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  #51  
Old 01-07-2017, 07:57 AM
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CALPERS
CALIFORNIA

https://www.calpers.ca.gov/page/news...-fund-finances

Quote:
CalPERS Annual Report Details Fund Finances

Fiscal Year 2015-16 Comprehensive Annual Financial Report Now Available

SACRAMENTO, CA - The California Public Employees’ Retirement System (CalPERS) released its annual financial report, which provides a detailed summary of the pension plan’s investment activities and performance over a one-year period ending on June 30, 2016. The Comprehensive Annual Financial Report (CAFR) (PDF) presents an in-depth statistical analysis of pension and health finances of the System and for the thousands of contracting California cities, counties, and special districts.

"Sound financial reporting is imperative to our funds' economic security," said Marcie Frost, CalPERS chief executive officer. "Our annual report is a key component of our fiscal responsibility that strengthens our accountability and transparency to our members, contracting employers, and the public we serve."

Significant data in the CAFR for Fiscal Year ending June 30, 2016:

Investment assets stood at nearly $302 billion for the Public Employees' Retirement Fund (PERF). California-based investments increased from the previous fiscal year by 0.5 percentage points to $26.8 billion.

Investment returns in the PERF earned 6.9 and 6.8 percent over the past three and five years, respectively despite volatile financial markets. Fixed income investments retuned 9.3 percent, while investments in real assets helped balance the fluctuations in the global equity market.

The funding level for the PERF is 73.1 percent as of June 30, 2015. As a result of lower-than-expected investment returns the PERF funded status has been estimated to decrease to 69 percent for June 30, 2016.

The removal of ineligible dependents through the Dependent Eligibility Verification Process saved approximately $122 million through cost avoidance. For better pricing and wider coverage, CalPERS also offered a new option to Medicare members and expanded eligibility for the CalPERS Long-Term Care program.

The California Employers' Retiree Benefit Trust (CERBT) Fund saw a 6.7 percent increase over the previous fiscal year in the number of employers that contract with CalPERS to prefund future retiree health care obligations. As of November 2016 the program reached a milestone and signed its 500th public agency. The CERBT is an optional program administered by CalPERS with total investment assets of approximately $5.4 billion, more than an $800 million increase over the previous fiscal year.

The number of retirees and beneficiaries increased 6.1 percent from the previous fiscal year to nearly 650,000.

The number of employers who contract for pension benefits increased to 3,021 from 3,007 from the previous fiscal year.
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  #52  
Old 01-07-2017, 03:51 PM
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MICHIGAN

http://www.mininggazette.com/opinion...n-liabilities/

Quote:
Tuesday’s front page of The Mining Journal featured an in-depth introduction to the newspaper’s series on pension liabilities.

Mary Wardell’s well-researched article kicks off more stories on this complicated, but important, topic.

First, it must be understood what unfunded accrued pension liability means: It’s the difference between the total amount due to both current — upon retirement — and retired workers, and the actual amount of money the system has on hand to make those payments.

Michigan is 61.6 percent funded, which is well under what the National Association of State Retirement Administrators, recommends for states: 80 percent at the least.
=sigh=

Quote:
An October article in Crain’s Detroit Business pointed out that some Michigan cities are cutting services for residents to pay for retiree health care or make payments to their defined benefit retirement plans. It already happened in pre-bankruptcy Detroit, where pension and retiree health care obligations forced cuts for essential services like police, fire, streetlights and others.

The Mining Journal series will cover pension liabilities and how they affect Marquette County, the city of Marquette, the cities of Negaunee and Ishpeming, public schools and what’s going on in the Legislature.

Each entity is unique, and the series will explain how each one is dealing with the pension challenges.

The effects will be far-reaching, regardless of how each Michigan resident is affected.

We strongly recommend people read The Mining Journal pension series to get a closer look at this complex issue.
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  #53  
Old 01-07-2017, 03:54 PM
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UNITED STATES MILITARY

http://www.alamogordonews.com/story/...ment/96125292/

Quote:
New in 2017: Huge changes ahead for military retirement


The year ahead will prompt many of today’s 1.3 million active-duty service members to make a big decision about their retirement benefits: whether to preserve their place in the traditional military pension system or opt into a new "blended" benefits package.

