mortality rates between 0% and 10%.At the 0% end, the above mortality rate would remain at .0743 and at the 10% end it would be lowered to .0669. This means that the 85-year-old man from above would be 10% less likely to die in the next year compared to the initial estimate. When a user moves the tool, the reduction is applied across the board at every age level and is then used to estimate the additional rise in liabilities. As retirees live longer, the amount of benefits owed to them increases, causing liabilities to rise.

The second assumption used for the tool is the assumed rate of return.This assumption is often considered the most important assumption for pension valuations. In earlier decades, the norm was for public plans to assume a long-run rate of return of around 8.5%. During the 90s and early 00s, this wasn’t altogether unrealistic. However, since the Great Recession it is clear that plans need to reevaluate these assumptions with some experts suggesting they lower them to 5%.

But what does the unfunded liability look like if the assumed rate of return is lowered?This is where the calculator comes in with the ability to adjust the rate return from 2% up to 15%. As you lower the assumed rate of return, you will increase the level of unfunded liabilities. Users can watch in awe and terror as the bar graph skyrockets as the module moves closer and closer to 2%.

Of course, the calculator displays estimates only.Which might lead you to wonder how your state has performed in terms of meeting the assumed rate of return. If we look at the annualized ten-year rates of return for state pension plans since 2008, it is clear that failing to meet the assumed rate is the norm and not the exception. You can explore this reality using the following spreadsheet. [click to download]

In order to create the calculator, our team spent months combing through the Comprehensive Annual Financial Reports for all 50 states to build a database of pension liabilities and actuarial assumptions.By creating a straightforward tool that anyone can use, we hope that individual citizens can become more informed about our nation’s current pension crisis and that our calculator will create even greater transparency in the pension process. Please be advised that the numbers in the tool are estimates and are for research purposes only. IPFI is not responsible for the financial decisions of retirees.
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Old 10-16-2018, 04:33 PM
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TEXAS

https://www.statesman.com/news/20181...texas-teachers

Quote:
Pension checks delayed for hundreds of recently retired Texas teachers

Spoiler:
One-third of recently retired Texas teachers were delayed in receiving their first pension checks after the state transitioned to a new pension processing system.

In previous years, the Teacher Retirement System of Texas would have sent out almost all checks by Sept. 1 to teachers who had retired over the summer — about 20,000 annually.

This year, the system had sent out checks to two-thirds of recent retirees by Sept. 1, forcing some who were skipped to dip into savings or take cost-cutting measures.

Pension spokeswoman Rhonda Price said some of the delays were due to the learning curve for employers — school districts and some colleges — to navigate the new processing system and to complete required reports on their retirees.

As of Thursday, 873 retirees still hadn’t received their checks because of the wait for more information from retirees and their employers, said pension officials, who insisted that the new processing system was not to blame.

Retirees and their advocates fear the delays were due to tighter agency policies on the kinds of information it required, but pension officials said it’s not out of the ordinary to see this many retirees without their pension checks yet.

“The summer months of May, June, July and August are the busiest months for TRS retirements,” Price said.

The average delay was up to 10 days after the 31-day waiting period from when the pension system received all required documents from retirees and employers, agency officials said.

Price said the new processing system, which is more reliable and will provide retirees with access to more online, self-service features, replaced an outdated administration system that was hard to maintain.

Recent retirees will receive back pay for months that are owed to them, Price said. Teachers who retired before this summer were not affected.

Tim Lee, executive director of the Texas Retired Teachers Association, said the delay was an unfortunate start “to what is supposed to be a really happy time in someone’s life.”

“These folks are telling us they can’t make their car payments, they didn’t expect their retirement to start off this way, their bills are getting past due; some have submitted applications to our foundation looking for some financial relief,” Lee said.

As of Thursday, Dayne Antwine, 60, had not received four months of payments — about $8,000 — that were due to him.

When he retired from the Beaumont school district as an elementary school teacher in May, he envisioned his own home where he could invite his children and grandchildren to visit. Instead, he’s been living with his children and has only $170 in the bank.

“I had all these great expectations, and I dreamed of getting one of those tiny houses. I didn’t want to be a burden on my kids, and now I’m being a burden on them,” said Antwine, who taught for 26 years.

Antwine said he was told he would get his first check by Sept. 1, then was told two weeks later that he had to submit additional documents regarding a recent divorce.

