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  #11  
Old 01-02-2017, 05:33 PM
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CALPERS
CALIFORNIA

http://www.fresnobee.com/news/politi...124085004.html

Quote:
Reality penetrates California’s public employee pension system, but not far enough

BY DAN WALTERS

It’s very rare, but always welcome, when reality intrudes on political decision making.


Thus, it’s noteworthy that overseers of the nation’s largest pension trust fund, the California Public Employees Retirement System (CalPERS), last month reduced – albeit reluctantly – its projection of future earnings by a half-percentage point.

With earnings on investments the last two years barely exceeding zero, CalPERS has been compelled to sell assets to make its pension payments, which far outstrip contributions from state and local governments and their employees.

With earnings on investments the last two years barely exceeding zero, CalPERS has been compelled to sell assets to make its pension payments, which far outstrip contributions from state and local governments and their employees.

Reducing the “discount rate” to 7 percent will force employers, and perhaps employees, to kick billions of more dollars into the system to slow the growth of CalPERS’ “unfunded liabilities,” as the $150-plus billion debt is termed.

However, the extra contributions generated by lowering the discount rate will not erase that debt, which is likely to keep growing if CalPERS’ investment earnings continue to fall short, as many economists expect.

In fact, CalPERS’ own advisers see a prolonged period of relatively low earnings and say the system shouldn’t count on more than 6.2 percent.

Rationally, the discount rate should have been lowered by at least another full percentage point. But CalPERS already has increased its mandatory contributions by 50 percent to make up for investment losses during the Great Recession and other factors, and cutting the discount rate to 6 percent would probably mean bankruptcy for a number of local governments, particularly cities.

All in all, therefore, while reality did make a rare visit to the CalPERS boardroom, its impact fell well short of what is needed to make the public employees’ pension system actuarially sound.

If it’s not economically or politically possible to finance the pension promises made to state and local government employees, the system’s only hope for solvency may lie in reducing those promises.


Read more here: http://www.fresnobee.com/news/politi...#storylink=cpy
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  #12  
Old 01-02-2017, 05:44 PM
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SOUTH DAKOTA

http://www.argusleader.com/story/new...ands/96013958/

Quote:
Pension proposals would affect tens of thousands

The South Dakota Retirement System will ask the Legislature to consider several measures to shore up the state pension plan amid new calculations that show it is no longer fully funded.

Lawmakers will be asked to reduce future annual cost-of-living-increases for retirees, tying those increases to inflation and the overall health of the system. The changes also call for expanding the number of years of salary that are used to calculate future pension benefits.

“This is probably the largest adjustment in benefits and design that we have made in our 40 years," Executive Director Robert Wylie said.

The system’s trustees will also ask the Legislature to address so-called pension spiking, a practice in which employees near retirement drive up their pension benefits with large, unreasonable increases in salary. The system’s board of trustees wants the Legislature to tighten the definition of compensation used to calculate pension benefits and to make it a class-one misdemeanor to violate statutory provisions that define compensation.

The system provides lifetime pension benefits for government retirees, including state employees, teachers and others. Currently, there are more than 80,000 members. Of those, about 25,000 are active retirees that draw about $400 million a year in benefits. Another 40,000 are active employees paying into the system, and about 16,000 others are members who are not yet eligible to draw benefits.

It’s long been considered one of the best-run pension plans in the country. Other than a brief exception during the Great Recession, the plan has been at or near 100 percent funded, according to calculations. That’s a stark contrast to other states, where lavish pension benefits and lawmakers’ refusal to put aside enough money have left them on the brink of disaster.

“South Dakota has approached retirement differently than many of our cohorts across the country,” Wylie said.

But a new evaluation of the plan and assumptions about long-term financial markets left officials to conclude that the plan is now 87 percent funded. Officials now assume that the plan’s rate of investment return will be 6.5 percent instead of 7.25 percent, that inflation will go from 3.25 percent to 2.25 percent and that member contributions will be lower.