Troops can start doing their research this year, but those who are eligible to make a choice have a full year before they can opt in to the new plan. That window will last from Jan. 1, 2018, through Dec. 31, 2018. Everyone who joins the military on or after Jan. 1, 2018, will be automatically enrolled in the new plan.

In the months to come, the Defense Department will roll out an expansive education program to ensure all troops understand the difference between the two benefits and are prepared to make such a critical personal financial decision. There will be classes, online educational tools and a calculator that will enable military personnel and their families to compare the two options based on their current career status and plans for the future.

The law contains a grandfather clause giving all troops entering the service prior to 2018 the option to keep the legacy retirement benefit, which offers a monthly pension check equal to 50 percent of basic pay after 20 years of service.

The new retirement benefit offers a smaller pension check, 40 percent of basic pay after 20 years, yet also includes monthly government contributions to an individual retirement account that service members own outright after completing just two years of service.

It will be similar to 401(k) contributions for private sector employees, and mark the first time the military offers some limited retirement benefit to troops who separate before reaching 20 years of service. Historically, noncareer service members — more than 80 percent of the force — have received no retirement benefit.

The new system will make individual retirement account contributions equal to at least one percent of basic pay. Beyond that, the government will provide matching funds to troops who contribute their own cash. The maximum is 5 percent, meaning if troops agree to contribute 5 percent of their own pay to the individual retirement account, the government will also contribute 5 percent.

Individual contributions are tax-deferred, meaning the tax is payable upon withdrawal. But money deposited into these retirement accounts, known as a Thrift Savings Plan, is generally not available for withdrawal before the owner reaches age 59½. Early withdrawal comes with significant tax penalties.

Personal finance experts say the most important factor in the decision will be whether an individual service member plans to stay for a 20-year military career. For those who expect to reach the 20-year mark, the traditional pension system is probably a better deal.

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  #54  
Old 01-07-2017, 03:58 PM
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CALPERS
CALIFORNIA

http://www.ocregister.com/articles/n...-pensions.html

Quote:
CalPERS return rate decision could lead to tax hikes

When California voters hear calls for tax increases in the near future they should think of pensions. That truth has never been clearer now that the California Public Employees’ Retirement System board voted to establish a more realistic return rate on its investments. The end result of this action is that state and local governments will have to chip in even more money for public employee pensions.

For years, defenders of the government retirement system justified healthy retirement payouts by claiming that CalPERS investments will bring an annual return of 7.5 percent. That assertion was defended despite the fact that over the last 20 years investment returns averaged only 6.9 percent, with the current annual return bringing in only 2.3 percent.

Facing market realities, the board lowered the estimate to 7 percent, a mark that still may be unattainable.

For taxpayers, the number change likely means more dollars from state and local government budgets will be directed to cover pension liabilities and less will be available to meet services supplied by government. The city of Los Angeles already dedicates 20 percent of its budget for pension obligations, Anaheim 13 percent, Long Beach 11 percent and San Jose as high as 27 percent. These numbers will only increase after the CalPERS board’s decision.

.....
Voters will never see a pension tax measure on the ballot. The effort to meet pension obligations will be subtler. Want more police services? Raise your taxes. Want to improve schools or parks? A tax increase is called for. A $10 car registration increase goes into effect in 2017 specifically to deal with California Highway Patrol pension obligations.

In the November election, about 80 percent of the approximately 430 local tax and bond measures passed. Most of the tax measures were dedicated for specific purposes, but, in government, dollars are fungible. Covering a service cost with a new tax allows freed up money to be used for pensions.

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  #55  
Old 01-07-2017, 04:01 PM
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Quote:
Originally Posted by campbell View Post
http://abc27.com/2017/01/05/pennsylv...ension-pledge/

Quote:
Pennsylvania senator responds to criticism over pension pledge

....
In the statement, he said he was not aware months ago that the decision he had to make at the start of his term would affect his ability to enter a 401(k)-style plan at any point in the future.

