STUMP » Articles » Public Pension Quicktakes: 6 March 2015 » 6 March 2015, 07:08

Where Stu & MP spout off about everything.

Public Pension Quicktakes: 6 March 2015  

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6 March 2015, 07:08

First, a thanks to my referrers from last week:

And a couple of search terms:

Here we got with this week’s pension news:

Public pensions won’t take a hit with new actuarial tables:

Many corporate pension plans are taking big financial hits because of new data that show Americans are living longer – but what about public-employee pension plans? Will they too see big losses and hits to their balance sheets as a result?

The answer is, no – at least not as significantly, broadly or immediately.

Because there are no mortality standards for public plans.

But wait, what’s this?

Also, large public plans generally update their mortality assumptions every three to five years – more frequently than corporate plans, said David Kausch, chief actuary at Gabriel Roeder Smith & Co., a consulting firm focusing on public-sector benefits plans. That means the public plans’ numbers already reflect some of the improvements in mortality shown in the Society of Actuaries’ data.

In fact, the society based its new assumptions only on data from private-plan retirees. The society did gather mortality data from some public plans as well, but found it was significantly different from the private-plan data, and that the public plans had differences from plan to plan. The reasons aren’t entirely clear – differences in geography may play a role, as well as the fact that corporate employees are more likely to work in more physically strenuous blue-collar jobs. The society is now starting a separate study of the mortality of public-plan retirees, Mr. Hall said.

Oh, that should be interesting to me. I’m not a pension actuary, but I am a member of the Society of Actuaries, who has developed these tables.

If you want mortality tables of many sorts, go here. I grab stuff from there all the time.

I am looking forward to reading their public pensions mortality study in the coming years.

Sweet deal for Marin County retirees:

A number of former Marin County executives who retired after long careers get annual pensions that are bigger than the salaries of the officials who replaced them at the Civic Center.

In a situation that reflects the robust benefits of a county pension system that favors veteran officials, a recent 3 percent cost-of-living boost for county retirees means that Mark Riesenfeld, the county’s former chief executive, is making more in retirement than the executive who replaced him, County Administrator Matthew Hymel.

Retiree Riesenfeld’s $7,560 cost-of-living raise brings his annual pension to $259,680, about $6,000 more than the $253,822 Hymel now earns working in the job Riesenfeld used to have.

Hymel said he is not inclined to comment on individual retirees but “I will say that I have a great appreciation for our former employees who dedicated over 30 years of service to our community.”

While piggy pensions aren’t what is killing most public pension funds… this definitely doesn’t help.

Detroit retirees see pension cuts:

City of Detroit retirees covered by the general retirement system are beginning to see pension cuts take effect with their March check.

Retirees reported that they received notices in the mail on Friday. The March checks, as well as paperwork for those who use direct deposit, show that the cuts are taking place now.

The March 1 date had been targeted as the time to begin the cuts, though some earlier reports suggested the move might have been delayed until April 1.

Following the city’s exit out of bankruptcy, retirees who had worked for the water department, bus system and other general city departments, will now see at least a 4.5% cut to their pension checks.

I came across

Connecticut double standard for double-dipping:

Evidence of that is a 180-degree reversal on Feb. 19 by the Connecticut State Employees Retirement Commission in its treatment of one of two government officials’ requests to collect pensions from past municipal jobs at the same time they work full-time in new ones.

One of the officials involved in this “double-dipping” controversy is Marilynn Cruz-Aponte, a $100,000-a-year assistant to Hartford’s public works director and a longtime Democratic political activist. She is popular with the Democrats who control the governor’s office and the General Assembly.

The other is Republican Mayor Joseph Maturo of East Haven. He is generally disliked by Democrats, many of whom call him “Taco Joe” because of his remark in 2012 that he might have some tacos for dinner on the day when four East Haven police officers were charged with terrorizing local Latinos.

….
The retirement commission has said in recent years that Maturo can’t be a full-time mayor and also collect a $40,000 disability pension under the state-run Connecticut Municipal Employees Retirement System (CMERS), stemming from his past service as an East Haven firefighter. also

And yet, since September 2013, the commission has been letting Cruz-Aponte work full-time as a Hartford city employee and still collect a $40,000 regular pension, stemming from her retirement after 25 years’ employment in New Britain city government.

….
In 2013, after Cruz-Aponte was informed by the comptroller’s office that she couldn’t collect her New Britain pension while working full-time in Hartford, Democrats in the legislature pushed through a bill that would have let her and others in the same situation collect pensions from past municipal jobs.

But then The Courant reported that the bill intended to help Cruz-Aponte would also let the unpopular (with Democrats), Maturo recover his pension, too, and Gov. Dannel P. Malloy vetoed it in mid-2103, saying it would lead to a spread of double-dipping by municipal employees.

Cruz-Aponte found another way: In August of that year she asked that the retirement commission overrule the decision by the staff of state Comptroller Kevin Lembo to deny her the pension. It voted in her favor and she started getting the payments in September 2013.

…..
There’s one more wrinkle in all of this: A former lawyer in the comptroller’s retirement division, Virginia Brown, has a “whistleblower retaliation complaint” pending at the state Commission on Human Rights and Opportunities and one of her many allegations of irregularities and improprieties involves the handling of Cruz-Aponte’s pension request.

Brown says in the complaint that in 2013, after Malloy vetoed the pension bill, a superior “informed me that the governor’s office called the comptroller… and told him to make sure the commission gave the retiree her retirement. The re-employed retiree picked up a check on September 27, 2013 for over $50,000 for retroactive retirement benefits.”

