Public Pension News

MOSERS celebrates 50th anniversary

2007-10-10T08:38:00.001-07:00

The retirement fund for public employees in Missouri began in 1957 with $100 thousand dollars in assets. Today, the MOSERS trust fund is worth $8.1 billion.

And the changes don't stop there.

Much has changed over the years for the pension system. Technological advances, increased retirement options and the growing involvement of American corporations in international financial markets have changed the way MOSERS does business. But the system’s executive director said the system has adapted to continue providing state employees with steady retirement benefits.

“Certainly from an administrative standpoint, we have had monumental growth in information technology,” executive Director Gary Findlay said. “The tools that are available to us to administer the plan hadn’t even been thought of in 1957 when we came into business.”

In fiscal year 2007, for instance, the system responded to 8,322 member e-mail messages within 24 hours. In 1957, IBM had just introduced FORTRAN, a computer language based on algebra, grammar and syntax rules that would become one of the most widely used computer languages for technical work.

MOSERS also has become an example of a “terror-free” investment fund. State Treasurer Sarah Steelman, an ex-officio member of the MOSERS board of trustees, urged the system to screen its investments for companies that have financial relationships with governments on the U.S. Department of State’s list of terrorist-sponsoring nations. That the system even had to consider such a policy proves how much the world - and MOSERS - has changed since 1957.

Louisiana State Retirement goes multimedia

2007-10-10T07:45:00.000-07:00

The Louisiana State Employees' Retirement System has gone interactive and multimedia. The system, also known as LASERS, has started operating a blog, and has developed a video explaining its plan provisions which is available from Google Video.

Federal pension system upgrade cancelled

2006-07-16T18:51:00.000-07:00

In an earlier entry, we noted that the U.S. Office of Personnel Management had moved ahead with plans to develop an electronic administration system for the federal pension system.

Now, FederalNewsRadio reports the plan has been scuttled by the House of Representatives.

The move has Office of Personnel Management Director Linda Springer scratching her head. "We had a little trouble in the House. The House zeroed out our funding for this. I don't understand that, because it's their pension." Springer says "a lot of things have astounded me since I've been here, but that would really take the cake."

Ms. Springer is hopeful that the "trouble," as she describes it, can be fixed in the senate.

NJ governor delays pension reforms

2006-07-16T18:44:00.000-07:00

In the wake of its highly-publicized wrangling over taxes, New Jersey will hold off on an effort to reform the state's public pension system.

In a recent radio interview Corzine said he plans to address some changes starting with negotiations for a new government worker contract this fall. The contracts for most public employee unions expire at the end of June.

"We have to have pension reform and health care reform, and it ought to be done in the standard way that you deal with your employees, through a contract negotiation," Corzine said Tuesday on New Jersey 101.5 FM. "We're going to be calling for that early, and that's going to, I hope, save both money and make sure that public employees will be secure that they'll actually get what's promised."

Some changes, however, can be accomplished through new laws, and Corzine recommended several in his March budget speech, saying pension abuses damage government credibility.

He called for raising the minimum salary for workers to qualify for a government pension, giving newly elected officials a 401(k)-like retirement plan, instead of the more generous defined-benefit government pension, and taking state contractors out of the pension system.

LA early retirement geared to reducing state workforce

2006-07-16T18:38:00.000-07:00

Government officials in Louisiana hope that an early retirement law passed during the 2006 legislative session will eliminate hundreds of jobs from the state workforce.

From the Baton Rouge Business Report:

Louisiana will begin offering state workers an early retirement option next year in hopes that payroll costs, and the annual budget, will deflate accordingly. Gov. Kathleen Blanco signed the legislation last week, prompted largely by last fall's hurricanes. Hordes of state workers either lost the buildings where they once worked, or lost everything else. Additionally, many are moving out of the state or are suffering from various ailments, says Rep. Warren Triche, the Chackbay Democrat who sponsored the act. The program will offer early retirement to members of the Louisiana State Employees' Retirement System who are at least 50 years old with 10 years of service. If a state employee decides to take advantage of the program, he or she will receive a retirement benefit equal to as much as 2% of their average compensation multiplied by the number of years of creditable service. Only one of every three positions left vacant by the program will be refilled, Triche says, unless the commissioner of administration and the secretary of state Civil Service decide to retain the post. The program would run from Jan. 1, 2007, through Dec. 31, 2008. Anticipated savings equal roughly $4 million.