His full statement is below:

After my election, I was informed that if I did not elect to go into the retirement system, I would be forever barred from participating in a 401(k) style plan that has been discussed and voted on by the Senate and the House. After reflection on the information provided, I elected to be in the SERS system to preserve my ability to opt into a 401(k) style plan.

The retirement form language which is based on state and federal law is clear. “If I do not elect to become a member of SERS within 30 days of the effective date of my current employment, or if I decline to become a member of SERS, I will not have another opportunity to elect to become a member of SERS….during my current employment.”

I was not aware months ago that the decision I would be required to make at the start of my term would affect my ability to enter a 401(k) style plan at any point in the future. As I said during the campaign, I do not want to collect a defined benefit pension. A 401(k) option, however, would be similar to what a large majority of my constituents currently have.

I stand ready to support meaningful pension reform. In fact, I have already committed to co-sponsoring legislation that will convert legislators’ defined benefit plan to a 401(k).

In addition to fighting for pension reform, I am not accepting a taxpayer-paid vehicle or per diems, and I will never vote to increase my pay. I have also already signed on as a co-sponsor of legislation that requires receipts before any reimbursement from state accounts are made.

I look forward to voting for long-overdue pension reform in the near future that will protect the taxpayers of the Commonwealth.


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  #56  
Old 01-07-2017, 04:03 PM
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DALLAS POLICE AND FIRE
TEXAS

http://www.wfaa.com/news/dallas-poli...unds/382652927

Quote:
Dallas Police and Fire pension members may have to pay back funds

Bernie Madoff.

It's a name now often bandied about when talking about the failing Dallas Police and Fire Pension fund.

"The reality of it is that it was a Bernie Madoff type scheme," says Lee Kleinman, a city council member and former pension board trustee.

The city has agreed to put in an additional billion dollars over 30 years, but they're proposing a series of bitter pills to make up the rest of the nearly $4 billion shortfall.

The bitterest pill: A proposal to take back all of the interest police and firefighters earned on Deferred Option Retirement accounts, or DROP. That would amount to an additional billion dollars saved.

The city is calling it an "equity adjustment." Retirees call it an illegal "claw back."

"We're looking at it as a prepayment of their future pension that is something above and beyond what the other cities were paying," outgoing City Manager A.C. Gonzalez said Thursday.

Whatever you want to call it, it's outlined in a draft legislation being hammered out by the city and pension fund leaders. Pension fund representatives and the city have been meeting almost daily to try to come to an agreement on proposed legislation that they can take to the state capital to fix the failing fund.

Gonzalez says he hopes that they can craft a joint proposal by the time the legislative session starts next week.

Current leaders of the pension fund acknowledged during last week's meeting that they aren't in a great bargaining position after police and firefighters rejected a series of changes to try to rescue the failing fund last month. That plan would have fixed about 50 percent of the problem.

If nothing is done, the fund would run out of money in about a decade.

DROP, which was created in the early 1990's, allowed police and firefighters to retire while still on the job. Their monthly pension checks then were deposited into DROP accounts, which were guaranteed an eight to 10 percent interest.

The pension continued to pay those high interest amounts in the bad years even when the fund lost hundreds of millions of dollars.

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  #57  
Old 01-07-2017, 04:04 PM
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MICHIGAN

http://www.detroitnews.com/story/opi...ties/96227612/

Quote:
Editorial: State can’t shirk pension reform


Flint is facing another crisis — but this one doesn’t involve its drinking water. The city’s pension system is severely underfunded and getting worse, and that leaves the future viability of the city uncertain, no matter what happens with its water lines.

Flint’s defined benefit pension fund has just 38 percent of the money it needs to pay promised benefits to future retirees. The fund has an unfunded liability of $345 million, which is up $60 million from last year, according to Flint’s 2016 audit report.

If the shortfall is not addressed soon, and in a sustainable way, Flint will face additional cuts in government services, something it has already been doing for nearly a decade. Since 2008, Flint has lost roughly 160 police officers and 50 water maintenance employees, part of a reduction that has seen its workforce fall to 470 employees from 1,156 in just eight years.

The basic problem is that promised benefits can’t be met with current municipal revenues, unless there are drastic changes to retirement packages. The state Legislature tried and failed to make those changes in last year’s lame-duck session. It must try again.