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  #13  
Old 01-02-2017, 05:46 PM
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OHIO

http://www.thenews-messenger.com/sto...sion/95958702/

Quote:
Letter: Faulty report used in critique of public pension

I would like to address the column by John Damschroder, “Agencies warn of massive Ohio public pension shortfall,” published Dec. 28 in The News-Messenger and News Herald.

The Ohio Police & Fire Pension Fund believes the reports cited in this column are full of inaccuracies. I will address just one of these “studies” today, though both studies cited are worthy of rebuke.

The study by the Mercatus Center at George Mason University, funded in part by the Koch Brothers, uses unfounded and unrealistic assumptions to come to a predetermined conclusion about defined benefit pensions, specifically OP&F.

The fact is, OP&F meets the state-mandated funding requirements and is a healthy, solvent retirement system that is well positioned to meet the obligations for the current and future public safety officers we cover. In case you are unaware, SB 340 that was passed late in 2012 increased member contributions, reduced benefit formulas and converted future cost of living increases, or COLA’s, to a CPI-based COLA, not to exceed 3 percent. Independent actuarial analysis projected a reduction of long-term liabilities of $3.2 billion from this major pension reform that you and the studies you refer to discount almost entirely, which is a major slap in the face to our public safety members and this fund. Further, all of these reforms were directed at the member, none of it to our valued employers.

OP&F is funded through payroll contributions from working police officers and firefighters and also from the cities and towns that employ them — a fact the Mercatus authors decided to assume would no longer occur. The most glaringly reckless aspect of the Mercatus report is that it bases its conclusions as though OP&F would suddenly no longer receive these member and employer contributions. These contributions are part of the Ohio Revised Code and are required. Contribution rates are easily discoverable and we are a bit perplexed how you got this basic fact so wrong. Future work life contributions are a key to our long term solvency and according to the State of Ohio will remain so.

The third leg of our funding formula is investment returns. Stochastic projection, a common way to gauge the probability of expected returns in the future, typically will yield a wide range of possible investment results. Your article clearly uses the worst case scenarios of those results in the Mercatus study that came from running over 100,000 simulations. To possibly better educate you and your readers I kindly ask that you visit the website for the State agency that oversees the public funds in Ohio, the Ohio Retirement Study Council as well as our website at op-f.org. There you will find plenty of material addressing our actuarial reports, investment performance, asset allocation, fees and historical returns. Please take note of the quartile rankings of the pension systems statewide and especially the ranking for OP&F.

Finally, the authors of the Mercatus report did not contact OP&F at any time to ask for data or confirm their research. It is disappointing and in our opinion irresponsible that The News Messenger would publish an article that only serves to create unwarranted concern and distress for our members and their families.

Please consider more carefully the accuracy of your reporting and if possible disclose the funding agent behind such inflammatory studies before reporting them in the future. OP&F is celebrating its 50 years of existence after fund consolidation occurred in the mid ’60s. We expect to be celebrating our 100th anniversary down the road with the same approach, strong fiduciary management and dedicated support for our mission across this great State of Ohio.

John G. Gallagher, Jr.

Executive Director

Ohio Police & Fire Pension Fund

Columbus
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Old 01-02-2017, 05:49 PM
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JACKSONVILLE, FLORIDA

http://jacksonville.com/news/2016-12...ion-reinstated

Quote:
John Keane sues to get full pension reinstated


John Keane resumed the never-ending battle Thursday over his pension by filing a lawsuit that contends the Police and Fire Pension Fund has no legal right to pay him a pension that is less than what the fund contractually agreed.

Keane, who retired in 2015 as the fund’s longtime executive director, is demanding full restoration of those pension payments. The suit names the Police and Fire Pension Fund’s board of trustees as the sole defendant.

Keane contends the decision to cut his pension violated his constitutional rights and relied erroneously on an April opinion by General Counsel Jason Gabriel.

Gabriel’s opinion asserted the General Counsel’s Office has the power to render binding opinions on the pension fund. Keane’s suit disputes that Gabriel has that standing over the pension fund, which is overseen by a five-member board of trustees.

