News From Treasury
LANSING, Mich. — Michigan Treasurer Nick Khouri today announced Michigan’s Chief Economist Jay Wortley is retiring effective Feb. 28, 2017, after 36 years of state government service. Eric Bussis has been selected as the states new chief economist and Director of the Office of Revenue and Tax Analysis.
Chief Investment Officer Speaks at SERA meeting
Jon Braeutigam, CIO of the Bureau of Investments at the Department of Treasury spoke at the March SERA meeting. As of 9/30/15 MSERS had a total of 58,453 retirees and beneficiaries receiving benefits and 4,215 inactive employees entitled to, but not yet receiving benefits. The MSERS “estimated market value funded ratio” as of 12/31/16 was around 68 percent. More information can be found at the Treasury web site at www.michigan.gov/treasury/
Possible Lowering of Pension Rate of Return
“Michigan Governor Rick Snyder on Wednesday unveiled a plan to drop the assumed rate of investment return for the state’s retirement funds to 7.5 percent from the current 8 percent. The Governor said the change would be “significant but prudent“.
“We want to be conservative in making sure we have those resources for the people that earned those pensions and benefits,” Snyder told a joint House and Senate appropriations committee as part of his fiscal 2018 budget presentation.
“He added that further reductions in the rate were possible if merited. Under the plan, the reduced rate for funds covering state workers, police, judges, and the national guard, would be immediate upon adoption by the state budget director and the retirement systems’ boards. A lower rate for the Michigan Public School Employees’ Retirement System would be phased in over two years.
“The move would trigger increased pension payments by Michigan of an additional nearly $247 million in fiscal 2018, which begins Oct. 1, and $400 million in fiscal 2019, according to budget documents.” Read the entire article at www.reuters.com
Note: the MPSERS (Public Schools retirement) board voted to adopt the proposed recommendation of the Bureau of Investments and the retirement system’s actuary that the Assumed Rate of Investment Return (AROR) be lowered to 7.5% from the current 8%.
Note: The State of Michigan Retirement Board meeting was held on March 2, 2017. Greg Parker, Director of Investments - Public Markets presented a retirement plan review to the Board. He indicated the funding ratios of the plans for State Employees and the Judges are improving and have “substantially” beaten its peers over time. The time weighted rates of return for State employees was 7.5 percent for the year ending 12/31/16.
The Board then took up the issue of reducing the rate of return for the State Employees, Judges and Military defined benefit and retiree health care plans. Director of ORS, Kerrie Vanden Bosch provided information and answered questions for the Board. ORS indicated its support for decreasing the assumed rate of investment return as it seems to be the direction retirement funds are taking nationally and the decrease would make rates more stable and the funds more sustainable. After discussion, the Board approved a motion to reduce the rate of return to 7.5% for the State Employees and Military plans beginning in FY16 and for the Judges plan beginning in FY17.
Speaking Up For Retirees
AARP Media, firstname.lastname@example.org, @AARPMedia
WASHINGTON, DC — AARP Executive Vice President Nancy LeaMond today offered the following statement in response to President Trump’s action that delays implementation of a crucial component of retirement planning, the fiduciary duty rule:
Hope for Wayne County Pensions
Wayne County is projecting a general fund operating budget surplus of about $44 million for the fiscal year 2015-16 based on preliminary numbers from the Department of Management and Budget.
“The County had already allocated an additional $7.5 million to protect pensions beyond the Annual Required Contributions in the 2016-17 budget. If surplus projections hold true, the administration intends to add up to an additional $2.5 million to fund pensions this fiscal year, bringing that total to $10 million. The County’s pension system still has $636.5 million in unfunded liabilities and is only funded at 54%, up from 45%.” Read the entire article at www.michronicleonline.com
HHS Poverty Guidelines For 2017
The 2017 poverty guidelines are in effect as of January 26, 2017. The range is $12,060 for one person to $41, 320 for eight persons in the family/household. You can see the full guideline at Federal Register notice of the 2017 poverty guidelines, published January 31, 2017
The payroll tax (FICA) is the 12.4% tax on earned income between $0.01 and $127,200, which is the maximum taxable earnings figure in 2017, (up from $118,500 in 2016.) Any wages earned above $127,200 would be free and clear of the payroll tax. While this is an increase it still does little to increase the funding needs of the fund.
Those of us who pay FICA, we pay half the tax rate while our employers pay the other half. If you are self employed — you pay it all.
Wouldn’t you think that persons making over $127,200 could afford to pay into social security as well as those who make less? They will get SSA benefits just like those who paid into it. Maybe that’s why the system is going broke?
There’s talk about increasing the payroll tax on those of us who already pay it. But I don’t see anything more on expanding the base of persons required to pay into it. Just saying. Check out this article at www.fool.com
Thinking About Early Retirement?
Take a look at the chart below on the impact of early retirement on lifetime benefits. Can sure make a difference. Read the entire article at www.fool.com
Full retirement age has been changing since Congress changed the law in 1983. Since that time the age at which you can draw “full” retirement has been gradually increasing. For people who attain age 62 in 2017 full retirement age is 66 and two months. Check it out at www.socialsecurity.gov
According to Michigan Aging Network News, “Michigan’s population 60+ now numbers 2.2 million, or 22% of the total population. The fastest growing segment is 85+ is expected to double by 2030.”
Just for Fun: Q
What is the “initial” state of retirement?
A: SSA, CD’s, IRA’s, AARP.
Editor’s note: June Morse may be contacted at email@example.com or 517-886-9323.
Return to top of page