AZ retirees lose annual increases

2006-06-28T07:54:00.000-07:00

Annual pension payraises that thousands of Arizona retirees have received for more than a decade will not be available this year. The increases will not be coming for at least another five years, as well.

The Arizona Republic reports:

The Arizona State Retirement System, which covers 76,000 retired teachers, school district and non-public-safety city and state retirees, said that low returns on investments from 2000 to 2002 drained the fund used to give the annual bump-up. It will take several years of strong returns before the system is able to give retirees raises again, officials said.

Though not tied to the Consumer Price Index, these annual July 1 raises were viewed by many retirees as cost-of-living increases. The retirees now worry about the lost income that will add up over the next five years, especially as health insurance rates are expected to increase in January.

"Most people depend on it, look forward to it and expect it," said Barbara Masztakowski, 67, who retired from the Chandler Municipal Airport in 2003. "Has gas stayed the same? Groceries stayed the same? Anything stayed the same? No. But my income is going to."

P & I: DC plans are bad for retirement

2006-06-26T08:12:00.000-07:00

An article in the industry magazine Pensions & Investments says it is a bad idea to rely on defined contribution pension plans for retirement income.

M. Barton Waring, managing director of client strategy at Barclays Global Investors, San Francisco, and Laurence Siegel, director of investment strategy at the $10.7 billion Ford Foundation, New York, assert that defined benefit plans are more efficient at providing retirement savings than defined contribution plans. Their working paper, titled “Don’t Kill the Golden Goose,” is under consideration to be published by the Harvard Business Review.

[...]
“We regrettably but reasonably conclude that few employees can ever expect a secure and prosperous retirement, with reasonable income replacement, using the defined contribution-plan structure alone,” Messrs. Waring and Siegel wrote in their paper. “We are kidding ourselves when we even speak the phrase ‘defined contribution retirement plan.’ They aren’t retirement plans at all, but modest savings plans.”

This information has particular resonance at a time when many states seek to emulate the corporate 401k model for public employees' retirement plans, and when Rep. Jim McCrery, R-LA, chairman of the House Subcommittee on Social Security, is pushing privatization once again.

LA retirees to receive COLA

2006-06-16T06:38:00.000-07:00

Retired members of the Louisiana State Employees' Retirement System will receive a cost-of-living adjustment for the first time in four years.

Some 32,000 retired state employees will get 2.4 percent cost-of-living increases in their pension checks beginning July 1.

The Louisiana House gave final approval Thursday to the plan which will mean an average $31.20 per month in retirees’ pocketbooks.

House Retirement Committee chairman Rep. Pete Schneider, R-Slidell, said the COLA “will probably cover the increase in Group Benefits” health insurance premiums.

OH Coingate probe looks at pension officials

2006-06-16T04:00:00.000-07:00

A criminal fraud investigation involving the Ohio Bureau of Workers' Compensation is expanding to examine the conduct of some state pension officials.

Authorities are trying to determine whether gifts provided by brokers and vendors violated laws requiring public officials to disclose such items to the public, or whether the gifts led to conflicts of interest or even constituted bribes.

Board members at the Ohio Police & Fire Pension Fund and State Teachers Retirement System already have been prosecuted for improperly accepting freebies from vendors or failing to disclose those gifts.

But the investigation of investment scandals at the bureau is uncovering other information, including situations in which brokers or vendors giving gifts to bureau officials possibly were doing the same at some pension systems, The Dispatch was told.

CA members face higher health care costs

2006-06-16T03:48:00.000-07:00

Members of CalPERS in eight California counties could find themselves in a health care plan that is more expensive than the one they have now.

The retirement system is considering replacing its HMO in those counties with a point-of-service plan.

Union leaders are balking at the proposed benefit changes and vow to press the issue when trustees act on the 2007 health benefits plan next week.

"These proposals are just another means of shifting the cost of health care from the employer to the employee without really looking at what is happening to drive up the cost of health care," said Yvonne Walker, a negotiator with the Service Employees International Union Local 1000, the largest union representing state workers. "As the cost goes up for co-pays, people will most likely hold off on treatment."

Some key changes on the table are:

Increasing HMO co- payments to $15 from $10 for physician visits;

Requiring members enrolled in preferred provider organization plans to obtain prior authorization for expensive imaging procedures such as MRIs or CT scans;

Creating a PPO urgent-care network with a $20 co-pay;

Introducing a new lower-cost Blue Cross of California PPO program that eliminates high-cost doctors. The plan would cut the number of physicians in the current network in half;

Dropping HMO coverage in five rural counties: Colusa, Lake, Mendocino, Plumas and Sierra; and

Replacing the HMO plan in Butte, El Dorado, Glenn, Mariposa, Napa, San Luis Obispo, San Mateo and Sonoma counties with a lower-cost point-of-service program.
In all, the proposals follow the fund’s recent cost-cutting strategy that included establishing prices by region, steering members to generic drugs and dropping HMO coverage at 23 higher priced hospitals, including 13 owned by Sacramento-based Sutter Health.

