Investment Advisory Committee (IAC) Meeting
The quarterly meeting of the IAC was held on Thursday, September 9th. Guest presenter was David. Lebovitz Vice President - Global Market Strategist for J.P. Morgan Asset Management.
Jon Braeutigam and Greg Parker discussed the performance summary for the combined retirement plans. For the year ending June 2017, returns matched the peer median return of 12.9 percent. The combined retirement systems paid out approximately $2.0 billion net of contributions over the past twelve months ending in June 2017. The Michigan State Employees Retirement System (MSERS) had market value of $11,470 million.
For more specific and detailed funding information, you can find previous and most recent Quarterly Investment Review information on the Michigan Department of Treasury, Bureau of Investments web site. www.michigan.gov/treasury.
Social Security Funding
Last year (2016) Social Security collected $957.5 billion in income, of which $922.3 billion was disbursed primarily to retirees, as well as millions of the disabled, and the survivors of deceased workers. This marked the 33rd consecutive year that Social Security's asset reserves increased, following the passage of the 1983 Amendments that gradually increased both payroll taxes and Social Security's full retirement age. Read more at http://madison.com
U.S. private equity had its best annual return since 2013 with 4.5% for the quarter and 12.9% for the year ended Dec. 31. (Pensions and Investments)
The Michigan Department of Treasury is asking residents to be alert for a new scam that implies the federal government will pay their outstanding state tax debts or other state debts.
Within the last month, the state Treasury Department has noticed an increase in cases where individuals are attempting to pay their outstanding state debts with routing numbers from two U.S. Department of Treasury Bureaus — the Financial Management Service (FMS) and the Bureau of the Public Debt (BPD). Individuals are using these federal routing numbers with their Social Security Number as the checking account number and listing the bank as either the FMS or the BPD.
Individuals who think they may have an outstanding state tax debt or other state debt are encouraged to call state Treasury Department’s Office of Collections at 517-636-5265.
For more information about state tax debt or other state debt collections, go to www.michigan.gov/treasury.
Just a Friendly Reminder to Those Not Yet Retired
Your age when you collect Social Security has a big impact on the amount of money you ultimately get from the program. The key age to know is your full retirement age. For people born between 1943 and 1954, full retirement age is 66. It gradually climbs toward 67 if your birthday falls between 1955 and 1959. For those born in 1960 or later, full retirement age is 67. You can collect Social Security as soon as you turn 62, but taking benefits before full retirement age results in a permanent reduction — as much as 25.83% of your benefit if your full retirement age is 66. (SSA)
A new study finds that public sector employees with a retirement plan choice overwhelmingly choose defined benefit (DB) pension plans over 401(k)-type defined contribution (DC) individual accounts. Among the eight states (Michigan was one) studied that offer employees such a choice, the DB pension "take-up rates in 2015 were 80 percent or higher in six states." Two of the plans studied had pension take-up rates higher than 95 percent. Florida and Michigan had take-up rates of 76 percent and 75 percent, respectively. Read the report at www.nirsonline.org
Who Doesn't Pay Social Security Taxes?
First of all: those making the big bucks. After an individual's income hits a certain level, mandatory Social Security contributions cease on any amount earned after that. Officially known as the "wage base limit," the threshold changes every year.
Social Security tax rate is 6.2% of earned income up to this determined limit. For 2017, the maximum amount of income that can be subject to Social Security tax is $127,200. No Social Security tax is assessed on income in excess of this amount. Although the minimum amount goes up yearly, it is still quite low considering the number of high wage earners.
Sounds like an easy solution to the Social Security funding issue is to RAISE THE THRESHOLD SO MORE EARNERS PAY INTO A SYSTEM Read more about this at www.fool.com
LANSING -" Unions representing more than 30,000 Michigan state government employees today called on the Civil Service Commission to reject a proposal for new limits on collective bargaining.
Under a proposal earlier this month from State Personnel Director Jan Winters, unions could no longer negotiate over how employees are recalled after layoffs, how overtime is doled out or how performance pay or other incentives are handled, among other issues. The Civil Service Commission, which regulates state workers, could vote on the proposal at its next meeting on Sept. 20 in Lansing." Read more of Justin Hinkley's report at www.lansingstatejournal.com
Impact of Stocks on Retirement System
U.S. stock market performance has implications for our entire retirement system — not just your 401(k).
Three studies addressing the big-picture relationships between the market and retirees’ financial security were produced in 2017 by the Center for Retirement Research. Here are summaries of each one:
State and Local Pension Plan Funding Sputters in FY2016 — Public pension plan returns were very weak in fiscal year 2016. But even though stock market performance improved in 2017, it will be difficult to compensate for the plans’ funding shortfalls over the long-term: “To achieve more meaningful progress,” the researchers concluded, state and local governments “need to establish contribution levels that will actually reduce unfunded liabilities.”
How Will More Retirees Affect Investment Returns? — This interesting paper reviews the effect of the competing demographic forces driving investment returns. This is an extremely complex economic calculation, but the upshot is that our retirement accounts are receiving less interest and dividend income per dollar invested.
What are the Costs and Benefits of Social Security Investing in Equities? — Young adults are told to throw their 401(k) contributions into the stock market and forget about them for a few decades. That’s because stocks are riskier but generally outperform bonds. The Social Security Trust Fund, which currently invests only in bonds, is just another long-term investor, and projections show that its finances would also benefit from investing in stocks.
Read more at http://squaredawayblog.bc.edu
Mark your calendars for the Tri-County Office on Aging’s 32nd Annual Dinner and Auction!
November 9th, 2017 at 6pm. Eagle Eye Banquet Center, 15500 Chandler Rd, Bath Twnp MI 48808
The annual Dinner and Auction is TCOA’s largest fundraising event of the year, with proceeds designated to support the Meals on Wheels (MOW) program and other in-home supports for older adults.
Click here to purchase your tickets for this evening of elegant dining, complete with a raffle with cash prizes, cash bar, and a live and silent auction. Last year this event raised just over $59,000 in support of TCOA programs and services. You can help us raise even more for older adults this year by sponsoring, attending, donating auction items, and/or selling raffle tickets. For more information about this event, please contact Fundraising and Volunteer Specialist Casey Cooper at 517-887-1377.
Editor’s note: June Morse may be contacted at email@example.com or 517-886-9323.
Return to top of page