Pension Matters

State Employees Retirement Fund
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May 2016

Can Assumed Rate of Return be Achieved?

Chief Investment Officers (CIO) of some of the largest U.S. pension funds acknowledged they have little hope of earning their assumed rate of return over the next couple of years, according to a CIO round table panel at the Pension Bridge Annual Conference in San Francisco. Read more at www.pionline.com

Private Equity Giants Warn Of Expected Lower Returns

At the Milken Institute Global Conference, a non-profit, nonpartisan think tank, “titans” of private equity shared some of their concerns about returns from private equity investments. They indicated returns will be lower than investors had come to expect from the asset class;” capital distributed back to limited partners will decrease; and their firms will be launching funds with lives as long as 20 years.” Read more at www.milkeninstitute.org

Other Pension Funds and Hedge Funds

Trustees of the New York City Employees' Retirement System (NYCERS) voted last week to liquidate its hedge fund holdings. At the same time the nation's largest public pension fund, California Public Employees Retirement System (CalPERS), indicated it has reduced its hedge fund investments by more than 80%. Read more at www.pionline.com

“Can Closing A Defined Benefit (DB) Pension Plan To New Hires And Replacing It With A Defined Contribution (DC) Plan Help Improve The Solvency And Sustainability Of A State’s Retirement System Finances?”

That is the hypothesis for a study conducted by the Reason Foundation which included Michigan and Alaska. Their conclusion is that both states are better off after closing their DB plans even though unfunded liabilities have increased in both states. However, the study also shows, “had the states properly managed their pension reform projects they would be billions better off today. In effect, the states have ‘spent’ the savings from closing the defined benefit plans on other budgetary priorities. See more at: www.reason.org

How Big a Burden Are State and Local Other Post Employment Benefits (OPEB)?”

A new study put out by the Center for Retirement Research at Boston College does not deliver good news regarding OPEB benefits costs. Their main findings are:

  • “aggregate unfunded OPEB liabilities are an estimated $862 billion – nearly two thirds of which is held at the local level;
  • these unfunded liabilities are equivalent to 28 percent of the unfunded liabilities of pensions (using the OPEB interest rate for pensions); and
  • while OPEB liabilities are large, several factors  – such as  sponsors’ flexibility to scale back benefits – limit their potential drain on resources.”

To read the entire brief go to http://crr.bc.edu

Seniors and Their Community Contributions

According to a recent report in M Live which cited information from federal data, about a third of Michigan households get Social Security benefits and almost a fourth of households have other retirement income using. Below is a look at our tri county area according to the data. Seniors are not exactly in the 1% but contribute a considerable amount to the tri county economy.

Eaton32%19,34427%$23,75526%
Clinton30%19, 85227%$25,27525%

See more at www.mlive.com

Public Plan Data

If you want to take a look at financial and actuarial data for some of the largest public pension plans in the nation, including the Michigan Plan go to http://publicplansdata.org/quick-facts. Data is from 2001 to 2014. The data for Michigan can be found at www.publicplansdata.org

Senior Actions

President Obama signed the Older Americans Act Reauthorization Act of 2016 into law last month. For more than 50 years, the Older Americans Act has helped people live the lives they want, with the people they choose, throughout their lives. Through the aging services network, it has helped older adults continue to stay work, play and volunteer in their communities, to the great benefit of all. Because of the Older Americans Act, neighborhoods and organizations across the country are able to continue to draw upon the wealth of knowledge that comes only with life experience.

Lansing has recently joined the effort to bring this “Livable Community” concept here. See more about this initiative at www.aarp.org The livability survey for Lansing is available at this site also.

The U.S. Department of Housing and Urban Development (HUD) announced it is making approximately $15 million available to test a “promising housing and services model for low-income seniors to age in their own homes and delay or avoid the need for nursing home care”.

Quotable

“The rise of ‘do it yourself’ retirement also reflects the growing income inequality in the United States. The 401(k) was originally created to provide a way for corporate executives to save some of their high earnings in tax-advantaged accounts and this is what it has been most successful at doing. The 401(k) was never intended to be the primary retirement savings vehicle for most workers, but that is what it has become. However, since the average worker does not make anywhere close to the income of a corporate executive, they have less to contribute to a 401(k) and, therefore, do not truly benefit from it. For the average worker, a defined benefit pension remains the best way to save and prepare for retirement.” www.protectpensions.org

“At a time when few Americans have any substantial retirement savings, public pensions are one of the only vehicles left that offer workers real retirement security.” Governing www.governing.com

Tri-County Office on Aging (TCOA) Needs Assessment

Just thought I would pass this along to our readers for you to provide your input to TCOA if you are a care giver or receiving care giving services. Every three years the Tri-County Office on Aging (TCOA) conducts a needs assessment to learn how the agency can better serve older adults in the community. Give them your feedback if you use or provide this service.

Two surveys were developed to collect information on a variety of topics of relevance to older adults, whether or not they currently participate in any TCOA programs or services. The audiences for the two different surveys are:

  1. Adults age 60 and older, including those who are caregivers for other adults (Full Survey)
  2. Adults under age 60 providing care to an older adult (Caregiver Survey)

TCOA appreciates your assistance in distributing this survey widely and facilitating the collection of responses.

Editor’s note: June Morse may be contacted at jmorse10@comcast.net or 517-886-9323.

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