Pension Matters

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

September 2016

At the June, 2016 Investment Advisory Meeting, Mr. Braeutigam advised the board that the rate of return for the retirement plans for calendar year 2015 was 2.8%. It was noted that the total pension fund ranked first over the past one, three, and five years over its peers. Over the past ten years, the fund ranked second.” Mr. Braeutigam indicated these results “added over $6 billion in extra fund value above the median plan returns”. Over $2.2 billion in pension payments have been paid in the past twelve months.

At the September, 2016 Investment Advisory Meeting, Mr. Braeutigam advised that the pension fund continues to beat its peers in all time periods, although current returns remain low. In today’s market, pension funds must take increased risk to even attempt to reach the 8% rate of return.

Complete minutes from both meetings and the Quarterly Investment Reviews can be found on line at Treasury, Bureau of Investment web site.

A Volatile Stock Market Over The Past Year Has Taken A Toll On Public Pension Assets.

Public pension plans are reporting meager investment returns this year. So far, no major pension plan has reported a preliminary annual investment return of more than 1.5 percent (Michigan’s annualized 1 year return was 1.5 percent.) thanks to a unstable stock market. Read more at

More Problems with 401K fees

According to Pensions and Investments both Neuberger Berman and Franklin Templeton are being sued for “self-dealing” where the firms offered their own funds instead of comparable cheaper funds to the clients. Read more at

Are Public Pensions in Crisis?

According to an article in the National Public Pension Coalition, “Most public pension plans are well-funded and their funding levels are improving.” One study which can be seen at ( found that the average funding ratio across all public pension plans improved by 10 points from 2009 to 2013. Another study estimates that most plans will reach sustainable funding levels by 2018. According to the Wall Street Journal, the top five public pensions are all over 100 percent funded.


“The laws that have caused the decline of private sector pensions do not directly affect public pensions. However, the fact that the private sector has largely abandoned pensions matters in the debate over the future of public pensions. The move away from pensions in the private sector has been bad for working families and their retirement security. The answer is not to do away with pensions for public employees, but to seek to improve retirement security for those in the private sector that don’t have access to the security of a defined benefit pension.” Read more at

Underfunded Pensions

In a brief released Wednesday, Philadelphia-based The Pew Charitable Trusts says “pensions in all 50 states were underfunded to the tune of $934 billion in the 2014 fiscal year”, the most recent year for which data is available.

Michigan is said to have funded two-thirds of its nearly $84.6 billion in pension liabilities that year, with $28.1 billion in debt, according to Pew. The state also fell short of a new benchmark Pew researchers developed to “determine how much states should contribute into their employees’ retirement funds to reduce their unfunded obligations.” Read the article at

Low Rate of Return for Public Pensions

U.S. public pension plans earned a median return of 1.07% in the fiscal year ended June 30, according to the Wilshire Trust Universe Comparison Service, worse than the median 3.43% in the prior fiscal year. It is the second year in a row that returns were nearly flat and well below the yearly 7.5% return target of many plans. (The CAFR for 2015 indicates a rate of return of 2.6% for the Michigan State Employees Retirement system.) Read more at

Another Inequity

“The cost of employer-provided health insurance is a larger share of lower-paid employees’ total compensation than it is for the people higher up in the organization. Since insurance costs have been increasing faster than total compensation the nation’s lowest-paid workers feel it most.” Suits mentioned were with New York Life, American Century, Transamerica and MassMutual. Read more at

Social Security turns 81 this year. Happy Birthday. “Live long and prosper.” Sunday, August 14, was the 81st anniversary of the Social Security Act! President Franklin Roosevelt signed it into law.

Lots of Seniors In Michigan

According to United Methodist Retirement Communities (UMRC), “With the 10th-oldest population in the U.S., Michigan is likely to face growing housing and infrastructure needs for its seniors within the next decade.”

Citing information from the Michigan Office of Services to the Aging:

  • The proportion of Michigan’s population that is 60 and older is growing more rapidly than other sectors of the population.
  • About 24 percent of Michigan’s population will be 60 and older by the year 2030, an increase of 32 percent from 2012.
  • In addition, Michigan’s residents are also living longer – the fastest growing segment of Michigan’s population is adults age 85 and older, which has grown by 35 percent between 2000 and 2010.
  • As of 2010, there are more than 182,000 residents between the ages of 85 and 95, and more than 1,700 centenarians, demonstrating that people will need help over a longer period of time. Read more at
SOS Act. Will it really?

Six members of the House of Representatives, led by Representative Reid Ribble (R – WI), introduced the “Save Our Social Security Act” (also known as the S.O.S. Act). Although the Act may not pass in the near future, it begins to set the stage for changes which will be required to keep Social Security afloat. Read more at

School Pensions Under Fire Again

School pensions continue to be under fire from Michigan Capital Confidential. See their latest tirade at

Let’s Keep An Eye on This Bill

(House Bill (HB) 5801) to significantly lower the income tax burden for both single and joint filer retirees was introduced. For those taxpayers born after 1946 through 1952, the pension subtraction would increase from $20,000 to $30,000 for single filers and $40,000 to $60,000 for joint filers. At age 67, subtraction amounts would increase as well.

According to SSA data there are about 1.4 million persons over 65 receiving SSA benefits in Michigan as of December of last year.

Senior Notes
  • Illinois Teachers’ Retirement System lowered its assumed rate of return to 7% from 7.5% starting with the fiscal year beginning July 1, 2017, at a board meeting Friday, according to an article in Pension and Investments.
  • The United States will need more than 3 million seniors housing units by 2040—about 2 million of which still need to be constructed, according to a recent brief from the American Seniors Housing Association (ASHA).
  • The median age of entry for independent living is about 83.7 years, and the median age of entry for assisted living is about 84.8 years, according to a study conducted by the Center for Retirement Research at Boston College in 2012.

Recently the Social Security Administration announced that it would require “two-factor” authentication on its website. The only way to access an online “My Social Security” account would be through a password and an additional code texted to the user’s cell phone.

After an uproar from some of those who don’t use cell phones, the agency used Facebook to say, “never mind”.

Speaking of SSA

According to the Social Security Administration, about 40 percent who receive benefits have to pay federal income taxes on some of those benefits...Whoopee

Find more information on pensions on the Lansing SERA Facebook page at

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

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