Pension Matters
State Employees Retirement Fund
Most Recent Market Value | Michigan Treasury Bureau of Investments
November 2015
Consolidation of Retirement Boards
Governor Snyder recently signed Executive Order 2015-13, which puts the management of the state’s three retirement systems under one consolidated administration, and creating a new Retirement Board.
The move affects the retirement systems for state employees, the military retirement provisions and Michigan judges. The order will take effect on January 1, 2016. Governor Snyder stated this would assure, "the most coordinated and efficient management of these functions and provide the best service of the retirement systems while streamlining government."
The board will consist of nine members, and include the attorney general, the treasurer, the state personnel director, the legislative auditor general or their designees. It will also consist of members of the three retirement systems and one person from the general public. The board will be placed under the authority of the Department of Technology, Management and Budget
Named to the board was Molly Jason as Attorney General Bill Schuette’s designee, Robert Brackenbury as Treasurer Nick Khouri’s designee, Craig Murray as Auditor General Doug Ringler’s designee, and John Gnodtke as State Personnel Director Jan Winters’ designee.
Appeals Judge Mark Boonstra was named to the Board to represent the general public, Other appointees are, Oakland District Judge Diane D’Agostini representing judges, Deputy Civil Service Director Matt Fedorchuk representing state employees, former state Retirement Services director Laurie Hill representing state employees, and John Wojcik, general counsel for the Michigan National Guard, representing the Military Retirement Provisions board.
Mr. Fedorchuk will serve until December 31, 2016. Ms. D’Agostini will serve until December 31, 2017. Mr. Wojcik will serve until December 31, 2018. Mr. Boonstra and Ms. Hill will serve until December 31, 2020.
How Pension Funds are Doing
A recent article in Bloomberg Business states, "The finances of more than two-thirds of U.S. state pension plans improved in fiscal year 2014, as a soaring stock market boosted returns and many states stopped incorporating losses from the recession into their pension calculations."
Idaho was ranked as having had the biggest improvement in funding with a raise in funding ratio from 7.6 percentage points to 93.1 percent and Oklahoma, whose actuarial value of assets gained 6.5 percentage points to 73 percent.
Michigan’s pension funding ratio has declined the most to 59.9 percent from 83.6 percent. Michigan is one of three states, including Alaska and Ohio that is reported to have more retired public employees than active members. See more information at www.bloomberg.com or go to our Facebook page "Lansing SERA" where the article is also posted.
State Police Get Pension Increase
According to an Associated Press news release, Gov. Snyder has a signed a law to ensure that certain Michigan State Police retirees get at least $16,000 a year.
The bill affects about 100 people, or their beneficiaries, who retired from the state police before October 1986 and collect less than $16,000.
The Senate Fiscal Agency says the law could cost $250,000 in the first year, but the amount would fall as retirees and beneficiaries from that period die.
Snyder signed the law Tuesday. Lawmakers still need to approve the money on an annual basis.
No Social Security COLA Next Year
In case you hadn’t heard, Social Security has reported that there will be no cost of living increase in the social security checks for next year.
You have also probably been hearing about increases in Medicare premiums along with the no cost of living increase. NOTE: if your Medicare premiums are withheld from your Social Security, you will continue to pay $104.90 per month for Part B. That’s because the “hold harmless” provision prohibits Social Security benefits from being reduced because of an increase in Medicare premiums. Medicare cost increases are generally covered by the Social Security COLA. Read more at www.kiplinger.com
4 Percent Rule for Required Minimum Distribution (RMD) May Not Be the Best
Retirees have been generally told that the best way to manage your retirement income is to draw down 4% of your savings every year. But things have changed and retirees are living longer and sagging interest rates sure aren’t helping.
Those of us lucky to have a pension and social security may make it though okay, especially if we have an IRA or 401(k) also. But as more and more people retire without defined benefit plans, their own savings, often in an IRA or 401(k) accounts, will be increasingly important.
An article in USA Today suggests looking at annuities (carefully). It also suggests looking at the 4 percent rule "loosely". Meaning adjusting your withdrawals depending on the market. Such as when markets are down, draw out less and when markets are up, draw more. You can read the whole article at www.usatoday.com
Best Nations for Retirees
Many think the pensions for American retirees is way too generous. However, according to a Global Age Watch Index that rates the quality of life of older citizens in 96 counties shows a different story. Switzerland comes out at number one while USA ranks eighth. One typical Swiss retiree who worked as an administrative assistant was receiving $5000 in social security and pension benefits. According to AARP’s Public Policy Institute the average American retiree averages $2,640 a month. Read more at www.helpage.org and www.aarp.org
Rising Costs for Medicare
Paying for health care is one of the biggest challenges that older Americans face. A study using data from the Centers for Medicare & Medicaid Services found that the average American who uses Medicare Part D for their prescription drug coverage paid an average of $466 in annual premiums during 2015. For 2016, that cost is expected to rise by more than 6% to $496.
