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  #1051  
Old 05-22-2019, 08:49 PM
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NIGERIA

https://thenationonlineng.net/life-p...ce-not-career/

Quote:
Life pensions: Party says political office not career

Spoiler:
The Abundant Nigeria Renewal Party (ANRP) on Saturday flayed the latest scheming by some political office holders to institute a pension scheme for themselves after leaving office.

The National Spokesman of the party, Mr Sesugh Akume, told the News Agency of Nigeria (NAN) in Lagos that political positions should be seen as a privilege and opportunity to serve the people and not as a career one retires from and earns a pension.

Some states recently begun the process of enacting legislations to provide monthly life pensions for legislators.

Kano and Bayelsa State Houses of Assembly have each passed a Bill to that effect and the Bills are awaiting governor’s assent.



In Bayelsa, the bill was rejected by the Gov. Seriake Dickson after the proposed law received widespread condemnation by the public.

Akume said that the idea of severance packages and life pensions for elected officials was wrong and without merit.

“Pension by its very meaning and essence is payment for retirees from service and indigent or other like people with disabilities.

“How then is it that elected officials are paid pensions as if running for office or being an elected official is a career one engaged in and is retiring?

“How can we justify that for merely being elected and having served for as low as four years and earning eye- watering salaries and emoluments, a person is duly qualified for a severance package and life pension and other perquisites from the state?”

Akume expressed his regrets that many retirees who had served the country for 35 year were being owed their gratuity and pensions.

He said that some retirees had died without accessing their gratuity and pensions with their families experiencing untold hardships striving to access the entitlements.

“The legislators are supposed to make laws to correct these anomalies, rather than working on getting their own life pensions for being elected into office.

“In time, Nigeria will have too many former elected officials to cater for and this will be a heavy financial burden that might take a toll on the welfare of the people.

“Severance packages for former presidents, vice-presidents, governors and their deputies should also be reversed,” Akume said. (NAN)


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  #1052  
Old 05-22-2019, 08:50 PM
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KENTUCKY

https://www.surfky.com/index.php/hen...nsion-windfall

Quote:
JIM WATERS: Candidate Could Reap Millions in Pension Windfall

Spoiler:
KENTUCKY (5/18/19) — The primary election is upon us, turnout will be low;
For those who vote Democratic, there's something you should know:
Much is at stake in your primary, perhaps more than meets the eye;
Rocky Adkins really wants to be governor, did you ever wonder why?

Adkins, a Democratic representative from Sandy Hook - which got its name from the fishhook-shaped bend in the Little Sandy River where the community settled in the 1820s in what is now Elliott County – wants to hook enough voters to escape Tuesday’s gubernatorial primary against Attorney General Andy Beshear and former Auditor Adam Edelen, his more-progressive opponents.

While Adkins probably has altruistic reasons for wanting Kentucky’s top political job, he also has an added incentive not available to his opponents: the ability to spike his legislative pension and become a millionaire twice over, courtesy of the taxpayers.

Legislation passed in 2005 allows lawmakers receiving part-time pay while in the General Assembly to be appointed or elected to a full-time position in state government and apply the highest three years of salary to their legislative pension, even though their work was in, say, the executive branch.

Lawmakers’ pensions are based on the average of their three highest-salary years multiplied by their years of service and a benefit factor, which is 2.75 percent for legislators who became members of the legislative pension system after 1982, including Adkins, who first came to the legislature in 1987.

Should Adkins serve four more years in the legislature – at which time he will have “maxed out” of the legislators’ retirement plan by reaching the point where his pension benefits equal 100 percent of his legislative pay – he would retire with an annual legislative pension of less than $32,000, according to an analysis of lawmakers’ salaries reported by the Legislative Research Commission.

However, Adkins winning the gubernatorial election would be Kentucky’s political version of James Holzhauer’s performance on Jeopardy, where the contestant-phenom has already pocketed $1.7 million, which is nearly what the longtime lawmaker would receive in additional pension benefits during his expected lifetime were he to become governor.