Defined benefit pensions, which are most common at the local government level, guarantee a specific amount of income after retirement and requires the government to save money to make those future payments.

An unfunded liability occurs when the government is not saving enough.

Sometimes the communities divert money to today’s spending needs. And sometimes they simply err in estimating life expectancy, the rate of return on investment and payroll growth.

The problem goes beyond Flint. Only a handful of Michigan’s cities and counties have adequately saved for their employees’ retirement benefits, according to a study by the Mackinac Center for Public Policy. Just 20 of Michigan’s 100 largest cities have enough money to meet pension obligations. Of Michigan’s 83 counties, two are fully funded — Bay and Kalamazoo.

The statewide pension system has big problems, too. The Michigan Public School Employees’ Retirement System has the largest unfunded liability in the state at $26.7 billion. MPSERS has not met its “annual required contribution” since 2009.

When the contributions are not fully paid, unfunded liabilities grow at a faster rate. In 2010, MPSERS’ required annual contribution was $1 billion. After 5 years of failing to save enough, the requirement is now more than $2.2 billion. The reason: Money is now going directly from the paychecks of current employees to pay for benefits of today’s retiring, instead of being invested in an interest-bearing fund that will grow to pay future pensions.

Today, only about 10 percent of money that Michigan teachers contribute is being invested for them.

The first solution is to force governments to pay required contributions. This will be tough for many struggling communities. But if they don’t pay now, they’ll have to pay much more later, or face insolvency.

The second step is to close pensions to new hires. A system that can’t support its current obligations should not be adding more.

The Legislature should pass a bill that puts all newly hired public employees into 401(k)-style defined contribution retirement plans. These are private accounts that can’t accumulate unfunded liabilities.

These are reforms that can’t be avoided. If steps aren’t taken now, Flint and other financially strapped communities will be out of business.
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  #58  
Old 01-11-2017, 04:11 PM
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CHICAGO, ILLINOIS

http://chicago.suntimes.com/politics...n-bill-stance/

Quote:
Pension battle between ‘Gov. Gridlock’ and ‘Madigan’s Mayor’?

SPRINGFIELD — Gov. Bruce Rauner and Mayor Rahm Emanuel have gone from vacation buddies sharing expensive bottles of wine to political adversaries trading insults.

On Monday the relationship was reduced to name-calling.

A top mayoral aide dubbed Rauner “Governor Gridlock.”

And Rauner’s deputy chief of staff fired back by linking Emanuel to the governor’s political nemesis, dubbing Emanuel “Madigan’s Mayor.”

The catalyst for the latest salvos between the two one-time friends was a bill to help salvage two city worker pension funds. It now heads to the governor, who has vowed not to sign it without pension reform.

The Illinois Senate on Monday voted to approve the measure 41-0.

It provides for taxpayers and government employees putting more money into retirement systems that cover laborers and municipal workers. The Illinois House passed the bill in December.

But Rauner won’t support the bill without pension reform. And he questioned the use of revenue in the bill — which would resort to the city using property tax money to fund pensions after it runs out of funds from a new tax on city water and sewer service.

“The bill essentially authorizes another property tax hike on the people of Chicago and sets a funding cliff five years out without any assurances that the city can meet its obligations,” Rauner spokeswoman Catherine Kelly said in a statement. “The governor cannot support this bill without real pension reform that protects taxpayers.”

Emanuel’s communications director Adam Collins didn’t mince his words in his own statement issued after the governor declared his intentions.

“Bruce Rauner is Governor Gridlock, and he is showing why nothing gets done in Springfield,” Collins wrote.

.....
Under the city worker pension plan, city taxpayers would contribute millions more a year to the municipal workers’ and laborers’ pension funds. To pay for the increased contributions, the City Council approved a new tax on city water and sewer service. Without acting, the Municipal Employees Pension Fund would be left with a gaping hole in 2023 — even after a utility tax is fully phased in — that would require tax increases to honor the city’s commitment to reach 90 percent funding over a 40-year period.

In mid-September, the City Council easily approved the mayor’s plan to slap a 29.5 percent tax on water and sewer bills to save the Municipal Employees pension fund.