“Notwithstanding Mr. Gabriel’s description of his position as ‘the mortar that holds the structure of our consolidated government firm,’ nothing in the Charter of the City of Jacksonville grants the City’s General Counsel the ability to retroactively cancel binding contracts by fiat, much less do so on behalf of independent agencies, such as the [Police and Fire Pension Fund] Board, which are not part of the City nor represented by the General Counsel,” the lawsuit says.

Gabriel could not be reached for comment late Thursday.

He sent a letter to Keane’s attorneys in October saying there are “numerous reasons why payment will not be tendered as demanded” when Keane threatened to sue over the cut in his pension.

Gabriel’s opinion determined that because the City Council never voted on the Senior Staff Voluntary Retirement Plan the pension fund board set up in 2000, there was no legal basis to Keane getting a $235,508 a year pension.

Based on Gabriel’s opinion, Mayor Lenny Curry ordered a stop to those payments. In its place, Curry said Keane would get pension payments as if he had been enrolled in the city’s General Employee Pension Plan, which reduced Keane’s payments to $188,578.

But Keane’s suit argues the Police and Fire Pension Fund is “an independent agency from the city, created wholly by state law,” so the General Counsel’s Office has no ability to issue binding legal opinions on the fund’s actions.

The suit also contends the reduced pension payments are less than what Keane would have received if he had been eligible to participate in the General Employee’s Pension Plan.

Keane’s pension became a hot-button issue in 2012 after the fund’s actuarial report said it was recognizing “for the first time” more than $2 million in assets in the Senior Staff Voluntary Retirement Plan. City officials have said they were blind-sided by that disclosure.

Keane’s suit says the pension fund “regularly reported” the existence of the Senior Staff Voluntary Retirement Plan from the start of the plan in 2000. Keane’s suit says there was a line item for “pension contributions” in the fund’s annual budget reports given to the city. The suit says the city’s financial management database also had records of the contributions to the pension plan.
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Old 01-02-2017, 05:50 PM
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IOWA

http://www.desmoinesregister.com/sto...rget/95952774/

Quote:
IPERS weighs cut in pension investment target

Iowa's largest public employees' pension fund is looking at lowering a key investment target, which could lead to higher pension contribution costs for public employees and increased pressure on state and local government budgets.

The Iowa Public Employees' Retirement System has asked its actuary, Cavanaugh MacDonald, to conduct a study of economic assumptions that will be presented in June, said IPERS' spokeswoman Judy Akre. The report will include consideration of assumptions for inflation, salary growth and investment returns.

The California Public Employees' Retirement System, the nation's largest public pension fund with about $300 billion in assets, decided last week to lower its assumed rate of investment return from 7.5 percent annually to 7.0 percent over the next three years. The change was approved amid concerns that investment returns will cover less of the cost of retirees' pensions than in the past. The California system, known as CalPERS, is considered a bellwether for public pension funds nationwide.

IPERS, which has 350,000 members, has about $28 billion in assets. It currently assumes a return on investment averaging 7.5 percent annually, although some IPERS' Board members have expressed concerns the target is too optimistic. Akre said the IPERS' Investment Board, which is responsible for setting the investment return assumption, requested the actuary's study in September.

Over the past 15 years, IPERS' investments have had annualized returns of 6.62 percent.

IPERS' Chief Executive Officer Donna Mueller said in a message accompanying the pension system's annual fiscal year summary that any decision to reduce IPERS' assumed investment return will not be taken lightly because it may require an increased contribution rate. Under current economic assumptions, IPERS faces an unfunded liability of nearly $5.6 billion that would be paid off in 28 years.
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Old 01-02-2017, 05:51 PM
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http://www.reuters.com/article/usa-p...-idUSL1N1EO0UQ

Quote:
U.S. public pension assets rise to $3.381 trln in Q3-Census

Dec 29 The holdings of the largest 100 U.S. public pension systems rose 2.5 percent or about $82 billion to $3.381 trillion in the third quarter from the previous quarter, according to U.S. Census Bureau data published on Thursday.

Compared to the same quarter in 2015, assets for these major public pension systems increased 5.1 percent from $3.216 trillion.