"Those (changes) are still reaping benefits," Grevious said. The smaller hospital network saved an estimated $36 million in 2005.

NJ cops defend pensions

2006-06-16T03:44:00.000-07:00

The union representing law enforcement officers in New Jersey has a message for state lawmakers: pay us what you owe us.

Fearing another tough budget year will mean further underfunding for police and firefighters' pensions, a law enforcement officers union sued Wednesday to force New Jersey to pay for years of shortchanging their retirement system.

The suit, filed in state Superior Court in Trenton, aims to make the state pay the full amount it owes the pension system for this year and years past. That could mean $3 billion to $4 billion, according to New Jersey Law Enforcement Supervisors Association President Tom Moran.

"Do we work for Enron here? Or do we work for the state of New Jersey?" Moran asked. "Because if we worked for Enron, people would be going to jail for what they're doing to our pensions."

MA Lt. Gov. proposes Defined Contribution plan

2006-06-08T03:39:00.000-07:00

Massachusetts Lt. Governor Kerry Healey says the state should abandon its Defined Benefit pension plan in favor of 401k-style private accounts.

"Our current system allows elected officials to leave public service with tens of thousands of dollars in perks," she said at a news conference at her GOP gubernatorial campaign headquarters.

She said her plan, which would need approval from the Legislature, could eventually yield more than $350 million in investment gains and administrative savings annually, while freezing the state's $13 billion pension unfunded liability.

"Each year, we have to steer taxpayer money away from education, local aid and health care programs to pay off the debt our pension system has accumulated," she said.

Healey's proposal also would also eliminate Massachusetts' 104 independent public pension systems and put their money in the state pension trust.

Thousands of dollars in "perks"? Is she talking about the retirement benefits that public employees earn for their years of service? It is easy, I suppose, to use fat cat "officials" as an example of why the traditional pension plan should be jettisoned. But, what about the tens of thousands of rank-and-file employees who spend their working lives serving the people of their communities and their state? What becomes of them?

Perks? Someone should hand Lt. Governor Healey a dictionary.

Someone should also hand her a copy of this analysis by NASRA.

There are good reasons for employers to retain a DB plan as the primary retirement benefit for public employees:

A DB plan is an effective tool for recruiting and retaining quality employees. Government’s exemption from most federal pension laws creates a rare competitive advantage for state and local government employers.

Providing a DB plan helps assure a secure source of income for retired employees, reducing the likelihood of these employees relying on public assistance during retirement.

By creating an incentive to retire, DB plans can facilitate an orderly transition of employees whose effectiveness or productivity may have waned. DC plans provide no such incentive, and may, in fact, serve as a disincentive.

This is to say nothing of the transition costs of switching from a DB plan to a DC plan, which benefit nobody so much as the financial services companies who will be crawling over each other for a chance to get their hands on all that cash.

I am unfamiliar with Massachusetts public pension law, but in my state, members of the public pension system have nothing to rely on but their DB retirement benefits. They do not pay into Social Security. If the same is true for Massachusetts public employees, the Lt. Governor's plan would place retirees entirely at the mercy of the stock market, without even Social Security as a hedge against destitution.

CO treasurer complains about PERA board

2006-06-06T05:04:00.000-07:00

Colorado State Treasurer Mike Coffman, in a Pueblo Chieftan editorial, argues that the composition of the PERA Board of Trustees is weighted too heavily with retirees.

As we have seen with the recent failure of private sector boards - Enron and WorldCom come to mind - the size of the board, the qualifications of board members and the perspectives that those members bring to the table are critical to successful stewardship. Pension plans such as PERA can work, and they have worked successfully in Colorado, but leadership is a vital part of the equation.

While this year’s PERA legislation makes some changes at the margins of governance, ultimately it has kept the status quo: PERA beneficiaries in, taxpayers out.

Exxon directors re-elected

2006-06-01T07:38:00.000-07:00

Despite the opposition of several public pension funds, all directors of the Exxon board were re-elected at the company's annual meeting in Dallas on Wednesday.