Ellen Waters, 65, was told in August that the system needed more information about a part-time job she had recently taken at Sul Ross University. Once the information was added on Aug. 29, system officials said her first check would arrive in 60 to 90 days.

Waters had to withdraw about $1,500 from her savings account to pay for two car notes and medical bills, and her husband took on more home-repair jobs. She received her check a week ago after writing to Gov. Greg Abbott’s office about the delay.

“I worried about paying the bills. I worried about making sure we had food on the table. If we had to go to the hospital, how was I going to pay for that? It was just a big strain and big worry,” said Waters, who retired from the Alpine school district as an educational diagnostician.

Lee, who compliments the system’s effort in administering benefits to hundreds of thousands of retirees, said the system needs more employees, including an internal ombudsman with whom retirees can share their concerns.

He also said the Legislature has forced the system to scrutinize whether retirees and employers are following rules.

“There seems to be a little bit more of just a gotcha approach,” Lee said.

The latest issue with the system is among multiple challenges that retirees are running into, including stagnant retirement payments and rising health care costs. The last time the state gave a cost-of-living adjustment to retirees was in 2013, but it only affected those who retired before Aug. 1, 2004. Some haven’t seen an adjustment in more than a decade.

Waters opted out of receiving health insurance coverage though the system, once considered a draw to the teaching profession, because the Legislature increased premiums and deductibles last year. There were 36,000 fewer retirees receiving health benefits through the system this year than in 2017.


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Old 10-16-2018, 06:01 PM
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NEW YORK CITY
ESG
DIVESTMENT

https://www.newsday.com/long-island/...gas-1.21918506
Quote:
City workers' pension funds hinge on Mayor de Blasio's environmental stand
Tens of thousands of Long Islanders' pension funds are invested in gas and oil holdings. New York City wants to divest about $3.7 billion from them because of climate change.


Spoiler:
The pension funds of tens of thousands of Long Islanders who work for New York City are the stakes of a plan by Mayor Bill de Blasio to shed billions of dollars in gas and oil holdings as a stand against climate change.

In January, Democrats de Blasio and Comptroller Scott Stringer, who administers almost $200 billion in five funds, set the wheels in motion for divestment. The mayor laid out what he described as a two-pronged attack on the fossil-fuel industry to save the environment: The divestment plan and a lawsuit against five major oil companies that sought billions of dollars in damages to pay for the effects of rising sea levels, coastal flooding and the like.

Not only do fossil-fuel companies hurt the environment, argue de Blasio and Stringer, oil and gas holdings are simply bad long-term investments. "Broken and dying" is how the mayor has described the industry. Three of the city's five pension funds are on board and considering the plan, and two have declined to participate.

The plan, though, can't go anywhere without the formal approval of the funds' trustees, who are charged with protecting the workers' financial interests. They have commissioned studies to determine whether the funds would grow, shrink or stay the same and how or whether to divest. To go forward, they must show how the funds' returns would essentially remain unchanged or increase.

ADVERTISING



The trustees' decision over the soundness of divestment becomes even more charged because the state constitution guarantees the full pension benefits to all retirees.

"If the pension fund doesn’t earn enough money, the legislature is going to have to tax the citizens more,” said Dick Ravitch, a fiscal watchdog and former lieutenant governor, who doesn't oppose divestment.

The push-pull involving politics and how to invest government pensions isn't exclusive to New York. From California to Massachusetts, environmentalists are pressuring public pension funds to dump fossil-fuel holdings with the idea that divestment will help force energy companies to stop polluting the water, air and land.

For two Long Islanders with city pensions, the choice is clear. Vincent Galante of Bethpage, who is still on the job as a chief engineer, is against divestment. Retiree Nelly Rodriguez of Uniondale is a firm yes.

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"I don't care if it's oil and gas stocks, I don't care what it is. Their job is to make money for that fund. There should be no political agenda involved here," said Galante, 54, who specializes in heating, air conditioning and ventilation systems in Manhattan.

Nelly Rodriguez, 63, of Uniondale.
Nelly Rodriguez, 63, of Uniondale. Photo Credit: David Gard | For NJ Advance Media
Rodriguez, 63, who retired last year after 40 years as a social services timekeeper and payroll worker, thinks the city can both take a stand and make a smart investment.

