Investment Advisory Committee (IAC)
I attended the March 5th meeting of the IAC. The Executive Summary indicated markets have rebounded strongly from the 08-09 financial recession. Returns have been good and the pension fund has outperformed its peers by over 4 percent. The Michigan State Employees Retirement System (MSERS) had a total fund return of 11.3 percent over the year ending December , 2014. More information is available in the Quarterly Investment Review for March 5, 1015 which can be found on the Department of Treasury, Bureau of Investments web site.
Film Incentive Cessation Legislation
I contacted the Bureau of Investment (BOI) for information on how the following might impact the pension fund’s Michigan Motion Pictures Studios investment.
HB 4122 which would require the Michigan Film Office to cease giving out incentives on Oct. 1, 2015, when the state’s fiscal year rolls over.
Robert Brackenbury, Director of Investments, Private Markets, Chief Operating Officer responded:
“we can’t be exactly certain of the impact, since not all of the film incentives are utilized by companies that also rent out the MMP Studio facilities. However, the elimination or reduction of incentives will impact on the studio’s ability to attract film tenants on a long-term basis. The timing of impacts on studio rentals will depend on the duration of films currently in production under existing incentive levels and the proportion of any remaining incentives that simultaneously are awarded to films that utilize the studio facilities.”
My thanks to Treasury’s Bureau of Investment for their responses to our inquiries.
National Institute on Retirement Security (NIRS) Studies States who Switched Pension Plans
The National Institute on Retirement Security (NIRS), presents summaries of changes in three states — Alaska, Michigan, and West Virginia — that made the switch from a DB pension to DC accounts. The study states, “ A misperception persists among some that defined contribution (DC) plans “save money” when compared with traditional pensions. However, several states that switched to DC plans have experienced a much different reality over time. Indeed, a recent NIRS analysis of the economic efficiencies of defined benefit (DB) plans reconfirmed that pensions deliver the same amount of lifetime income for about half of the cost of providing the lifetime income from a typical DC plan. “ Below is an excerpt of what they found for Michigan.
You can access the entire study at www.nirsonline.org and type in Michigan in the search window.
Constitutionally Guaranteed Retirement Benefits get no Help from High Court
A unanimous opinion from the Supreme Court states, “ When a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life.“ www.latimes.com
Always Nice to Get a Letter from Those Who are and Have done the People’s Business
The following letter was written to the California Alliance for Retired Americans by Alan Simpson, co-chairman of the Simpson-Bowles Commission on the debt and deficit.
Read more: www.politico.com
Detroit Pensioners 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. Read more at www.freep.com
Treasury to Help Detroit Pensioners
“...the state Treasury Department accepted one-time applications in December that will provide qualified retirees supplemental pension payments.
The Income Stabilization Fund was created to prevent retirees from falling below the poverty line as a result of the cuts. The program allocates $20 million over 14 years for retirees from either of the city’s two pension funds.
To be considered, pensioners must be 60 or older and have an income that is at 140 percent of the 2013 federal poverty level. For police and fire, 268 retirees or beneficiaries were deemed eligible for the monthly supplement of up to $58.
The General Retirement System had about 1,550 applicants who qualified. Of those, about 1,450 will begin receiving monthly payments of $1 to $180 this year, said Tina Bassett, a spokeswoman for the fund. Bassett said the additional 100 or so eligible pensioners who do not qualify this year may be deemed eligible in future years based on changes in the federal poverty index. “Our retirees and other members have made personal sacrifices and difficult decisions throughout this process and now are working to move forward on a stable path,“ she said.
Read the entire article at www.detroitnews.com
Tighter Rules On Retirement Account Brokers
President Barack Obama calls for tighter rules on retirement account brokers,“ reigniting a confrontation with the financial services industry over rules affecting trillions of dollars in 401k and other savings accounts“. (Feb. 23) AP
Watch the video at www.usatoday.com You can also see it on our Lansing SERA Facebook page
Follow These Steps to Keep Your Accounts Secure
A brokerage account can be a lot like a bank account. Keep your money safe from scammers and fraud. Take the time to do the following to protect yourself:
Get the full tips at Investor.gov
Tax Planning for Retirement
Taxes don’t stop when your paycheck does. In fact, tapping your retirement nest egg comes with all sorts or new rules and opportunities.
Read more at www.kiplinger.com
Editor’s note: June Morse may be contacted at email@example.com or 517-886-9323.
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