The pension funds, as institutional shareholders, sought the defeat of several directors who approved controversial pay and benefit packages for Exxon executives.

From Pensions & Investments:

ExxonMobil Corp. shareholders today elected all of the company’s 12 directors and voted 52.2% in favor of a shareholder proposal calling for the election of directors by a majority vote of shares, according to preliminary proxy-voting results. James R. Houghton, William R. Howell and Reatha Clark King received the lowest support among directors with about 79% of the vote each, said Russ Roberts, ExxonMobil spokesman. Walter V. Shipley received about 82% of the vote in favor. All other directors received support of about 95% or higher, Mr. Roberts said.

The $209 billion California Public Employees’ Retirement System, Sacramento, opposed the election of Mr. Houghton, Mr. Howell, Ms. King and Mr. Shipley.

The $72 billion North Carolina Retirement Systems, Raleigh, opposed Michael J. Boskin and Henry A. McKinnell Jr., in addition to Mr. Houghton, Mr. Howell and Ms. King.

The $96.1 billion (US$87.4 billion) Ontario Teachers’ Pension Plan, Toronto, opposed all 12 directors.

The funds were concerned about excessive executive compensation.

NC system flexes shareholder muscle on executive pay

2006-05-31T08:07:00.000-07:00

Five members of the Exxon board of directors are losing the support of a major institutional investor.

The North Carolina retirement system, which is managed by the state treasurer's office, is taking this action to make known its displeasure regarding Exxon's executive pay practices.

Grabbing on to an issue popular among voters, [State Treasurer Richard Moore] said the North Carolina retirement system will refuse to support the re-election of the directors who have served on the board's compensation committee. The system owns 11 million shares of Exxon Mobil stock valued at $663-million (U.S.). The company's annual meeting is today in Dallas.

Congress and the public have complained about a nearly $400-million retirement package given recently to the energy giant's former chairman, Lee Raymond.

"As shareholders, we are outraged that executives are using soaring gas prices, which are hitting consumers at the pump, to fatten their own wallets," Mr. Moore said. "The excessive pay packages, like that seen at Exxon Mobil, diminish shareholder value and are evidence of policies that fail to generate long-term value for shareholders."

Exxon Mobil didn't immediately return a phone call yesterday seeking comment.

Exxon shares represent the North Carolina retirement system's largest single block of holdings.

KU students FIGHT for pension fund divestiture

2006-05-31T04:56:00.000-07:00

A group of students at Kansas University is asking a municipal pension fund to consider the moral implications of some of its investments.

The group has adopted the name FIGHT, which stands for "Fighting Ignorance of Global Humanitarian Threats." FIGHT wants the city of Wichita's public pension system to divest itself of holdings in companies that do business in Sudan. This is in response to the genocide in Darfur.

"This is an issue that I and several of my friends have been working day in and day out on here at the University of Kansas," said Amanda Applegate, a member of FIGHT (Fighting Ignorance of Global Humanitarian Threats). "Our foremost concern at the moment is attempting to divest finances from wherever possible, because we believe that divestment is the fastest way to end the genocide in Sudan."

Applegate, a graduate of Wichita East and FIGHT's advocacy director, said the group is awaiting a report from the city. It has also asked the same questions of the city of Lawrence.

Wichita officials confirmed that they were looking into the matter.

FIGHT's request is the latest example of how the campaign to help Darfur has slowly gained traction in Kansas.

In February, Sen. Donald Betts, D-Wichita, introduced a resolution asking the Kansas Public Employees Retirement System to divest from companies doing business in Sudan. The resolution was tabled because it involved a change in how money was being invested.

Memorial Day Open Thread

2006-05-29T07:55:00.000-07:00

Our pension benefits might be under assault from some quarters, and the state worker paychecks could certainly be bigger, but isn't it great to have the day off as we honor those who have made the ultimate sacrifice for their country?

So, what's going on in your neck of the woods?

Use the "Comments" feature to give your thoughts on the state of the pension environment, or anything else you feel like talking about.

Feds hope to develop "electronic retirement system"

2006-05-29T06:56:00.000-07:00

The Washington Post's "Federal Diary" blog reports on efforts to develop an electronic retirement system for the federal government.

The Office of Personnel Management has awarded a contract to the firm Accenture to develop a system that will allow speedier calculations of retirement benefits for federal employees.

The current process requires a search to find personnel files and other paperwork, often creating delays. Most retirees, as a result, are put on interim, partial retirement pay while a final annuity is calculated.

