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  #911  
Old 01-22-2018, 11:47 AM
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Mary Pat Campbell
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It's just a google doc that has my record of every time I grabbed someone using the 80% funding myth since October 2014.

This is my blog category:
http://stump.marypat.org/category/80-percent-funding/

and this is the 2017Q4 post:
http://stump.marypat.org/article/879...ercent-funders

and here's a graph:
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  #912  
Old 01-22-2018, 01:23 PM
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Looks like it is in decline. Are people reformed or are you less vigilant?
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  #913  
Old 01-22-2018, 01:25 PM
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Quote:
Originally Posted by Masked Avenger View Post
Looks like it is in decline. Are people reformed or are you less vigilant?
I have a theory -- the bar is getting lowered to 60% or 70%.

My news alert is set up for 80%. I have had other people emailing items I had missed because of the moving of goalposts:
http://stump.marypat.org/article/867...new-80-percent

Spoiler:
I think you can see why the “80% is healthy!” goal mark is not very helpful for messaging right now… because most states aren’t there. Many more are in that “safe” 60% – 80% range… and there are too many that fall below even the 60%.

So I may need to reboot my Hall of Shame next year in light of the bogus 80% being replaced by an even-more bogus 60%.

But hey, y’all are Jonny-come-latelies. I already had noted goalpost-mover Dean Baker got ahead of the pack years ago:


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  #914  
Old 01-22-2018, 04:49 PM
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Quote:
Originally Posted by twig93 View Post
A few gems from the second article:



When your funding ratio is in the low 30s, I'm not sure the level of precision in measuring it makes a whole heckuva lot of difference. Doesn't absolve the actuaries of their responsibilities, but at those funding levels, who cares? The fund is in serious serious trouble no matter what interest rate assumption you use.
[red]Time to increase the long term investment assumption to 15%[/red]
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  #915  
Old 01-22-2018, 05:44 PM
Pension.Mathematics Pension.Mathematics is online now
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Pension actuaries now are specifically taught to not do these! a good article that is part of the exam syllybus:

https://www.actuary.org/files/PPPTF_...Report_c_0.pdf

I am not saying that Mr.Sharpe is completely innocent, but as an actuary that was trained many years before the standards were updated, he was likely following the status quo / the instructions of his clients (public employers).

In general, this is a case of competing interests resulting in future retirees getting screwed over:

-Current generation of tax payers (and active plan participants) want to make low contributions (human nature)

-Elected officials seek re-election by the tax payers, therefore they want to balance budget, especially in the short-term (i.e., they don't really care if the plan ends up terminated 20 years from now)

-The actuary (Mr.Sharpe) is likely indifferent, but would follow the status quo and use optimistic assumptions (such as outdated mortality) as instructed by his client, which happens to be public employers, who want both:
  1. Minimal conflict with elected officials, that is, they are okay with low contribution levels;
  2. Good pension benefits to attract and retain public employees, this increases pension liabilities and benefit payments.

-The above 2 items cause the health of the plan to deteriorate.

-As a result, future retirees suffer damage at the end when the plan finally collapses and is terminated.

P.S, none of this (including the adaptation of of financial economics) would have happened if the stock market never crashed, outdated mortality assumption was only a catalyst to poorly funded public pension plans.

Last edited by Pension.Mathematics; 01-22-2018 at 06:34 PM..
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Old 02-24-2018, 10:17 AM
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http://www.mywebtimes.com/news/local...1ff54f54a.html

Quote:
Pension panel spars with city

Spoiler:
Streator's firefighters pension board accuses the city of shorting its fund by more than $120,000 this year.

The city is contributing $635,000 to the fund, an amount recommended by a consultant who was recently disciplined by his professional organization and has attracted national media coverage for his controversial methods.

In early January, all five pension board members, including two mayoral appointees, signed a letter to the City Council, contending the city's underfunding of pensions has had a "crippling" effect on the fund.


By accepting the current $635,000 tax levy for the fund, the board said, "the city is knowingly and willingly choosing to underfund pensions."

In a letter last week to the board, Mayor Jimmie Lansford said he took "personal offense" at the pension board's assertions.

"The city, lawfully, prudently and responsibly manages its various financial obligations — to firefighters and others — in accordance with current accounting and budgeting practices," the mayor said. "I understand that you would like to see a higher level of funding transferred to the fire pension fund; but for you to make the claims you have made simply because you did not receive the money is irresponsible."

He added, "Gentlemen, it is time to dial back the confrontational and accusatory rhetoric, and together find solutions for the various issues facing our community."

For years, the state has received its recommendations on pension contributions from the state Department of Insurance, but Lansford said it was not received on time this year, so the city went with Timothy Sharpe, an actuary in the Chicago suburbs. The mayor also questioned the state's methods.

The mayor suggested the pension board and the city administration work together to jointly select an independent actuary. If the two sides move quickly, he said, the new actuary can prepare a report in time for the city's 2019 tax levy ordinance, which will be voted upon late this year.

The Department of Insurance actuary suggested the city contribute $775,000 this year. The pension board said $756,000 was required "to simply pay necessary bills."