What is pension pork, anyone?

Because of House Bill 299 passed in 2005, Adkins would be allowed to use the highest three years of salary he would earn as governor to spike his legislative pension – from less than $32,000 to nearly $140,000, based on an average of the governor’s salary during the past three years.

Adkins’ legislative pension, which would spike by nearly $108,000 after his first term as governor, would be even higher should he win reelection.

Were this guitar-picking politician from the east to serve two terms as governor, his pension would rival the chief executive’s current salary of nearly $149,000.

But let’s not get too optimistic here about his political chances; voters still must decide.

Conservatively, if Adkins were to serve a single term as governor and then retire, he would – based on life-expectancy tables for a white male born on Nov. 4, 1959, which this year happens to fall on the day before the General Election – reap a lifetime windfall of nearly $2 million in additional pension benefits than had he retired from the legislature.

No wonder HB 299 was known as “the greed bill.”

Ridding Kentucky of this corrupt reciprocity-enabling scourge was part of omnibus pension legislation struck down by the Kentucky Supreme Court in December.

That should not prevent legislative leaders from correcting this egregious policy in a separate bill during the first week of the 2020 session of the General Assembly, even if – especially if – Adkins is governor.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.


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  #1053  
Old 05-22-2019, 09:06 PM
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OHIO

https://www.ai-cio.com/news/ohio-per...nager-program/

Quote:
Ohio PERS to End Emerging Manager Program
Fee savings not enough for CIO Paul Greff to continue effort to enlist newcomer firms.
Spoiler:
The Ohio Public Employees’ Retirement System agreed to ditch its $530 million emerging manager program at last week’s board meeting, the fund confirmed.
In a board memo obtained by CIO, Chief Investment Officer Paul Greff’s investment team at the $99.6 billion pension plan advocated the fund rid itself of the program, which is aimed to benefit new money managers. The chief reason for axing the model is that the newbie managers underperformed its benchmark.

Source: OPERS
The program invests only in US stocks, covering large, small, and midcap issues. In 2006 the plan set a policy of investing up to 1% of its assets to state- and minority-owned external managers. The fund is still trying to achieve this, as this area encompasses 2.8% of assets, almost triple the goal, without the use of the program.

The program was created in 2012 to favor fledgling managers based in Ohio and also minority-owned firms. The objective was to reduce fees, and also boost performance. Although it did save costs (reductions were 42%), it has underperformed its 13.49% benchmark by 1.58 percentage points yearly since inception.

Source: OPERS
Only managers with $1.25 billion in assets under management or less can play, a cap that was increased from $750 million in 2016. Unfortunately, only 41 managers met those conditions. The plan’s staff later tried to add more “higher conviction” managers, but that tactic also failed.
In the memo to the plan’s board, Greff and his staff listed reasons for the lackluster results, such the aftermath of the 2008 financial crisis and structural problems, like the restrictions on which managers could be hired.
Once the Ohio emerging-manager platform is gone, staff will find new outside managers to handle the pension portfolio. The seven emerging managers currently in the program—Affinity Investment Advisors, Bowling Portfolio Management, Dean Investment Associates, Decatur Capital Management, Matarin Capital Management, Redwood Investments, and Winslow Asset Management—will remain in place for now while the plan’s staff assesses its next steps, according to an email from spokesperson Michael Pramik.
Pramik also told CIO the fund will “consider” modifying the program to include asset classes other than equities, but will require “substantial time” to conduct a thorough review.
Big funds such as the $233.9 billion California State Teacher Retirement System (CalSTRS)and Texas’ employees and teacher retirement systems, have enjoyed rewards from their emerging manager programs. Both Texas plans have expanded these undertakings over the past year.
These programs are also not as restrictive with their asset classes or their manager sizes. CalSTRS, for example, allows real estate, global equity, and private equity managers up to $6 billion into its program.
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  #1054  
Old 05-23-2019, 09:53 AM
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NEW YORK