Accenture, a consulting and technology services company, will help OPM reorganize its staffing, training and processes for handling retirement claims under a contract that carries a maximum value of $40 million and that will run no longer than four years, an OPM official said. Accenture will be paid as task orders are issued, the official said.

The contract is the second awarded by OPM to upgrade retirement claims processing. On May 3, the agency announced a 10-year, $290 million contract with Hewitt Associates, an outsourcing and consulting firm, to build the new, electronic benefits-delivery and tracking system.

Funding for the retirement project, however, may be in jeopardy. The House Appropriations transportation-treasury subcommittee that oversees OPM has removed funding for the project in fiscal 2007. The administration had asked for $26.7 million next year.

KRS land purchase scrutinized

2006-05-29T06:23:00.000-07:00

State auditors want to know the details of a Kentucky Retirement Systems land deal. The system reportedly paid $700 thousand dollars for a piece of property that had sold for $450 thousand just two months prior.

The property had been on the market since 2000, and the retirement system had many opportunities to buy it before it was sold to veterinarian Caroline G. Taylor, said a trustee of the Holly Hill Church of Christ.

Since the deal, two high-ranking retirement system officials have since resigned. Gordon Mullis Jr., the chief operating officer, who signed the deed of sale for the property, resigned April 10. John R. Krimmel, chief investment officer, resigned May 10. Both men did not return repeated calls for comment.

A woman at Krimmel's Frankfort home said he was traveling and "pursuing other options" and would probably not comment about his departure.

Williams Hanes, executive director of the retirement system, said the purchase is being reviewed by the system's board of trustees and its lawyer. Information has also been forwarded to State Auditor Crit Luallen, the Kentucky State Police and Attorney General Greg Stumbo.

Options back-dating probe heats up

2006-05-29T06:09:00.000-07:00

Public pension funds are leading the attack on the corporate practice of back-dating stock options.

Several state retirement systems are involved in lawsuits against companies who have granted to their employees stock options which in some cases are priced lower than the current market value.

Calpers, the largest U.S. pension fund, plans to ask companies named in the inquiry to disclose additional details about their option-granting practices. The move comes as pension funds in Ohio and Minnesota are suing UnitedHealth Group over the pay package of its chief executive. UnitedHealth, the second-largest U.S. health insurer after WellPoint, has set up a special committee to review its stock-option grants.

At least 24 companies have said federal officials are investigating their stock-option practices, including the possibility that they deliberately moved option grants back to dates when the stock price was lower. Backdating would inflate the value of the options and shorten the amount of time executives would have to wait before claiming a profit.

"Executive pay has been one of the top issues for our members for the past few years, and this just adds fuel to the fire," said Ann Yerger, executive director of the Council of Institutional Investors in Washington. "It's a corporate atrocity that everyone is shocked by."

Public Pension News reported previously on the UnitedHealth lawsuit here.

Editorial: Reform N.J. pension laws

2006-05-27T05:43:00.000-07:00

The Asbury Park Press editorializes against double- and even triple-dipping in New Jersey's public pension system:

It's little wonder there's been no legislative action to end the practice of pension tacking — earning pension credits from multiple part-time public jobs to create a much larger pension upon retirement. About a third of New Jersey's legislators have more than one state-funded pension, so they have little incentive to act.

One Assembly member, Christopher "Kip" Bateman, R-Somerset, wants to change that. Not only has he introduced bills to address tacking, but he is giving up his pension rights from three municipal jobs. Legislators from both sides of the political aisle should join him in his bid to end a practice that is a drain on the pension system and contributes to rising property taxes in New Jersey.

It's a big budget number. A Gannett New Jersey review last year of pension data from 2002 showed that $238 million — 3 percent of the entire payroll of local, county and state government, excluding police, firefighters and teachers — was paid in salaries to 9,500 people holding 24,700 government jobs.

Bateman's first bill (A-696) would require legislators with more than one job in the Public Employees' Retirement System to choose only one position to earn pension credit. That's what he's doing in giving up his credits for serving as municipal prosecutor in three Somerset County towns. The other bill (A-119) would apply to anyone in the state retirement system hired after the bill becomes law.

Both bills face a rocky future because they hit two entrenched groups — legislators and public employees — in their pocketbook. But the price is paid by all taxpayers who fund pensions for retirees for years to come.

Special benefits hurting Mass. pension system

2006-05-26T05:09:00.000-07:00

Insiders who specialize in gaming the Massachusetts public pension system have contributed to a $3 billion increase in liabilities. A new study says the system is plagued with what it calls "abuses, loopholes, and exceptions."