But the Illinois General Assembly still needed to sign off on employee concessions tied to the deal as well as the funding schedule the five-year ramp to actuarially required funding.

Same goes for the mayor’s plan to save the Laborers pension fund, bankrolled by a previously approved, 56 percent tax on monthly telephone bills.

Those concessions call for employees hired after Jan. 1 to become eligible for retirement at age 65 in exchange for an 11.5 percent pension contribution. That’s 3 percentage points higher than employees pay now.

Veteran employees hired after Jan. 1, 2011, get to choose between contributing 11.5 percent for the right to retire at 65 or continuing to pay 8.5 percent and waiting until 67 to retire.

The legislation would require newly elected Chicago aldermen and citywide elected officials to serve longer to achieve the maximum 80 percent city pension.
http://www.chicagotribune.com/news/l...109-story.html

Quote:
Emanuel wins approval of pension bill, but Rauner may veto

The Illinois Senate on Monday easily approved Mayor Rahm Emanuel's plan to shore up two city worker pension funds, but the measure faces an uncertain future now that it's headed to a skeptical Gov. Bruce Rauner.

The mayor's bill is aimed at preventing retirement systems for municipal workers and laborers from going broke in about a decade. The two funds are a combined $21 billion short of what's needed to pay out future benefits, and the plan relies on newly hired employees paying more toward their retirement.

The House approved the bill 91-16 last month, and on Monday the Senate followed suit, 41-0. But the Rauner administration, which is seeking a broader deal to cut costs in state worker pension systems, responded Monday by throwing some cold water on the plan.
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Old 01-11-2017, 05:26 PM
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CALIFORNIA

http://californiapolicycenter.org/do...ension-trough/

Quote:
Double Dipping at the Public Pension Trough

January 10, 2017/by Marc Joffe

On December 30, the Los Angeles Times reported that James Mussenden, the retired city manager of El Monte, raised his total annual cash pension benefit to $216,000 by using a Supplementary Retirement Plan from Public Agency Retirement Services. The PARS plan is not unique to El Monte: if the leadership of any public agency concluded that the generous retirement benefits available from CalPERS or CalSTRS was insufficient for their post-retirement lifestyle and they were able to convince their council or board to go along, taxpayers in their city, special district, school district or community college district would find themselves paying into an additional plan.

Unlike CalPERS, CalSTRS and California’s various city and county pension plans, PARS is a private company with limited disclosure obligations and without exposure to the California Public Records Act. As a result, it is more difficult to assess the impact PARS is having on the size of public employee retirement payouts and on the taxpayers who fund them. Fortunately, some PARS data can be obtained through public agencies that use its services or who receive its reports. California Policy Center is collecting data on PARS, and we can start sharing some of that information here.

First, some caveats are in order. PARS offers a variety of retirement plans including several defined contribution options. Since these DC plans do not place taxpayers on the hook for disappointing investment performance, they are less objectionable to pension reformers (but because DC plans may involve employer matching contributions, they could still be questioned from the perspective of whether total public employee compensation is appropriate – but that’s another story). Also, the California Public Employees’ Pension Reform Act effectively prevented California agencies from starting new PARS defined benefit plans and adding new hires to existing ones. Still, the numerous PARS defined benefit plans around the state entitle many current employees to receive outsize pensions at significant taxpayer expense.

The State Controller’s ByTheNumbers web site reports that PARS defined benefit programs have $355 million in assets and are 49% funded. That data comes from the Public Agency Retirement Systems Trust 2015 Audited Financial Statements, which we obtained through a Public Records Act request and can be seen here. One concern about PARS is how employer contributions are invested. According to the audit, a large portion of the funds have been placed in Highmark Capital Management portfolios. As shown here, HCM invests PARS assets into mutual funds, which means that management fees are being paid both to HCM and each individual fund manager. HCM’s fee alone is 0.58%. High management fees can be expected to depress portfolio returns – keeping them well below the 7.5% actuarial projection.

The audit also lists entities that offer PARS plans. From that list, we identified 114 public agencies that had PARS defined benefit plans as of June 30, 2015 (one of these, the City of San Bernardino, is liquidating its PARS plan as part of its Chapter 9 bankruptcy process.)