"With this global warming that is happening — with the floods and all the stuff that we've been getting lately, all the disasters — my funds should be invested into the good energies, the green energy," Rodriguez said. "Not only would it make more money, I feel like it would be better for the environment."

Green money
The city has one of the largest pension portfolios in the world, with a value of $197.8 billion, according to the city comptroller's office. Of the city's roughly 384,000 municipal employees, about 338,000 — 88 percent — belong to one of the city's five retirement funds, according to the Department of Citywide Administrative Services. The funds are police; fire; two for public school teachers and support staff; and one for all the other municipal workers, from secretaries and accountants to groundskeepers and librarians. The others opted out or have other retirement arrangements, according to the mayor's office.

De Blasio's predecessor, Mayor Michael Bloomberg, got the ball rolling on climate change when he launched major initiatives in 2007 to fight global warning and to plant a million trees in a decade. De Blasio picked up the mantle when he took office in 2014. He promised the city would reduce greenhouse emissions by 80 percent by 2050 and start a green building plan.

"Climate change is an existential threat to New Yorkers and our planet. Acting now is nothing short of a moral imperative,” de Blasio said when he unveiled the emissions initiative. “New York City must continue to set the pace and provide the bold leadership that’s needed."

The reduction plan turned out to be a nod to bigger moves. In September 2017, New York City joined other international cities, including Paris and Melbourne, in vowing to uphold the clean energy standards outlined in the Paris climate accord after the United States backed out of the agreement a few months earlier. Then, came the lawsuit and the divestment plan.

The lawsuit was dismissed in July — the city is appealing — and the divestment plan is still being studied. When de Blasio unveiled the plan 10 months ago, he spoke of divesting $5 billion in gas and oil holdings from the five funds. Today, the total amount stands at about $3.7 billion, according to his office, from three funds after the police and firefighter funds declined to participate.

"Certainly we want to be socially responsible, but at the same time we don't believe the pension funds should be politicized," said Jake Lemonda, 61, of New Hyde Park, who heads the Uniformed Fire Officers Association.

Last month, just ahead of an international climate change summit, de Blasio and London Mayor Sadiq Khan launched an international fossil-fuel divestment network of cities that also includes Paris, San Francisco, San Jose, Oslo and Pittsburgh.

De Blasio also pledged to double the city's pension investments in renewable energy and energy efficiency in the next three years — to $4 billion.

“New York City leads from the front when it comes to the fight against climate change,” de Blasio said told summit participants. “We’re taking a stand for generations to come with our goal to double our pension investments in job-creating climate solutions."

At odds
Harvard Law School's Robert Sitkoff and Max Schanzenbach of Northwestern University's Pritzker School of Law have studied socially conscious investing and fiduciary duty.

"We argue that reasonable people disagree" on the strategy, Schanzenbach wrote in an email.

Someone who opposes fossil-fuel divestment is state Comptroller Tom DiNapoli, who oversees the state pension fund that covers a million municipal workers, retirees and beneficiaries statewide, including in Nassau and Suffolk counties. The $207 billion state pension system holds between $4.4 billion and $7.2 billion in fossil-fuel investments, depending on how the industry is defined, said Matt Sweeney, DiNapoli's spokesman.

“We’re an investor, not a divestor,” Sweeney said of the state pension fund.

In December, DiNapoli resisted a call by Gov. Andrew M. Cuomo to come up with a plan to divest the fund's holdings from fossil-fuel companies. The state, the comptroller said, has more leverage to do good when it flexes its stockholder muscle.

"We've shown that shareholders have the power to compel major corporations, like ExxonMobil, to address climate change," DiNapoli posted on his office's website.

For public pension expert E.J. McMahon, all that should matter is the interests of the beneficiaries. A fund, he said, should invest in stocks that yield the most profit.

“The focus should be on earning secure, adequate returns, period," McMahon, a fellow at the conservative Empire Center for Public Policy, wrote in an email. "Anything else is pure politics, and not in the best interest of New York public employees.”

Retired New York City Transit manager Mathai Mathew started drawing his pension in 2010. He thinks retirement funds should stay in fossil fuels — and put some money into green energy technology like solar power.

Retired New York City Transit manager Mathai Mathew.
Retired New York City Transit manager Mathai Mathew. Photo Credit: Debbie Egan-Chin
"We should continue investing in it, developing it and promoting it," said Mathew, 70, of Albertson. "At the same time we should be the leader in managing the pollution."