https://www.ai-cio.com/news/ny-state...19-return-5-3/

Quote:
NY State Pension Misses Target with 2019 Return of 5.3%
Private equity helps raise fund’s asset value to $210.2 billion.
Spoiler:
The New York State Common Retirement Fund earned an estimated 5.23% return on investments for the fiscal year that ended March 31 to reach an estimated value of $210.2 billion, up from $207.4 billion at the end of fiscal year 2018. This was below the fund’s long-term expected rate of return of 7%, and well behind the 11.35% the portfolio returned last year.
Despite the underperforming return for 2019, the fund’s asset value has risen 93% in the past 10 years, and has more than tripled since 1995.
“The Fund’s value continued to grow during its 2019 fiscal year and remains well positioned to meet its long-term return expectations and provide retirement security for our members, retirees and their beneficiaries,” New York State Comptroller Thomas DiNapoli said in a release. “It was a tumultuous year in the markets that fortunately came with more ups than downs, including a swift recovery from December’s significant correction.”
Private equity was the fund’s top-performing asset class, returning 9.90% for the year, followed by domestic equities, real assets, and real estate, which rose 8.84%, 8.15%, and 7.09%, respectively. The worst-performing asset class was non-US equities, which lost 4.46% for the year, after returning 17.02% in 2018, followed by absolute return strategies, cash, and Treasury Inflation-Protected Securities, which returned 2.07%, 2.59%, and 2.76%, respectively.
Domestic equities was the fund’s largest asset allocation at 35.8%, followed by core fixed income, non-US equities, and private equity at 17.3%, 12.9%, and 9.1% of the portfolio, respectively. That compares to last year’s allocations of 36.6%, 16.8%, 15.2%, and 8.3%, respectively.


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  #1055  
Old 05-23-2019, 03:44 PM
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RHODE ISLAND

https://www.forbes.com/sites/edwards.../#4b23ebbc6171

Quote:
Senator Elizabeth Warren Promised Retired School Teachers Pension Help, Hasn't Delivered

Spoiler:
In October 2016, the Rhode Island Retired Teachers Association (RIRTA) wrote to Massachusetts Senator Elizabeth Warren on behalf of its over 600 members pleading for her assistance. The subject was mismanagement of the state pension and looting by Wall Street hedge funds.

Since Warren is known for keeping a watchful eye on Wall Street, the retirees figured she might champion their cause—even though their own elected officials in Rhode Island were either complicit, or involved, in the looting.

Further, RIRTA believed that looting of public pensions—Rhode Island-style—was emerging as a national problem uniquely deserving of Senator Warren’s critical eye.

“Rhode Island’s state retirees have been on a fixed income for 5 years....we are in our own recession. Surveys of our members show the financial impact and hardships that these years have created. The average profile of our membership is a 73 female retiree. Yet, in our own state we are not heard by elected public officials. So, we have turned to you Senator Warren. You have proven many times over your concern for the average citizen up against bureaucracies and politicians who neglect the welfare of their citizens.”


RIRTA explained that in December 2015 it took the unprecedented step of filing a whistleblower complaint with the U.S. Securities Exchange Commission’s Washington and Boston offices regarding the state pension. A similar complaint was also filed with the Criminal Division of the US Attorney's District of Rhode Island.

The complaints included the findings of two of my in-depth forensic investigations of the state pension documenting potential violations of law: Double Trouble : Wall Street Secrecy Conceals Preventable Pension Losses in Rhode Island and Beyond Bad : A Generation of Mismanagement of Employees System of Rhode Island Real Estate.

The retired teachers told Senator Warren they had also contacted Rhode Island Attorney General Peter Kilmartin by letter with their concerns and were told...'' the AG has no stand-alone investigatory staff.''

Funny, the AG’s website states:

The Attorney General is the top legal official in Rhode Island. As the State’s top prosecutor, the Attorney General fights to enhance the economic security of Rhode Island, protect the public safety of our communities and restore the public trust in state government by fighting corruption.

Must be hard to do all that with no investigatory staff!