One of the most brazen pension ploys, [Ken Ardon, a Salem State economist and a former Romney adminstration finance official] found, is the rash of state workers who inexplicably wind up “fired” right after they reach the 20-year mark.

The dismissals are a bold attempt to grab one of the state retirement system’s coveted perks - early retirement. A state law allows workers with 20 years of service who have either been fired, or had their jobs eliminated, to sail off with a pension.

That’s just one of a veritable thicket of loopholes Beacon Hill lawmakers have inserted over the years, the study finds.

The study also cites the example of a former University of Massachusetts president who attempted to augment his pension by arguing that his housing and transportation allowances, in addition to his retirement annuity, should have been part of his benefit calculation.

Louisiana lawmakers reject UAL payments

2006-05-25T17:57:00.000-07:00

The Louisiana legislature has rejected a measure which would beging paying down the unfunded accrued liabilities of that state's public employee and teacher retirement systems.

A bill that would lock the state into paying off more of its retirement debt each year was narrowly rejected by the Senate Finance Committee.

The Louisiana State Employees' Retirement System and the Teachers' Retirement System of Louisiana are (b) billions of dollars short of what they will owe employees when they retire, a debt that falls on the state to pay over time and grows the longer it takes to pay.

Senator Walter Boasso proposed the state put more money toward that debt in a bill that would cost the state 111 (m) million dollars in the upcoming fiscal year that begins July first.

Boasso says there's never going to be a right time to start paying down the debt.

Opponents of traditional public pensions like to blame system members for the drain on state and local budgets. The real culprits are lawmakers who refuse to make responsible decisions about keeping their promises to generations of hard-working public employees.

New York comptroller defends public pensions

2006-05-25T17:23:00.000-07:00

This is from nysut.org:

At a time when pension systems — especially public pensions with defined benefits — are under assault by conservatives who view government as the enemy, it is the obligation of unions and progressives to stand up and be counted, state Comptroller Alan Hevesi told delegates to the RA.

He said federal legislation has already undermined private pensions to the point where 10 million retirees of large corporations have lost their benefits.

President Bush's campaign to privatize Social Security was also part of what Hevesi called the "ideological assault" on pensions.

Influential conservatives like Grover Norquist maintain that defined-benefit pensions, like those for public employees, including the NYS Teachers' Retirement System, are "overgenerous."

"It's a myth," Hevesi said. He pointed out that 70 percent of those receiving pensions from the state Employees' Retirement System get less than $20,000 per year, with some considerably less. Most retirees who receive more were members of the uniformed services.

International Public Pension Reform

2006-05-25T17:12:00.000-07:00

As Great Britain undertakes a reform of its national public pension system, the International Herald Tribune examines what other countries are doing in that vein:

BELGIUM

After a number of strikes and tension with unions, the government increased the eligible age for early retirement to 60 from 58 and the years of contribution for full retirement benefits to 40 from 38 years.

FRANCE

A 2003 law obliges people to work longer for a full pension, with a phase-in from 2004 to 2008. Public sector workers must contribute for 40 years like private sector employees, instead of 37½ years. The contributions period required for a full pension will increase to 41 years by 2012 and 42 after 2012.

GERMANY

Germany agreed this year to raise the basic retirement age to 67 in steps from 2012 to 2029. Pensioners get no increase in benefits through 2009. In March, the government advised people to take extra coverage as pressure on basic pensions grows.

GREECE

Greece's center-right government has not tackled reforms of the country's social security system other than to stress the urgency for dialogue between social partners to prepare for an overhaul that will secure the system's viability.

IRELAND

A relatively young, fast- growing population means Ireland's problem is less acute, but almost half the members of its work force do not have pensions and the system is under review. In 2000 the government decided to set aside 1 percent of gross domestic product a year and the proceeds from the privatization of the telecommunications operator, Eircom, to help finance future state pensions.

ITALY

The new center-left coalition said during the campaign that it would scrap a 2004 law raise the retirement age to 60 or after 40 contribution years starting in 2008, in order to avoid the sharp jump in the retirement age. Instead it would closely monitor demographic trends and raise the retirement age if and when necessary.

PORTUGAL

The Socialist government raised the retirement age for public workers last year to 65 from 60 as part of convergence of public and private pensions. Portugal is evaluating options to reduce costs for private sector workers. Pensioners will also pay higher taxes under the 2006 budget.