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Old 01-02-2017, 05:54 PM
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CONNECTICUT

http://www.courant.com/opinion/op-ed...230-story.html

Quote:
Kevin Lembo: Without Deal, Pension Costs Will Crush Us

Connecticut's unfunded pension liabilities are a crushing debt that increasingly crowd out other state budget priorities and remain a top concern for businesses when deciding whether to invest here and hire more workers.

Gov. Dannel P. Malloy and the State Employees Bargaining Agent Coalition recently agreed to restructure the state's pension payment plan in an attempt to stabilize ballooning costs over the next 16 years. Politicians and pundits weighed in — with some hailing the agreement as a panacea and others deriding it as ineffective.

I urge everyone to learn all of the facts before reaching a conclusion, because this issue is too complex for soundbites and social media warfare. The people of Connecticut are intelligent, and need their leaders to treat them like adults who can understand the problem.

Here are the facts:

In 1992, the state created a plan to pay its unfunded pension obligations by 2032. The payment plan was flat and predictable — like a fixed-rate mortgage. In the mid-1990s, however — when the state enjoyed consistent surpluses — government decision-makers negotiated an agreement to lower the annual pension fund contributions. But this meant payments would sharply increase in the distant future, like a balloon mortgage.

That distant future is now.

At the worst time, while we continue to claw out of recession, the balloon payments have arrived and are scheduled to get precipitously bigger each year. The cost of paying for benefits earned this year is slightly under $300 million. When combined with the cost of those decades of deferred payments and other shortfalls, however, the cost for us in 2016 was more than $1.5 billion.

That annual payment could grow from $1.5 billion to nearly $6 billion in a single year by 2032.

No one party or person can be blamed for this predicament, be it the Republican Rowland administration or the Democratic majority in the legislature. Regardless, today's elected leaders must solve this problem now and for future generations.

So what do we do?

Last year, Gov. Malloy proposed a reform of the state's unfunded pension liability. Treasurer Denise Nappier and I commended him, but expressed concerns about components of his plan.

My staff and I spent a great deal of time researching and analyzing this issue, and consulted with actuaries about best practices before submitting my plan. Treasurer Nappier did her own work as well and, ultimately, we all pooled our ideas.

While Gov. Malloy and I don't always see eye to eye, his deal with the State Employee Bargaining Agent Coalition incorporates many of the essential components that I advocated, including replacing the unsustainable rising balloon payments with more stable and predictable annual contributions, drastically reducing payment volatility and adopting a more conservative long-term rate of return assumption. Gov. Malloy should be commended for taking another step forward in solving our pension crisis. His administration, to its credit, has made the full recommended annual pension payments. Changes that they previously negotiated to new employee benefits will help drive down future costs.

Republican leaders, including Sen. Len Fasano of North Haven and Rep. Themis Klarides of Derby, raise two important points.

First, they note that the agreement does not address pension benefit design — including whether incorporating overtime in pensions or other calculations should be changed. This is a fair question, but I would caution them against rejecting this agreement on that basis. If the state eliminated the pension system, and every Connecticut employee left tomorrow, the state would still owe these billions in unfunded pension costs. Why kill this agreement when a separate conversation can be had about benefit design?

Second, they believe every legislator should vote on this agreement. I agree.

And should Sen. Fasano and Rep. Klarides have that opportunity to vote, I look forward to seeing whether they stand by their opposition and, in doing so, vote for the greatest tax increase in Connecticut's history — because that's what it would take to pay a $6 billion pension payment in a single year if the agreement fails.

The credit rating agencies endorse this action. The business community has demanded action. I urge the legislature to save Connecticut from financial devastation and adopt this agreement.

This pension crisis is too big for partisan warfare.

Kevin Lembo is the state comptroller.

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Old 01-02-2017, 05:56 PM
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CALIFORNIA

http://www.sfgate.com/news/article/S...g-10829730.php

Quote:
State court upholds 2013 law that cut buying pension credits

A state appeals court has upheld a 2013 California law that eliminated a pension benefit for hundreds of thousands of state and local government employees in an effort to reduce the pension system’s mounting deficits.
The lawmakers’ action in eliminating the right of public employees to buy additional retirement credits was “wholly reasonable” and did not violate any binding promises made to the employees, the First District Court of Appeal in San Francisco said Friday.
A lawyer for a firefighters union that challenged the law said it would probably seek review by the state Supreme Court, which has already agreed to consider another case cutting back on public pensions.

