Pension Matters
State Employees Retirement Fund
Most Recent Market Value | Michigan Treasury Bureau of Investments
June 2019
What a Grand Gesture!
Billionaire Robert Smith has pledged to pay off the students loans of the entire graduating class of Morehouse College. The gift is estimated to be worth up to $40 million. Some members of the graduating class were saddled with debt upwards of $90,000.
Kudos to Smith for his donation. But students shouldn’t have be forced to take on such massive amounts of debt in the first place. Currently, Americans have more than $1.5 trillion in student loan debt. We must make public colleges and universities tuition-free for all students. What do you think? (Facebook posting of Robert Reich)
Check your Blood Pressure Meds
Drug companies recalled dozens of lots of the front-line blood pressure and heart medications valsartan, losartan and irbesartan — alone or in combination with other drugs — after testing revealed the drugs had cancer-causing impurities in trace amounts.
The Food and Drug Administration is investigating the underlying causes of the impurities. The federal agency hasn’t completed its inquiry, but inspection reports reveal problems at both factories — Zhejiang Huahai Pharmaceutical in China and Hetero Labs in India — before the carcinogen-tainted drugs were discovered. (Read more in USA Today)
Challenges Pension Administrators Face
Well-run retirement plans are an important reason why talented employees join the public sector workforce. In a 2018 Accenture survey of 2,800 public and private employees, 78 percent said pension benefits are critical to accepting employment and 73 percent stay with an employer because of the retirement benefits offered. Read more at www.governing.com
Don’t forget that the Office of Retirement Services also has a page on Facebook with lots of updates and new information.
Did You Know?
“ Women confront special financial challenges in retirement due to persistent wage discrimination and time spent away from the workforce raising children or caring for elderly family members. Because Social Security retirement benefits are based on lifetime earnings history, women’s benefits are typically lower than men’s. Women of color have even more reason to maximize benefits. Average Social Security checks for African American women are 25% lower than men’s, while Latinas’ are 31% lower.
Women can mitigate these inequities by waiting to claim Social Security until at least full retirement age — increasing their monthly benefits.” (Detroit News)
Be Prepared
“ One of the largest potential expenses in retirement is the cost of long-term care. The median cost of a private room in a nursing home was nearly $97,500 in 2017, according to the Genworth Cost of Care Study; a room in an assisted-living facility cost $45,000, and 44 hours per week of care from a home health aide cost $49,000. Medicare provides coverage for some skilled nursing services but not for custodial care, such as help with bathing, dressing and other activities of daily living. But you can buy long-term-care insurance or a combination long-term-care and life insurance policy to cover these costs. See The Long-Term-Care Insurance Dilemma for more information about long-term-care insurance and other ways to cover these costs. See Medicare Rules for Home Health Care for information about Medicare’s strict rules for covering home health care.”
To look up Medicare’s coverage rules and other types of care and procedures, go to Medicare.gov/coverage and use the “ Is my test, item or service covered?” tool. Also see What Original Medicare Covers. If you believe a claim was unfairly denied, see How to Appeal a Denied Medicare Claim. (Kiplinger)
Retirement Legislation of Note
In the House’s final vote before the Memorial Day break, a bipartisan majority overwhelmingly approved retirement reform package, 417-3. The legislation, titled the Setting Every Community up for Retirement Enhancement Act of 2019, referred to as the SECURE Act, includes provisions that make it easier for smaller employers to join open multiple-employer plans, eases non-discrimination rules for frozen defined benefit plans and adds a safe harbor for selecting lifetime income providers in defined contribution plans. It also increases the automatic-enrollment” safe harbor” cap to 15% from 10%.
The bill was introduced in late March by a bipartisan group of Ways and Means Committee members, including Chairman Richard Neal, D-Mass., and Kevin Brady, R-Texas, the committee’s ranking member. See the bill.
Want More in Your Tax Refund
According to an article in Kiplinger, if you are unhappy with the tax refund you got in 2019 (too high or too low) or owed the IRS, then there’s an easy way to change how much you’ll get back (or owe) on next year’s return by simply adjusting the number of allowances you claim on your W-4 form now. Claiming more allowances can also turn a refund on your last return into larger paychecks this year and beyond. Think about it. (Kiplinger)
From Kiplinger Today — Check It Out
The 25 Best American Funds for Retirees
The best American Funds are among the top actively managed, large-company funds you can find anywhere, says investment adviser Steve Goldberg. And now they’re available to anyone through online brokers. Plus: The 25 Best Low-Fee Mutual Funds to Buy Now.
How Far Will Congress Go on Retirement?
“In the 45 years since Congress passed the landmark Employee Retirement Income Security Act (ERISA) of 1974, there have been unfortunate changes to the nation’s retirement system that make it difficult for working families to prepare for retirement. Research indicates that one key change — replacing defined benefit (DB) pension plans with defined contribution (DC) individual accounts for private sector workers — has dramatically reduced the retirement plan coverage and wealth among the bottom half of U.S. households as measured by income.Hopeful progress toward improving the retirement outlook for working Americans took a bipartisan step forward when the U.S. House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 by a vote of 417 to 3 just before the Memorial Day recess. This measure expands opportunities to participate in DC savings plans, like 401(k) accounts, and encourages employers to offer features in DC plans that would replicate the lifetime income feature provided by traditional pensions. The U.S. Senate Finance Committee is considering similar legislation, the Retirement Enhancement and Savings Act (RESA).” Read the entire article at www.forbes.com
Editor’s note: June Morse may be contacted at jmorse10@comcast.net or 517-886-9323.
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