Divestment is a "win-win situation" for Jon Forster, 64, of Park Slope, Brooklyn, who retired after 37 years with the city as a specialist in human rights and lead-poisoning prevention.

"We see that the investments in oil and gas are not good long-term investments," Forster said. "I'm concerned about all New Yorkers and human beings across the world."

In 2017, New York City's five municipal pension funds paid out benefits totaling $12.9 billion to more than 332,000 retirees or beneficiaries.

The average per-capita payment to all beneficiaries in 2017 was $38,711, with a median of $34,259.

A breakdown of where the money went:

The city: $5.5 billion to 152,638 recipients.

Nassau: $1.37 billion to 28,769 residents; average annual pension was $47,618.

Suffolk: $973.9 million to 19,232 beneficiaries; average annual pension was $50,638.

Elsewhere: The rest of the funds went to recipients scattered across the region and beyond.

Source: New York City's Independent Budget Office


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Old 10-16-2018, 06:02 PM
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CHICAGO, ILLINOIS

https://chicago.suntimes.com/news/ra...isis-end-year/

Quote:
Emanuel vows to confront pension crisis ‘before the end of the year’

Spoiler:
Mayor Rahm Emanuel vowed Friday to confront Chicago’s skyrocketing pension payments “before the end of the year,” but he refused to say whether the solution he seeks will include $10 billion in pension borrowing.

“I’ve never been patient. I have a sense of urgency to get work done. And I have a moral commitment—-both to the public and to my successor–to leave the city better off and in a stronger position than the day I walked in,” the mayor said.

“We’ve always confronted challenges regardless of political risk . . . I’m a mayor for all eight years, not 7 1/2 . . . I’m gonna deal, first with the budget. I will, before the end of the year, address the issue of pensions.”

Under repeated questioning by the Chicago Sun-Times, Emanuel refused to say whether he would revisit the $10 billion borrowing, even though the potential savings has been diminished by rising interest rates.

Nor would he say whether there is a viable alternative that would minimize the need for another punishing round of post-election tax increases.

“I’m gonna address the issue of pensions, and you’ll just have to wait for that,” he said, playing it coy.

Emanuel’s lame-duck status has emboldened aldermen who have taken a series of tough votes, just to begin to solve Chicago’s $28 billion pension crisis.

Chicago taxpayers have already endured a parade of property tax increases for police, fire and teacher pensions, two increases in the monthly tax tacked on to telephone bills and a 29.5 percent surcharge on water and sewer bills.

It’s not at all clear whether Emanuel still has the juice to push the pension borrowing through the City Council.

Even his own Chief Financial Officer Carole Brown acknowledged this week that, “Your political capital changes when you’re not running for re-election.”

But during Friday’s interview, Emanuel bristled at the suggestion that his lame-duck status has diminished his ability to finish the job he started.

“The first test [after he announced he wasn’t running] was a vote I had on e-cigarettes. And we passed it in 24 hours overwhelmingly,” the mayor said.

“I believe this budget will pass. We’ve never not passed a budget obviously. And never had to struggle. In 7 1/2 years, never lost a vote. So, I don’t buy that” claim that his political capital has diminished.

In late August, Emanuel offered a spirited defense of the pension borrowing plan — even after mayoral candidate Paul Vallas warned that it would put beleaguered Chicago taxpayers in a “financial straightjacket.”

The mayor initially planned to rush the borrowing through the City Council in September — before introducing his final city budget.

That timetable was dramatically altered on Sept. 4. That’s when Emanuel touched off the political equivalent of an earthquake by choosing political retirement over the uphill battle for a third-term.

After that, the budget became the primary focus because, as Brown put it, “We know we have a finite amount of time.”

Brown said this week she still believes the $10 billion borrowing makes “financial sense if we can achieve the right rate.”

“Whether or not we do this, the next administration will be faced with how to pay more than $277 million in pension payments next year. It’s what they’re gonna be looking at when they do their 2020 budget,” she said.

“If we can come up with a financially sound way to stabilize our pension funds while we still make contributions, but make those contributions more manageable over time and lower the cost of funding our pensions, I don’t know why we wouldn’t consider it. Which is why the mayor is still considering it.”

But if interest rates continue to rise, Emanuel may be forced to shelve the borrowing and find another way.