CZECH REPUBLIC

The country needs to reform its pensions from the pay-as-you-go system. Parliament proposed raising the retirement age by a few months every year to reach 63 by 2013, and put the retirement for men born in or after 1953 and childless women born in or after 1956 at 63. Political parties seeking to raise the retirement age to 65 in 20 years.

JAPAN

With one of the largest retiring populations among industrialized nations, Japan is facing serious economic and social problems. The country has public and private pension plans, based on a pay-as-you-go system that relies on the contributions of employers and employees to pay pensions.

POLAND

The country changed its pension system in 1999, replacing a pay-as-you-go system with a "three pillar" approach including mandatory individual savings accounts. The move has been praised for averting a crisis, but caused a hiccup in the process of EU membership before EU agreed to allow Poland phase the transition costs into its accounts over five years.

SWEDEN

A severe budget crisis in the early 1990s prompted Sweden to overhaul its pension plan. The new system, introduced in 1999, places greater emphasis on balancing payments made into the system against expenditures as well as taking into account the economic growth rate. Individuals may invest a portion of pension payments in private pension funds of their choice.

UNITED STATES

Social Security is a social insurance program that also pays disability benefits, financed through payroll taxes and payable at a reduced level starting at age 62.

The program - also in danger of severe underfinancing - exists alongside private pensions set up by companies. President George W. Bush has called for a transition to partial privatization via individual accounts that could be invested in the stock market.

PA governor praises PERS

2006-05-25T17:03:00.000-07:00

Governor Ed Rendell congratulated the Pennsylvania Public Employees' Retirement System for successful litigation that netted $23 million. The victory was in a lawsuit against Time Warner, Inc., AOL, Ernst & Young and other parties.

"Since taking office, I have encouraged the state's managed funds, which make large investments, to pursue recovery of substantial losses that they believe and allege to have resulted from unlawful conduct by public companies, including the issuance of alleged false financial statements," said Governor Rendell.

"By successfully pursuing this litigation, and successfully reaching settlement, these public fund managers have helped to reduce future financial burdens on taxpayers. I will continue to work with my General Counsel to pursue recovery in these kinds of cases."

The funds endured losses from these investments prior to Governor Rendell taking office, but no litigation was pursued. By going to court, at the Governor's urging, these funds were able to collect money for state and public school retirees and help to foster and implement better corporate governance to benefit all investors.

CalPERS considers health benefit cuts

2006-05-23T09:16:00.000-07:00

UPI reports the California Public Employees' Retirement System is mulling over a reduction in health benefits which would include restrictions on HMO membership in rural areas of the state.

CalPERS` healthcare purchasing pool also could give members a lower-cost coverage option by adding a third preferred provider organization plan, the Sacramento (Calif.) Business Journal reported Monday.

'The reality is healthcare costs continue to increase and CalPERS members continue to age,' said CalPERS` Terri Westbrook, assistant executive officer of the health benefits branch. 'If we continue with the status quo, our costs will increase.'

Public pension systems file suit on back-dating of stock options

2006-05-23T08:59:00.000-07:00

Spurred by the compensation packages for executives of UnitedHealth Group, Inc., five public retirement systems have initiated a lawsuit related to the issuance of stock options.

The systems want to stop Chief Executive Officer William McGuire and Chief Operating Officer Stephen J. Hemsley from exercising back-dated stock options until the suit is resolved.

The lawsuit alleges that McGuire, Hemsley, and several other UnitedHealth executives received several billion dollars worth of illegal stock option grants that were backdated to coincide with dates on which the stock prices were particularly low. For example, between 1997 and 2002, McGuire and Hemsley purportedly received stock options at, or pennies from, UnitedHealth's annual stock-price low six years in a row. The lawsuit challenges the validity of these stock options on the ground that they were not issued in accordance with the executive compensation plans and employment agreements agreed to by the Company and voted on by shareholders. By backdating the grants to earlier dates with lower stock prices, UnitedHealth executives received windfall profits at the direct expense of UnitedHealth.

The retirement systems involved in the lawsuit are:

St. Paul Teachers' Retirement Fund

Public Employees' Retirement System of Mississippi

Jacksonville Police & Fire Pension Fund

Louisiana Municipal Police Employees' Retirement System

Louisiana Sheriffs' Pension & Relief Fund

Retired firefighters lose '13th check'

2006-05-18T07:24:00.000-07:00

Pension trustees in Bay City, Michigan have withdrawn an annual bonus paid to the city's retired firefighters. The action is part of a plan to close a multi-million-dollar budget hole.