Two meetings with Rhode Island State Treasurer Seth Magaziner in March and May 2016 were equally unproductive. RIRTA told investment newbie “Kid” Magaziner they were deeply concerned with the pension’s continued heavy investments in underperforming high-risk hedge and private equity funds with fees that were draining the pension fund.

To summarize, prior to reaching out to Senator Warren, RIRTA had contacted every federal and state agency with jurisdiction over the state pension and had provided them with in-depth forensic investigations by a nationally recognized expert in pension malfeasance that credibly documented pension mismanagement, at a minimum, as well as potential violations of law.

In short, the teachers had exhaustingly done their homework.

I was contacted by Warren’s staff about the retired teachers' concerns, specifically, Beth Pearson, an Economic Policy Fellow and Lindsay Owens. I was told that Warren's office needed to coordinate its actions with Rhode Island Senator Sheldon Whitehouse.

And then came years of deafening silence.

Senator Warren, I understand you want to be a national leader. My suggestion is that you show leadership by being willing to step on the toes of your fellow Democrats, particularly with respect to matters within your field of expertise—such as fighting Wall Street looting Main Street. This is a job tailor-made for you-- if only you’ll do it.
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  #1056  
Old 05-24-2019, 09:48 AM
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CONNECTICUT
https://www.journalinquirer.com/publ...74e0ae348.html
Quote:
There is a crying need for pension reform

Spoiler:
While the General Assembly has been debating the minimum wage, tolls, and other matters, its silence on pension reform is deafening.

Connecticut’s economic problems are closely tied to the state’s overwhelming pension liabilities — all of which were approved by our legislators.


People retiring from one job to collect a pension while working another job, the use of overtime to increase eventual pension benefits, and other perks enjoyed by state employees should be a primary focus of the legislative agenda, just as it was for Rhode Island Gov. Gina Raimondo and Connecticut’s former Gov. Dannel Malloy, who attempted to limit this state’s pension liabilities. But so far only silence from Gov. Ned Lamont and his allies in the state House and Senate.

There is a crying need for pension reform. It is pressing. If present contracts cannot be changed, the necessity for a reduction in personnel may have to be examined.

Pension liabilities and the problems they present should be a prime item on the legislative agenda. Unfortunately, the Democratic caucus is so tied to employee unions that any reform must almost come by edict from the union overlords.

Pensions are a part of employment agreements, and rightfully so. But abuses in the system should be reviewed and efforts made to eliminate them.


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  #1057  
Old 05-24-2019, 02:20 PM
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NEW HAMPSHIRE
https://www.unionleader.com/news/pol...a48002eb3.html
Quote:
Cost-of-living increase for NH retirees passed by Senate

Spoiler:
CONCORD — The pivotal step to deliver the first cost-of-living adjustment for nearly 30,000 retired public employees in a decade narrowly cleared the State Senate Thursday.

The 12-11 vote sends the bill (HB 616) for a 1.5 percent increase to the desk of Gov. Chris Sununu, who has said he will sign it.

The increase, effective July 1, would only to go to state, county and local retirees who finished their government service at least five years ago.

The COLA would be capped at a $50,000 pension, meaning no retiree would get more than $750 per year from it.

Senate Majority Leader Dan Feltes, D-Concord, said the state’s unfunded pension liability remains high but the system has stabilized and can well afford this modest increase.

“In my district, 2,400 retirees including people who have worked their entire life, dedicated public servants struggling with food, medicine, heat and rent and we can’t finally go forward with an actual COLA,” Feltes said.

“It’s been too long.”

Sen. Jeb Bradley, R-Wolfeboro, pointed out lawmakers approved one-time $500 stipends for retirees in 2011, 2013 and 2018, but a permanent COLA would increase local property taxes by nearly $150 million over the next 20 years.

The COLA would raise state taxpayer costs by more than $40 million over the same period.

“You can’t on the one hand promise property tax relief and then on the other vote for a plan to raise them by $150 million,” Bradley said.

Senate Republicans had again proposed Thursday a one-time, $500 stipend but that failed on the same, 12-11 vote.