“If it doesn’t cost us money in the long run, we should do whatever we can that’s fiscally responsible to avoid the big hit . . . But with interest rates rising, I don’t know how feasible it will be,” Ald. Joe Moore (49th) said earlier this week.

After a five-year ramp to actuarial funding ends, Chicago taxpayers will be on the hook to keep city employee pension funds on the road to 90 percent funding.

By 2023, the city’s contribution to all four funds will nearly double, from $1.2 billion this year to $2.1 billion, according to the city’s annual financial analysis.

The $10 billion pension borrowing was tailor-made to soften the post-election blow.

But municipal finance experts have raised concerns, pointing to pension-bond defaults in Detroit, California and Puerto Rico.

They wonder what would happen if the market tanks and what specific city revenue would be used to back the bonds, now that Emanuel has isolated sales tax revenue in a special fund and used that “securitization” structure to refinance $3 billion in city debt.


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Old 10-16-2018, 06:06 PM
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SANTA MONICA, CALIFORNIA

http://santamonicalookout.com/ssm_si..._Hall_Pay.html

Quote:
PART II: Council Candidates Tackle Pension Debt, City Hall Pay

Spoiler:
October 15, 2018 -- The City's pension debt is rapidly reaching half a billion dollars and its workforce is among the highest paid in the state. The Lookout asked the City Council candidates what they plan to do.

Unfunded pension liabilities for the City of Santa Monica have reached $461 million. What should the council do to address the debt?

SCOTT BELLOMO

We need to have ongoing resident advisory committees that participate in the review of the use of funds and debt management. The residents pay a significant portion of the bills, so the residents should have a voice in the decision-making process. We need to have frank discussions and look at all options.

A first step would be to have an independent third party look at the current staffing levels to determine if the city is operating efficiently. Is the city overly generous relative to comparable cities? Would offering early retirement have cost savings?

Until the city can meet its financial obligations, we must scale back or stop all pet projects that are overpriced, such as the $2.3 million bathroom at Clover Park. We need to stop hiring, with the exception of police. How can we justify paying premium prices and adding more staff when we have a $461 million liability?
SUE HIMMELRICH

We have discussed this issue in the Audit Subcommittee and are now assembling a committee of individuals, including representatives of our employee unions, to look at our alternatives in depth. I have asked to be a member of that committee. We also have hired an actuarial expert to advise the committee and our staff. We have already taken the unusual step of paying down our CALPERS liability by $45 million in the last year.

I am looking forward to learning in the course of the serving on this committee what avenues are available to us to best reduce this liability.
KEVIN MCKEOWN

We’ve already begun to pay down future obligations, and new employees do not receive the same pension benefits historically given to those who committed to public service instead of more lucrative commercial jobs.

It’s important to remember that our pension obligations were fully funded until 2008. The Great Recession was weathered well by our City, because we had been fiscally prudent. Other communities did less well, and the California Public Employees' Retirement System (CalPERS), heavily invested in the stock market, was especially devastated.

We, like every other California governmental agency reliant on CalPERS, now must make up the losses of a decade ago. At the time we agreed to pension terms for long-term employees, the funding was there. We’re still obligated to keep our employment promises, and we will do so by continuing to pay down the debt and limit the obligations we incur with new employees.

GREG MORENA

As an audit commissioner and finance professional I understand this issue. It is critical that we defend our credit rating by constantly evaluating our assets vs. the amount of unfunded liabilities in order to maintain our AAA rated bond status.

It’s important that our community knows that we no longer offer pensions that we cannot afford, we have stopped the bleeding. At this point we are at the mercy of Calpers management. Going forward we should look for alternative investment vehicles that can earn a better return than the CALPers fund and we should explore potential risk-averse investments such as Santa Monica real estate.
PAM O'CONNOR

The City has been paying down its unfunded pension liability ($1.3 million/year) for several years to take advantage of prepayment discounts. But pension rates are rising due to external actions of the California Public Employees Retirement System (CalPERS).

The City is working with its employees to share the costs of pension contributions. The City Manager is convening a Pension Advisory Committee to consider approaches to the issue. The Committee will start soon and report its findings to the Council in early 2019.

Crucial going forward is for the City to retain its strong fiscal health (the City has AAA bond ratings from all three national credit rating agencies). To ensure a strong fiscal foundation going forward the City is moving to a performance-based budgeting process and at its last Council meeting (10/9) adopted a Performance Management Policy to transition to a reimagined, performance-based biennial budget to prioritize allocation of resources.