.....
One California city that has been hit hard by PARS obligations is Redding in the far northern part of the state. Like many inland cities, Redding is struggling with weak revenues. According to its most recent financial audit, total city revenues remain well below their pre-recession peak of $308 million – totaling just $288 million in the 2016 fiscal year. Tax revenues peaked at over $60 million in 2008 and were just $48 million in 2016.

Meanwhile the city was required to cough up $5.8 million in PARS contributions on top of the $15.2 million it had to pay CalPERS. So a large proportion of Redding’s tax take is needed just to fund add-on pension payments.

Redding’s net PARS liability is $31 million based on an optimistic discount rate of 7.5%. Using a more realistic discount rate, its net liability would be in excess of $50 million.

In a forthcoming article we will discuss how Redding’s PARS plan came to be and who has benefited from it (hint: the story is not too different from that of El Monte). Also, if readers have stories about PARS at individual agencies, please consider sharing them with us in the comments, by email or via Facebook.
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Old 01-11-2017, 05:31 PM
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JACKSONVILLE
FLORIDA

http://jacksonville.com/opinion/2017...costly-mistake

Quote:
Merging police and fire pensions into state system would be a costly mistake

As pension negotiations between the city and public safety unions continue, the unions have claimed that shifting new employees to the state-managed Florida Retirement System would be a fiscally responsible solution for Jacksonville taxpayers.

When it comes to Jacksonville’s dysfunctional pension system and its huge unfunded liability, taxpayers have learned that the devil is in the details.

After examining the implications of a shift to the Florida Retirement System, city taxpayers should be on high alert.

I estimate that it would cost taxpayers an additional $1 billion over time versus current pension spending plans. Most of the $1 billion would be wasted to pay down the growing unfunded pension liabilities of the Florida Retirement System.

Joining it would be an awful deal for the city and its citizens.

In June 2015, Mayor Alvin Brown and the City Council approved a landmark pension reform agreement with the Jacksonville Police and Fire Pension Fund.

The agreement was estimated to save taxpayers $1.5 billion over 30 years. At the agreement’s core was the creation of a new and financially more sustainable pension plan for newly hired police and fire employees.

Nearly all of the agreement’s anticipated savings was a result of this new plan, which would cost the city about 10 percent of public safety payroll to fund.

Today, if it were to join the Florida Retirement System, the city’s cost to fund the pensions of new police and fire employees would be 22 percent of payroll — more than double our current rate.

By paying much more, most of the savings from the agreement would evaporate, with taxpayers picking up the tab.

It gets worse for Jacksonville taxpayers.

The Florida Retirement System has its own unfunded pension liability, currently estimated at $25 billion.

This must be paid down. The details are laid out in financial reports.

If we were to join the Florida Retirement System, about half of the money that Jacksonville taxpayers would send to Tallahassee would be diverted to pay down existing state pension debts.

......
As the Jacksonville Police and Fire Pension Fund reduced its assumed rate of return from 8.5 percent to 7.75 percent and then again to its current level of 7 percent, its unfunded liability skyrocketed.

We continue to learn this lesson, that a pension fund can present itself as healthy on paper while cloaking significant financial tumors.

Flaws for state system exposed

Until recently, the assumed rate of return on the investments of the Florida Retirement System was 7.65 percent.

This rate is flawed and is acknowledged as unrealistic.

In October, both the actuary and the investment consultant of the Florida Retirement System recommended reducing the rate to 7 percent.

Instead, the rate was dropped only trivially to 7.6 percent.

By neglecting the guidance of its own advisers, the Florida Retirement System is concealing a growing risk.

Its actuary made it crystal clear that a rate of 7.6 percent “conflicts with our judgment regarding what would constitute a reasonable assumption.”

If the 7 percent rate was adopted, its unfunded liability would surge from $25 billion to $38 billion, and its funded ratio would drop below 80 percent — the rule of thumb level for healthy pension funds.

The current payroll charge of 22 percent for the Florida Retirement System would increase sharply as a result as additional funds would be needed to pay down $13 billion of newly recognized unfunded liability.

It’s a question of when, not if, rates will be adjusted.

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