Pension Matters

State Employees Retirement Fund
Most Recent Market Value | Michigan Treasury Bureau of Investments

December 2015

Quarterly Meeting of the Investment Advisory Committee (IAC)

I attended this year’s final meeting of the IAC on December 1, 2015. After several years of double digit returns this most recent one year return was 2.6 percent, significantly lower than what we had seen but which was still somewhat better than its peers. Overall the fund had "strong returns" compared to its peers. The total fund paid out $2.2 billion over the past twelve months ending in September. The ten year rate of return for the full pension fund as of the end of this fiscal year is 6.7 percent. Strong returns have listed the Michigan pension fund 2nd to its peers. The complete Quarterly Investment Review can be found on Treasury’s Bureau of Investments website.

In addition, the results of an asset/liability study for the State Employee’ Retirement System (MSERS) and Other Post Employment Benefits (OPEB) was presented by consultant Aon Hewitt. Some of their key findings were that the MSERS portfolio is "well diversified"; contributions to the fund will help close the "funding shortfall" but will decline over time. The analysis covered demographic trends, contributions and funded ratio. The review also looked at potential impact of changing the actuarial rate of return assumptions.

More Pensions Affected

More than 28,000 people in Indiana and Michigan who belong to the Central States Pension Fund will have their pensions cut due to lack of funds. This affects local organizations like the Teamsters. According to its Executive Director, the fund will run out of money by 2026.

The change, which must be approved by the Treasury Department, would impact nearly 13,179 members in Michigan and 14,950 members in Indiana.  Read more at

Lack of Integrity

According to the Center for Public Integrity, a nonpartisan, nonprofit group in Washington, D.C., Michigan is the bottom rung when it comes to its truthfulness and honesty. The report states, "A significant factor in Michigan’s 2015 ranking is its lack of effective disclosure rules for officials in nearly all facets of state government. Conflicts of interest and potential public corruption remain buried in an honor system with no honor. 

Thanks to loopholes created by the legislature, big spenders representing special interests can dramatically influence an election without leaving a trace. . . . Campaign cash also taints the judicial system. . . .

The state doesn’t require officials to disclose their financial holdings and outside income."

Michigan fails in campaign finance, lobbying disclosure, ethics enforcement, procurement, pension fund management, civil service management, access to information and accountability by all three government branches, according to grades issued Monday.   See the entire report at

Price Index for the Elderly

According to new research from the Center for Retirement Research at Boston College, "Critics have argued for decades that the CPI-W understates the inflation of the elderly because it does not reflect how large a share of their budget goes for medical care, where prices have been rising rapidly." Their conclusion is that if medical care costs continue to rise, a different index for seniors would be appropriate. To read their full report, go to

Social Security Touches More People than Any Other Program

The Pew Research Center has issued a report on Social Security Facts, which states, "At the end of 2014, according to the most recent Social Security Trustee’ Report some 59 million Americans were receiving retirement, disability or survivors’ benefits from the system; the total cost was $848.5 billion. 166 million people paid payroll taxes into the system." This is a fascinating article. You can read it at

Majorities across Generations Oppose Cuts in Social Security Benefits

Medicare Costs for 2015 and 2016

Medicare’s web site states, "Most people pay $104.90 each month and will continue to pay $104.90 in 2016) for Part B coverage. There are exceptions — one is income — if your income is above $85,000 your cost may go up. To see the complete list of exceptions and changes to Medicare coverage for 2016 go to

Benefits Important to Job Seekers

A new report from Employee Benefit Research Institute (EBRI) finds that a job’s benefit package can make or break a potential employee’s decision to take the job. This is relatively easy for state employees to understand as many of us took state jobs because of the benefits — not the pay. The full report, “Views on the Value of Voluntary Workplace Benefits: Findings from the 2015 Health and Voluntary Workplace Benefits Survey,” is published in the November 2015 EBRI Notes and online at

Michigan Consumers Susceptible to Holiday Scams

A new survey from AARP Fraud Watch Network found that 66 percent of Michigan consumers failed a quiz about staying safe from "common holiday scams." Many are engaging in risky behavior that puts them more at risk.  A report, “Beware the Grinch: Consumers at Risk of Being Scammed During the Holidays,” details the polling.



Editor’s note: June Morse may be contacted at or 517-886-9323.

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