Although she didn’t name her, Brown was referring to Cruz-Aponte. State retirement records show that Cruz-Aponte received a check on Sept. 27, 2013, for $53,565.

And double standards play so well with the public.

Connecticut is not in a good place with regards to its pensions, btw. 80 percent may be a bogus measure, but I can tell you near-40% fundedness is horrible. That’s Illinois-level horrible.

New Massachusetts governor trying early retirement enticement that has failed elsewhere:

Facing the prospect of a daunting state budget gap, Governor Charlie Baker will file legislation this week aimed at enticing thousands of state employees to retire early. But if the move does not generate the expected savings, workers will be laid off, a top official said Sunday.

The administration projects that 4,500 people will take advantage of the pension-sweetening Early Retirement Incentive Program, presuming the Legislature goes along with the offer.

“We need to get to that number, one way or another,” said Kristen Lepore, Baker’s budget chief. “If we’re not able to reach this number, I’m going to have to do layoffs.”

After accounting for costs, including additional pension liability and filling some of the newly vacant positions, the administration says it expects the program would save about $178 million in the new fiscal year, which begins in July.

…..
But only employees who are vested in the pension program with at least 20 years of service or who are at least 55 years old when they retire would be eligible, according to the administration.

Some classes of employees and those whose salaries are funded by a federal grant, for example, would not be eligible for the program.

Almost 14,000 people would have access to the program, according to the Republican administration.

The bill sweetens the prospect of retiring in the next few months, offering workers a chance to boost their pensions by crediting them with up to five additional years of age or work.

But the program prohibits employees from getting an annual retirement benefit of more than 80 percent of their regular compensation at the time they retire.

…..
She said the biggest difference between previous early-retirement programs and this one is the additional pension costs are paid for, instead of adding to the state’s unfunded pension liability.

The pensions costs are to be spread out over 15 years, she said.

Treasurer Deborah Goldberg, a Democrat who oversees the state retirement board, hinted at concerns in a statement Sunday.

“I look forward to reviewing the details of the Governor’s proposal,” she said, “keeping in mind the impact it will have on our unfunded pension liability and potential effect on the state’s bond rating.”

What I mean by “failed” is not that people won’t take the deal. Just that this sort of enticement has been used in both public and private pensions, without having a great benefit for stopping fiscal bleeding.

I understand out-and-out layoffs would make for bad blood, but that is another option for cutting costs in the government.

As exactuary says on the Actuarial Outpost:

Also, if you can do layoffs, why do the sweeteners at all? If you do any layoffs, who will be served by the sweeteners? Not the taxpayers. If you don’t have to do any layoffs, then your sweeteners must be too sweet.

Of course.

More lawsuits in New Jersey:

TRENTON — More than a dozen New Jersey unions today announced plans to sue Gov. Chris Christie to force him to more than double next year’s payment into the public worker pension system.

Christie’s proposed budget for the fiscal year that begins this July, which he introduced last week amid a call for sweeping new pension reforms, includes a $1.3 billion pension payment that’s nearly two times this year’s contribution but still far below what Christie agreed to under a 2011 pension overhaul.

Christie would have to find an additional $1.7 billion in his $33.8 billion proposed budget to pay for the $3 billion pension payment unions are demanding. A spokesman for Christie noted that the $1.3 billion earmarked for pensions would already be the largest payment ever made into the system.

So last year, it was $900 million being shortchanged out of a $34 billion budget (3%)

This year, it’s $1.7 billion out of $33.8 billion (5%) — a larger gap to close on both a relative and absolute basis.

Another bite at the apple in Phoenix:

Phoenix voters might experience a sense of deja vu when they go to the polls this August.

City leaders decided Wednesday to refer another pension initiative to the ballot, with the goal of cleaning up some of the unintended consequences and weak spots left behind by a previous effort to confront rising pension costs.

City Council members voted 6-3 to move forward with the proposal, the third pension ballot question put to city residents in as many years.

The city estimates the measure would save $38.8 million over 20 years by changing some of its rules for new hires coming into the pension system. Existing retirees or employees in the system now would not see an impact to their pension benefits, nor would public-safety workers.

I have a question — did this really have to go to a ballot question? Is this the only way pensions can get changed there?

One of the proposal’s key pieces would cap the size of pensions that the city’s highest-paid employees could earn in the future. It would also take steps to combat the practice of pension spiking, or the artificial inflation of an employee’s income toward the end of a career to boost retirement benefits.

The measure also would limit the amount of money new employees are required to pay for their pensions. City officials said a 2013 pension overhaul has had the unintended consequence of making contribution rates skyrocket for new hires.

“We have to continue to be that very attractive employer,” said Councilman Daniel Valenzuela, who supported the measure. “I think we found a good balance.”

Councilmen Bill Gates, Sal DiCiccio and Jim Waring voted against the proposal. Critics questioned whether it does enough to limit the pension system’s financial risk to taxpayers or to stop pension spiking.

Oh wait, I see why it needs to be a ballot proposal:

Voters would need to decide the proposal’s fate because it includes changes to the city charter, Phoenix’s establishing document. Council members are expected to vote on more specific ballot language later this month.

Okay, but it is not clear to me that this has been thought through well at all. This bit stood out to me:

The committee’s recommended plan would reduce and cap the amount of money that new employees must contribute to their pensions at 11 percent of pay. City workers will soon pay more than 15.5 percent of their paychecks into the pension system, on top of the 6.2 percent they must put into Social Security. Their pension payment could climb to 17 percent in the next several years.

Officials said the high contribution rate has caused an exodus of new employees and made recruiting high-quality workers a struggle.

I will say something more about “employee contributions” another time.


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