Pension Matters
State Employees Retirement Fund
Most Recent Market Value | Michigan Treasury Bureau of Investments
May 2015
Office of the Auditor General (OAG) Report on Public Retirement Systems
The OAG issued the Comprehensive Annual Financial Reports (CAFR) for the State’s public retirement systems. The biggest percentage increase in a system’s net position was 13.7 percent for the state employees’ retirement system.
The combined net worth of the four systems on September 30, 2014, the end of the 2013-14 fiscal year, was more than $60.8 billion.
Each of the reports credited increased contributions and healthy investment earnings growth for the improvements during the year. For the three largest funds, investment growth averaged around 30 percent for the year. In addition, costs, especially for health care, showed limited increases.
The State Employees Retirement System (MSERS) had total assets at the end of 2013-14 of $12.9 billion, up 12.3 percent from the $11.5 billion the year before. Its liabilities fell during the year to $848.9 million from $885.6 million, or 4.1 percent.
That leaves the MSERS with a net position of $12 billion, up from $10.6 billion, or 13.7 percent. The MSERS fund saw the largest increase in investment earnings over the year ’ as U.S. stock markets hit new highs of 32.7 percent.
Health care cost increases were small across the board. The state employees system increased by 1.2 percent. The report can be found on the ORS web site at www.michigan.gov.
In an audit of the state’s 401K plan for the 2013-14 fiscal year, auditors found the total investment accounts balanced, but the mutual funds had been overstated by $528.58 million, with the Dodge and Cox Stock Fund and Artisan Mid Cap Fund understated totaling that amount.
Two retirement funds for state employees did not have sufficient controls to ensure investments were classified and financial activity was recorded correctly, Auditor General Doug Ringler said in recent reports.
Similarly, the Office of Retirement Services (ORS) and Financial Services had misallocated investment balances between the various funds. The report can be found at www.audgen.michigan.gov./p>
An audit of the 457 plan, also for FY 2013-14, made essentially the same findings. Again, the mutual funds had been overstated, by $173.37 million, and the other two funds understated by that total. This report can be found at www.audgen.michigan.gov
ORS officials agreed with the findings and recommendations, but noted the errors did not affect participant accounts.
What’s New from Employee Benefit Research Institute (EBRI)
End-of-life Finances: A new analysis from EBRI finds that almost 21 percent of those who died at ages 85 or older had no non-housing (meaning financial) assets left—and more than 12 percent had no assets at all. The situation was worse for singles who died at or above age 85: almost a quarter had no non-housing assets, and almost 17 percent had no assets. About 9 percent of singles in that age range also died with outstanding consumer debt, averaging $6,368.
Those who died at earlier ages were generally worse off: Almost 30 percent of households that lost a family member between ages 50 and 64 had no assets left. Read the entire report at www.ebri.org
Retirees Get Voter-OKed Pension Cut Overturned
A retiree group won a big victory last month. Reversing a superior court ruling, an appeals court overturned part of a voter-approved San Francisco pension reform in 2011 that ended higher payments to retirees when investments have “excess earnings.”
But the feisty retiree group called ’Protect Our Benefits’, is unhappy because the appeals court ruled higher payments can be ended for city workers who retired on or before Nov. 5, 1996, when the supplemental cost-of-living adjustment was first approved by voters.”Read more at www.calpensions.com.
Employees Winning 401(k) Lawsuits
Employees have been fighting back against high 401(k) fees, and recent lawsuits have proven that the courts are siding with them.
The 401(k) industry lags behind the growth of cheaper mutual funds and ETF options offered by other online retirement advisors. The tide is turning in the employees’ favor. Several lawsuits have already demonstrated that employees will pressure companies to offer better investment options instead of the previous scant alternatives with only a limited number of mutual funds with high fees.” Read more at www.mainstreet.com.
Lawmaker Wants to Mandate Retirement Plans, Employer Contributions
A new legislative proposal wouldn’t just require employers to offer a retirement plan — it would mandate employer contributions too.
The proposal, unveiled by Rep. Joe Crowley (D-N.Y.), Vice Chair of the House Democratic Caucus, would direct employers with 10 or more employees to open individualized retirement accounts for every employee, if they do not already offer a retirement plan. These federally established “Secure, Accessible, Valuable, Efficient Universal Pension“ accounts (labeled “SAVE UP“ accounts) would have government oversight, private management and a limited number of low-fee index fund options. “ Read more at www.napa-net.org
How Pensioners Will Move Yields as Much as the Fed
An aging US population is as great a force on treasury yields as any move from the Federal Reserve to hike interest rates, according to rating agency Moody’s chief economist. See what they mean at www.ai-cio.com/
Social Security Administration:
Annual Statistical Supplement to the Social Security Bulletin, 2014
The Supplement includes more than 240 statistical tables that provide comprehensive data on Social Security and Supplemental Security Income. The data cover program details such as beneficiary counts, amounts of benefits, and the status of the trust funds. Find it at www.ssa.gov
Savings Education
Campaign for a Secure Retirement: my Social Security ’ This educational campaign encourages retirement planning and saving and creating a my Social Security account at www.socialsecurity.gov/myaccount. Get estimates of what your benefits would be at different retirement ages and better understand what savings you will need in retirement.
Retirement Plans Database
The Center for Retirement Research at Boston College has introduced a new public plans database (PPD). The new PPD has more data covering over 150 state and location pensions plans. The data covers 2001-2013. Also has downloadable financial reports and actuarial valuations for all “sample“ plans. To see Michigan’s retirement plans in the PPD go to www.publicplansdata.org
A Little Humor
The best time to start thinking about your retirement is before the boss does.
Source Unknown
It’s paradoxical that the idea of living a long life appeals to everyone, but the idea of getting old doesn’t appeal to anyone.
Andy Rooney
Editor’s note: June Morse may be contacted at jmorse10@comcast.net or 517-886-9323.
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