The Senate GOP plan would have paid the stipend with $7 million in state dollars and only grant it to those making up to a $40,000-a-year pension.

Sen. Jeanne Dietsch, D-Peterborough, broke ranks with the other Senate Democrats and she opposed the COLA and backed the one-time stipend.

She said the state retirement system could not estimate the impact of this increase on local property taxes in her district towns.

“I can’t go back to my towns ... I can’t go back to the taxpayers that I promised I would lower your property taxes and vote to raise your property taxpayers,” Dietsch said.

The New Hampshire Retirement Security Coalition said in a statement studies have shown 80 percent of the economic benefit from this COLA would remain in NH.

Sen. Harold French, R-Franklin, said most of the retirees in his district have lower pensions and would get more from a one-time, $500 stipend than a 1.5 percent increase.

But Sen. Kevin Cavanaugh, D-Manchester, said it’s time retirees get an increase they can depend on year after year.

“They want the COLA because they can depend on it,” Cavanaugh added.


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Old 05-24-2019, 02:21 PM
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HAMDEN, CONNECTICUT

https://www.newhavenindependent.org/...s_nixed_again/

Quote:
Pension Transfers Nixed, Again

Spoiler:
For the second time in two weeks, the Hamden Legislative Council voted down a $2.1 million package of transfers from funding allocated for the town’s pension fund.

The transfers failed 6-6, many of the no votes the same as at the last meeting, the yeses grumbling and holding their noses as they voted in favor of a transfer most said they did not like.

“I’m reluctantly going to vote for this even though I don’t want to because we have to pay our bills,” said At-Large Rep. Betty Wetmore, who added that she was “very unhappy about it.”

The package would have used $2,096,370 originally budgeted for the pension to pay for other expenses that have gone over budget: $150,000 for professional/technical services, $100,000 for natural gas, $101,000 for water, $150,000 for electricity, $183,500 for street lighting, $225,000 for police overtime, $25,000 for police extra duty, $515,500 for public works tipping fees, $250,000 for the state’s CMERS pension plan, $150,000 for town attorney’s office expenses, and $396,370 for workers’ compensation.

The council did pass the $150,000 transfer for attorney’s office expenses.

“This line is going to be a problem if we don’t fund it,” said District 9 Rep. Brad Macdowall. “These are not bills that can just have shutoff notices for six months.”

The other transfers, however, will have to wait further. For months now, the town has been receiving shutoff notices from several utilities because it has not paid its bills.

Deputy Finance Director Rick Galarza said that the town is not in any danger of having services shut off because he has negotiated extensions.

“It’s government. They know they’re going to get paid,” he said of the utilities.

Director of Public Works Craig Cesare said his department will be fine until June. At that point, he said, the lack of funds will become a problem. The next council meeting is scheduled for June 3.

Multiple Tries Failed

Curt Leng.
Mayor Curt Leng’s administration originally submitted a $2.1 million transfer package in March. When council members asked for more information on the package, and whether it would be the last of the fiscal year, it did not go anywhere. With funds beginning to dwindle in utility accounts and the fire department, the administration submitted a stopgap transfer package of $300,000 in mid-April. Only the fire department transfer passed.

The administration then tried again with a $2.5 million package on May 6. Again, only a transfer for the fire department passed.

On Monday, the package passed the Finance Committee, which it did not when it came before the council on May 6. At-Large Rep. Lauren Garrett voted yes in committee so that the package could come before the whole council, at which point she voted no, helping to fail it.

“I appreciate the Council’s Finance Committee approval of the transfer and am hopeful that when the full council is at the table, the transfer gets approved and we can continue the business of the people, like we should be,” wrote Leng in a statement.

Three council members were absent on Monday — John DeRosa, Berita Rowe-Lewis, and Michael Colaiacovo.

The six council members who voted against the transfers — Cory O’Brien, Lauren Garrett, Justin Farmer, Brad Macdowall, Harry Gagliardi, and Athena Gary — have been very outspoken in the last few months about their opposition to transfers that will require underfunding the pension.