Friday’s case affects a pension system for 1.6 million state and local employees, although the ruling deals only with those who were employed when the law took effect in 2013, said the attorney, Gary Messing.
The 2013 measure repealed a 10-year-old law that allowed employees with at least five years of service to purchase up to five years of credits before retiring, so that a worker who retired after 20 years would receive a pension based on as much as 25 years of contributions.
Although that law did not increase costs to government employers, it added to rising pensions at a time that statewide public retirement systems faced shortfalls estimated at $500 billion or more in recent studies. The repeal barred employees from purchasing future retirement credits starting in 2013.

The 2013 law was challenged by a union of 6,000 state firefighters, supported by other state and local labor organizations. They argued that they had a “vested,” or established, right to pension benefits that were in effect when they were hired, and that the state broke its contractual promise to them by eliminating those benefits.
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Old 01-02-2017, 07:01 PM
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http://www.dmagazine.com/frontburner...-fire-pension/

Quote:
Can the Texas Rangers Ride to the Rescue of the Dallas Police and Fire Pension?

Most of us have been on vacation, drinking too much whiskey and eating too much noodle kugel (I guess Iíll speak for myself). So letís recap the Dallas Police and Fire Pension System fiasco as we attempt to undertake a healthier and more fiscally solvent new year.

CDK Realty Advisors sued the Dallas Police and Fire Pension System for not paying $139,479 in fees back in February 2016. Yes, thatís right. The lawsuits seemed to start when CDK sued the pension fund. It would take a couple more months for DPFPS to file a counterclaim, alleging that CDK breached its fiduciary duty by encouraging DPFPS to ďenter into a variety of real estate investments that were high risk, speculative, and not typically of the type pursued by pension systems. These high-risk investments have resulted in write-downs and losses of more than $320 million Ö .Ē Thatís about when the FBI served a search warrant at CDKís offices.

Fast-forward about eight months. Concerned about a run on DROP accounts (which included about $80 million in withdrawals by panicked retirees at the beginning of November alone), Mayor Rawlings sued DPFPS on December 5 to try to stop people from taking all the money. In response, the DPFPS Board stopped lump sum withdrawals a few days later. They amended that position on Thursday to allow certain small, monthly distributions. On Friday, Mayor Rawlings announced that he had also asked the Texas Department of Public Safety to investigate. Thatís the Texas Rangers. Philip Kingston told the Texas Tribune heís concerned that the Texas Rangers investigation may impact the lawsuit against CDK. Because, you know, people may not want to answer questions if they might go to jail. But thatís kind of always true, whether or not the Rangers are involved (again, I guess Iíll speak for myself).

Rawlings had held out some hope that the state of Texas might bail out the pension fund. That looks doubtful. In addition to a scathing letter from Rep. Dan Flynn to Rawlings back in November, the House Committee on Pensions issued a report in early December. Itís pretty clear that they are telling the City of Dallas to stop trying to get someone else to solve the problem, find some paper clips and double-sided tape, and figure out how to MacGyver this situation. Because the cavalry isnít coming.

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Old 01-03-2017, 11:04 AM
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http://crr.bc.edu/briefs/state-and-l...ancial-crisis/

Quote:
State and Local Pension Reform Since the Financial Crisis

byJean-Pierre AubryandCaroline V. Crawford
SLP#54

The brief’s key findings are:

Since the financial crisis, 74 percent of state plans and 57 percent of large local plans have cut benefits or raised employee contributions to curb rising costs.

Plans with a larger pension cost burden and lower initial employee contributions were more likely to enact such changes.

And, among plans that made changes, those in states with the strongest legal protections for current workers were more likely to limit the cuts to new hires.
http://crr.bc.edu/wp-content/uploads/2016/12/slp_54.pdf
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