Did you know Medicare does not have the same negotiating rights as other medical providers? Increased premiums for drug coverage is the outcome. That’s why it is so important to give Medicare the same negotiating rights as other medical providers.
The Congressional Budget Office says that giving Medicare’s low-income beneficiaries the same discount available under Medicaid would save $116 billion over 10 years. These savings could cut the cost of the program by about 10% a year. www.usatoday.com
Another Health Care Reality
According to Fidelity Investments’ annual health care costs estimate, a couple, both age 65, can expect to spend about $245,000 on health care throughout retirement. What will that do to our next egg? You can find data specific to Michigan at www.aarp.org
Need a New Medicare Card?
If you are a Medicare beneficiary and you have lost, damaged, or need to replace your Medicare card, you can now easily order a replacement Medicare card using your online my Social Security account.
Getting a Medicare replacement card is another convenient service that is only a few minutes away with your my Social Security account. Help spread the word about the many benefits available with a my Social Security account at www.socialsecurity.gov/myaccount.
Let’s Compare Pensions
We have been hearing a lot about CEO hourly wages being astronomical compared to the average worker. What about their pension? According to a report in by the Center for Effective Government and the Institute for Policy Studies, "CEO nest eggs on average are worth more than $49.3 million, enough to produce a $277,686 monthly retirement check for life".
But what about workers? According to the Census Bureau, Michigan State and Local Average Pension Benefit Payments for 2014 were between $20,000 and $24,999. www.census.gov
Detroit Pension Debt
LANSING, Mich. (AP) — "The Michigan state treasurer is warning lawmakers that Detroit’s public schools could be insolvent by spring if the Legislature doesn’t cover millions in debt.
A House subcommittee held a hearing Tuesday, the first since Gov. Rick Snyder last week said lawmakers should set aside $70 a million a year for a decade.
Treasurer Nick Khouri says Detroit schools face many challenges, even without debt. He says the cash-poor district hasn’t been making timely payments to suppliers. Nearly $160 million is owed to the state pension fund.
Information from: The Detroit News, www.detnews.com/
Elderly Banking... ..............PRICELESS!!
Shown below, is an actual letter that was sent to a bank by an
82-year-old woman. The bank manager thought it amusing enough to
have it published in the New York Times.
Dear Sir:
I am writing to thank you for bouncing my check with which I endeavored to pay my plumber last month. By my calculations, three nanoseconds must have elapsed between his presenting the check and the arrival in my account of the funds needed to honor it.
I refer, of course, to the automatic monthly deposit of my entire pension, an arrangement which, I admit, has been in place for only eight years.
You are to be commended for seizing that brief window of opportunity, and also for debiting my account $30 by way of penalty for the inconvenience caused to your bank.
My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways. I noticed that whereas I personally answer your telephone calls and letters, — when I try to contact you, I am confronted by the impersonal, overcharging, pre-recorded, faceless entity which your bank has become.
From now on, I, like you, choose only to deal with a flesh-and-blood person.
My mortgage and loan repayments will therefore and hereafter no longer be automatic, but will arrive at your bank, by check, addressed personally and confidentially to an employee at your bank whom you must nominate.
Be aware that it is an OFFENSE under the Postal Act for any other person to open such an envelope.
Please find attached an Application Contract which I require your chosen employee to complete.
I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative.
Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof.
In due course, at MY convenience, I will issue your employee with a PIN number which he/she must quote in dealings with me.
I regret that it cannot be shorter than 28 digits but, again, I have modeled it on the number of button presses required of me to access my account balance on your phone bank service.
As they say, imitation is the sincerest form of flattery. Let me level the playing field even further.
When you call me, press buttons as follows:
IMMEDIATELY AFTER DIALING, PRESS THE STAR (*) BUTTON FOR ENGLISH
#1. To make an appointment to see me.
#2. To query a missing payment.
#3. To transfer the call to my living room in case I am there.
#4. To transfer the call to my bedroom in case I am sleeping.
#5. To transfer the call to my toilet in case I am attending to nature.
#6. To transfer the call to my mobile phone if I am not at home.
#7. To leave a message on my computer, a password to access my
computer is required. Password will be communicated to you at a later
date to that Authorized Contact mentioned earlier.
#8. To return to the main menu and to listen to options 1 through 7 again
#9. To make a general complaint or inquiry. The contact will then be put
on hold, pending the attention of my automated answering service.
#10. This is a second reminder to press* for English.
While this may, on occasion, involve a lengthy wait, uplifting music
will play for the duration of the call.
Regrettably, but again following your example, I must also levy an
establishment fee to cover the setting up of this new arrangement.
May I wish you a happy, if ever so slightly less prosperous New Year?
Your Humble Client
And remember: Don’t make old people mad. We don’t like being old in
the first place, so it doesn’t take much to piss us off.
Editor’s note: June Morse may be contacted at jmorse10@comcast.net or 517-886-9323.
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