O’Brien said that he has said since the beginning of the fiscal year that he would not support transfers from funds allocated for the pension. He said he hoped the administration would implement cost saving measures to prevent budget overages, and that if need be, it would find other ways of covering them if they occurred.

Pension Background
After decades of underfunding its pension, Hamden finally took out a $125 million pension obligation bond in 2014 to cover its pension expenses. The bond required that the town ramp up its pension payments until it reached the actuarially required contribution (ARC), the amount the state says the town needs to pay into the fund each year to be on track to full funding.

The town was supposed to reach 80 percent of its ARC payment in the 2017-2018 fiscal year. But when the state shorted the town around $5 million in municipal aid, it changed the statute to allow Hamden to pay only 55 percent, pushing back the ramp up period. The town paid $12,650,000.

In the 2018-2019 fiscal year, the council passed a budget that funded the pension at 100 percent of ARC, even though the state required only 70 percent. So far, the town has met the state’s requirement, paying around $16 million of the $22.6 million budgeted.

“I understand why the Council would like to put more than is required into the Pension Fund, so would I, but this isn’t the year to do it,” wrote Leng. “Just like a household might want to make an extra mortgage payment in order to pay off their mortgage faster (a great financial practice if you can afford it), if it means that you can’t pay your heating bill that year then you make adjustments and make sure you cover all your essential payments properly before putting down that extra payment.”

For many of the council members who voted against the transfer, however, the difference between 70 percent funding and 100 percent funding is not “extra.” When they passed the budget, Majority Leader Cory O’Brien, District 5 Rep. Justin Farmer, and others have said they were committing to paying 100 percent of ARC.

Farmer said it is frustrating that the council had voted to raise taxes in order to fund the pension, and now must go back on that commitment.

O’Brien has repeatedly said that underfunding the pension is a form of borrowing money, because it just pushes off payments that will have to come in the future.

“It’s just further indebting the town,” he said on Monday.

Hamden is now on the state’s CMERS pension plan, so the town’s plan no longer has new hires added to it, but the town has a long way to go before it has fully funded the old plan. According to a report compiled by Segal Consulting, in July 2018, the town had, in total, around $458 million in pension liabilities, with almost $165 million, or around 36 percent, funded. The addition of this year’s $16 million brings the fund to around 39 percent funded.

In the 2019-2020 fiscal year, the ARC payment is around $22.6 million again. The mayor, and the council, have budgeted $19 million in the upcoming budget, which meets, but does not exceed, the state-required 85 percent. That means that in the next fiscal year, the town will not have the option to transfer from funds allocated for the pension.

One projection that Leng’s administration gave the council in 2018 showed that by 2039, ARC will reach $34 million before it starts to decrease.

Galarza said the administration would resubmit the transfer package. He said that as the fiscal year comes to a close, there might be other accounts he can pull from, but that he would not be able to come up with $2 million anywhere other than the pension.

“They want to really pay that pension payment, and I get it, but we have other things besides that pension bill,” he said. “It’s tough, you know, both sides have valid points. I understand where one’s coming from. I understand where the other’s coming from… I think everyone’s trying to do the right thing.”

Nonetheless, Galarza said he is hopeful. “I think at the end of the day this is going to work itself out.”


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Old 05-24-2019, 02:35 PM
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NEW JERSEY

https://www.heartland.org/publicatio...n-problem-asap

Quote:
RESEARCH & COMMENTARY: NEW JERSEY MUST ADDRESS PENSION PROBLEM ASAP

Spoiler:
In this Research & Commentary, Matthew Glans examines a pension reform proposal in New Jersey that would create a hybrid pension plan for teachers and non-uniformed state, county, and municipal employees.