National attention

In January, the American Academy of Actuaries issued a news release announcing it reprimanded Sharpe for numerous violations of rules that require actuaries to act with competence and perform their services with skill and care.

Last February, Wirepoints.com reported a committee of the American Academy of Actuaries recommended charges against Sharpe. At the time, Sharpe responded on an online comment board that the charges levied against him were false and unfounded.

"(The charges) were initiated by competitors out to destroy my business and damage my reputation," he wrote. "I am defending myself vigorously and expect to be vindicated in what are supposed to be confidential proceedings."

In 2015, the New York Times ran a story about how actuaries across the country were providing bad projections to government pension boards. Sharpe was presented as an example.

According to the New York Times, an official in La Grange, a Chicago suburb, found Sharpe was using a mortality table from 1971 that showed that the town's 100 police officers and firefighters were expected to die, on average, before reaching age 75, compared with 79 under a more recent table.

This is significant. A shorter projected lifespan means a lower annual contribution to pension funds. If members' average lifespan ends up longer, that will put pension funds in a long-term squeeze.

A trustee in La Grange called out Sharpe, but the manager and council majority sided with the actuary. The trustee said he had the support of fire and police pension board members.

The Times said in the 2015 story that Sharpe had the biggest market share of police and fire pension business in Illinois.


Sharpe couldn't be reached for comment.


Inaccurate numbers?

Kurt Snow, president of the Streator firefighters union, said Sharpe's report does not accurately reflect the number of current members in the fund and lists incorrect percentages for retirement and widow benefits.

"The question arises that if the city manager knew that the numbers were inaccurate, why would he suggest to the council to move forward with it?" Snow asked in an email. "If he didn't catch the inaccuracies, why didn't he?"

In an email to The Times, City Manager Scot Wrighton defended Sharpe's analysis.

"Mr. Snow apparently believes the Sharpe report is inaccurate, but this is only his opinion," Wrighton wrote. "The city does not agree; actuaries use different methods and assumptions. More important than dueling actuaries, however, it is important to know that the culprits of so-called pension 'underfunding' are not to be found in Mr. Sharpe's analysis."

One of the culprits, Wrighton said, is the fire pension board's investment strategy. The top-performing 15 percent of downstate fire and police pension funds saw investment earning averages of 6 percent or better from 2009 to 2016, Wrighton said. Of 295 fire pension funds that fully reported their financial activity, Streator's placed 262nd, the bottom 12 percent. It earned on average 1.7 percent on its assets from 2009 to 2016, the manager said.

"These shortfalls and poor returns are straining the Streator tax levy, yet the fire union blames the City Council for 'underfunding.' Based on the assets of the Streator fire pension fund, for each 1 percent of investment return shortfalls, it costs the pension fund and Streator taxpayers about $50,000."


As he has before, Wrighton blamed the state for creating a situation in which even rich towns don't fully fund their pension accounts, noting the mandatory 3 percent annual benefit increases and the ability of firefighters to retire with full pensions at age 50.

"So why isn't the fire union willing to discuss meaningful and reasonable reforms before they bankrupt cities and add to an exodus of people leaving the state?" he said. "In all of this, the Streator City Council seeks first and foremost what is best for the future of the entire city. Its modest reform proposals reflect this priority. The interests of narrow special interests should generally be secondary to this broader public interest."


In an email, Patrick Devaney, president of the Associated Firefighters of Illinois, disagreed with Wrighton's analysis. He noted the a report from the state Commission on Government Forecasting and Accountability that details the main causes of underfunding of pensions in Illinois from 1996 to 2016.

"As you can see, the failure to make a lawful employer contribution is the overwhelming driver and benefit increases account for a tiny fraction of it," he said.



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  #917  
Old 02-24-2018, 01:45 PM
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They don't name the "online comment board" but sounds like a pretty interesting place.
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  #918  
Old 02-24-2018, 02:02 PM
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This is awfully involved reporting for a local issue.
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  #919  
Old 02-24-2018, 06:32 PM
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The article reads that "Sharpe couldn't be reached for comment". Although it could be true, my personal experience is that statements like that are sometimes inaccurate.

Some lawyer/reporter once made a mediocre article about a lawsuit I filed (unrelated to actuary) and she made the false and misleading statement that I "couldn't be reached for comment". In reality, that reporter-wannabe made no attempt whatsoever to reach me, yet her statement gives the false impression that I avoided her imaginary calls or emails.

Time for Mr. Sharpe to set the record straight, at least regarding that mywebtimes article.
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  #920  
Old 02-25-2018, 08:40 AM
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Or, perhaps, discretion is the better part of valor.

It does not seem to me it was a good idea for him to have created this thread in the first place. Many/most people would not have known about his situation, and when the disciplinary notice went up... again, most people would have ignored it, even among actuaries.

The Academy et al do not go out of their way to contact potential (or current) clients of actuaries re: the disciplinary notices, afaik. I wonder how many users of actuarial services know to even look at such a record.

Making a big public stink over this just brings attention to something most people ignore.
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