ASHLEY POWELL

I do want to say that I think that unfunded pension liabilities, while concerning, should not scare us provided we feel confident of being able to pay for them in the future. Our main goal should be that future expected economic growth will generate revenue necessary to cover these pensions and that we get the most effective government service from those who have earned pensions with Santa Monica.

For limiting the growth of unfunded pension liabilities, we should consider raising retirement ages and requiring longer vesting periods for public workers before pensions can be earned for new city employees. We should also look at the possibility of having defined benefit plans for those who retire locally in the state and defined contribution plans for those who don’t.

Santa Monica has among the highest paid government workers in the State. Do you think residents are getting their money's worth?

SCOTT BELLOMO

Santa Monica’s pension debt is among the highest in the state. We have some of the highest salaries among public employees, along with very generous benefits packages. We have more personnel than similar cities. Our City Manager makes more than a US President.

What are the residents of Santa Monica getting in return?

As a businessman, I define “ROI” as return on investment. But as a resident, I define “ROI” as quality of life. The salary costs we pay are not providing the commensurate quality of life that one would rightly expect.

Is crime under control? No. Is traffic getting better or worse? Worse. Is the homeless population shrinking or growing? Growing.

I think the developers are getting their money’s worth. I think Silicon Beach businesses are getting their money’s worth. But I do not think Santa Monica residents are getting their money’s worth.
SUE HIMMELRICH

This question does not accurately represent our compensation for Santa Monica employees.

The truth is that while “Santa Monica had the highest median senior leadership level cash wages among peer cities at $214,842, which is 14.5 percent ($187,689) above the peer median,” “the median value of cash compensation (including base pay and overtime) amongst all of Santa Monica’s employees was $86,077, which falls below the peer median ($91,600) of cash compensation.” See page 17 of Final Compensation Study Report.

In other words, our higher level employees are above the peer median and our lower level employees are below the peer median. In response to this, the Council directed as part of the new compensation guidelines that the difference between salary levels be compressed to raise the lower end and decrease the upper end.

KEVIN MCKEOWN

First, let’s correct the assumption in that question: SOME Santa Monica employees are outliers in terms of compensation, but a recent review showed that the majority rank and file City employees are far closer to the average for comparable cities, and some are actually paid below average.

I have now worked together with a whole generation, twenty years, of Santa Monica City Employees. We hire the best, and they are extremely motivated and responsive. It’s only fair that their compensation and benefits reflect their professionalism.

What I want to do, though, is compact the pay grades, reducing the spread between our lowest paid city workers, who deserve compensation that allows them to be resident members of our community, and our highest paid, whom we sometimes must bid for in competition with other cities for the very best top management.
GREG MORENA

Yes. Santa Monica government workers are amongst the best anywhere. We benefit from an exceptionally-skilled workforce that we wouldn’t attract at lower salaries. Although our overall payroll is costly, it is important that we continue to offer government workers competitive salaries to recruit the best and brightest, and ensure that the employees themselves can afford to live in the city.


PAM O'CONNOR

Santa Monica residents expect a high level of service, infrastructure and a wide range of facilities and programs. The City is taking actions to better manage and measure performance.

City workers are taking on ‘total workplace’ initiatives to modernize the way the business is conducted and services delivered. Efforts are being undertaken to streamline or eliminate bureaucratic practices that no longer serve useful purposes.

In addition, new technological tools are being adopted to deliver better and faster results more affordably. And most of the people who do this work are committed to delivering the highest quality of service to the City’s residents.


ASHLEY POWELL

Yes, while we do need to make sure that they are sustainable over the long term, good salaries help ensure that we bring in the best people to work for us.


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Old 10-16-2018, 06:06 PM
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BRAZIL

https://www.usnews.com/news/world/ar...sector-pension

Quote:
Brazil Leftist Candidate Would Reform Public Sector Pension

Spoiler:
SAO PAULO (REUTERS) - Brazil leftist presidential candidate Fernando Haddad said on Monday that if he wins the election this month, he would undertake public sector pension reform in order to unify public and private rules.

Speaking at a press conference in São Paulo, the Workers Party candidate also acknowledged his party, which ran Brazil for 13 of the last 15 years, had made errors and was willing to correct them, without "throwing the baby out with the bath water."

Haddad is seen as unlikely to win the Oct. 28 run-off.


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