New Jersey’s current total pension liability is $115 billion, making it one of the worst-funded pension systems in the country. To put this in perspective, New Jersey’s pension debt exceeds its $37.4 billion annual budget. The state pension system covers nearly 800,000 current and retired public employees. The New Jersey Legislature is now considering a pension reform plan developed last year by the bipartisan Economic and Fiscal Policy Working Group who recommended moving younger workers out of the traditional pension plan and into a proposed defined-contribution retirement system.
The new proposal would create a hybrid pension plan for teachers and non-uniformed state, county, and municipal employees who are new hires or have less than five years of service. The new plan has two components. First, it would provide a defined benefit plan on the first $40,000 of income. Second, it would provide a cash balance account on income more than $40,000.

Under a defined-contribution plan, employers contribute a fixed amount over the course of an employee’s tenure, which is invested into a 401(k)-style retirement account the employee manages. This gives employees control over their retirements. Furthermore, this provides a more stable and predictable long-term budget outlook.

On the other hand, a defined-benefit plan is the traditional pension model in which an employee’s pension payment is calculated according to length of service and the salary they earned at the time of retirement. These plans have several major flaws which allow employees to inflate their pensions beyond what is both necessary and sustainable. For years, elected officials have guaranteed defined-benefit pension benefits to government employees but have not been adequately funding them and shifting the cost of the plans onto future taxpayers. Adding to this problem is the fact that most taxpayers are unaware of how much it will cost to keep these pensions afloat in the future.

Cash balance (CB) plans feature the benefits of defined-benefit and defined-contribution plans. CB plans provide guaranteed monthly retirement income, use of pooled investments, and access to annuities. By setting a minimum investment return and sharing any additional earnings, a CB plan helps employers gain predictability over costs, which safeguards state budgets during down periods while ensuring employees receive their benefits.

New Jersey’s pension shortfall has been compounded by its unrealistic expectations for its investment returns. Currently, New Jersey assumes its investment portfolio will earn 7.5 percent annually. New Jersey legislators should consider lowering the assumed investment return rate to a more realistic level. Pension experts recommend states use an expected rate of return from 2.3 percent to 3.1 percent, figures based on Treasury bond yields.

Although a hybrid model will not eliminate all of New Jersey’s pension problems, it will limit the rapid growth of unfunded liabilities. Defined-contribution and CB plans give retirees direct control over their retirement nest eggs and enable them to move in and out of the private sector without losing accrued pension benefits. They also allow governments to budget more accurately because benefits are paid directly to employees in a defined amount each year.

The following articles examine state pension reform from multiple perspectives.


Hidden Debt, Hidden Deficits: 2017 Edition
https://www.hoover.org/research/hidd...s-2017-edition
In this study, Joshua D. Rauh of the Hoover Institution applies market valuation to pension liabilities for 649 state and local pension funds and says that despite the introduction of new accounting standards, the vast majority of state and local governments continue to understate their pension costs and liabilities by relying on investment return assumptions that range from 7 percent to 8 percent per year.

Pension Reform Handbook: A Starter Guide for Reformers
http://reason.org/files/pension_reform_handbook.pdf
This paper by Lance Christensen and Adrian Moore of the Reason Foundation considers many of the problems that troubled pension systems often experience. The authors also outline several principles they believe should be used as part of any pension reform effort.

Public Pension Cash Balance Plans: A Primer
http://www.pewtrusts.org/~/media/leg...briefv7pdf.pdf
In this Issue Brief from The Pew Charitable Trusts, the authors argue a well-designed cash balance plan can help government employers meet their recruitment and retention goals while keeping costs down and improving long term fiscal stability.

The Path to Public Pension Reform
https://www.mercatus.org/publication...pension-reform
In this Policy Briefing, Eileen Norcross and Olivia Gonzalez of the Mercatus Center at George Mason University discuss pension reform. They argue true reform must address “the inherent problems of public-sector accounting and management of pension funds and consider the benefits of defined contribution plans for public-sector workers. Reforms should be equitable for all generations, fund retirement benefits adequately, and have a plan for funding legacy obligations.”



Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website at https://www.heartland.org/publicatio...udget-tax-news, and The Heartland Institute’s website at http://www.heartland.org.

The Heartland Institute can send an expert to your state to testify or brief your caucus, host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact the government relations team at governmentrelations@heartland.org or 312/377-4000.


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