More than a half dozen former officers and firefighters questioned the Police and Fire Retirement System Board of Trustees on Tuesday about the $2.2 million it has reserved for annual bonus paychecks - known as the 13th check - on top of the monthly payments to retirees.

Board members absorbed the fund into the general account to fund regular pension stipends. This May, instead of an extra check, beneficiaries received a letter detailing the suspension of the seven-year-old 13th check program.

DB plans in good shape

2006-05-18T06:49:00.000-07:00

The nation's Defined Benefit public pension plans face funding challenges, but are not in a crisis. This is the conclusion of a study published by NASRA official Keith Brainard.

With some exceptions... public pensions remain in reasonably good condition, thanks to diversified and professionally managed portfolios, an improving stock market, and a near cessation of benefit enhancements during the past few years. Assuming investment markets continue their return to historic norms, the current public pension funding level is projected to mark the low point and will begin to rise.

***Seventy percent of public pension plans are funded at 80 percent or higher, a threshold considered by many actuaries to indicate actuarial health. Of course, that leaves 30 percent funded at lower levels, with a higher unfunded liability to overcome.

Most plans with poor funding levels got that way through the chronic failure of legislatures (or city councils) to make required contributions.

Nationwide, taxpayer contributions make up one-fourth of all public pension revenue; investment earnings and worker contributions make up the rest. Generating investment earnings first requires contributions, and states and cities that failed to make required contributions have lost out on billions of dollars of potential earnings, thereby worsening their pension plan's funding level.

Fort Worth mayor wants more directors for pension plan

2006-05-17T03:56:00.000-07:00

The mayor of Fort Worth wants more expert advisors for his city's $1.6 billion public pension fund.

As the city continues an exhaustive financial review of its billion-dollar pension fund, Mayor Mike Moncrief is pushing for an immediate expansion of the fund's board of directors to increase its level of expertise.

"The sooner we get some expertise, some additional expertise, on this board, the better off I'm going to feel," Moncrief said during a council session Tuesday.

A team of financial experts -- the city's external and internal auditors, an independent actuarial firm and a professional with a background in securities regulation -- is testing the financial condition of the city's $1.6 billion pension fund.

The team is being formed by the city auditor at the request of the City Council, which has made Fort Worth's pension fund a top concern for 2006. A report to the council is expected by mid-July.

"It's being driven by this council's resolve to make sure we're doing everything possible to account for the people's money," Councilman Jungus Jordan said. "That's probably the No. 1 job that this council has."

Voters in Texas say "no" to firefighter pension

2006-05-16T05:08:00.000-07:00

From the Bay City Tribune:

A firefighter pension plan was defeated by a 6-to-1 margin, as Bay City voters rejected it and two other proposed charter amendments Saturday.

Vote totals were 185 for and 1,212 against Proposition 1, directing city officials to join the Texas Statewide Emergency Service Retirement System by Oct. 1, to provide a pension and disability plan for volunteer firefighters.

Pension contributions increase for Ohio library workers

2006-05-10T04:14:00.000-07:00

Library staffers in Stark County, Ohio will pay more for state retirement benefits, even as they get a 4 percent raise this year.

Effective in June through March 21, 2009, library wages now will be in line with those at similar-sized Ohio libraries, although the average entry-level wage will remain lower, according to a library news release.

Required contributions to the Ohio Public Employees Retirement System fund have increased from 8.5 percent to 9 percent.

For the first time, employees will also pay 5 percent to 7.5 percent, depending on whether they are single or have family coverage, toward health care insurance premiums.

The library will continue to provide benefits for part-time employees on a prorated basis.

Maryland boosts teacher pensions

2006-04-26T08:51:00.000-07:00

Contrary to a nationwide trend, Maryland Governor Robert Ehrlich signed into law an increase in pension benefits for his state's school teachers.

The governor's signature on the pension measure marks a major milestone in a four-year push for reform that has been led by the state's 62,000-member teachers union. The Maryland State Teachers Union Web site proclaimed yesterday, "It's the law!"

It was unclear even two weeks ago whether Ehrlich would sign the bill, which passed by wide margins in the Democrat-controlled legislature. He has consistently opposed such costly benefit enhancements.

"We're very pleased that the legislature took the mantle and challenge of finding the funding to make this improvement," said Bonnie Cullison, president of the Montgomery County Education Association, which represents more than 10,000 teachers. "This is absolutely essential to the state of Maryland and is critical and essential for the recruitment and retention of teachers in the state."

The benefits package will cost the state an additional $120 billion.

Chicago Fed Blogs

2006-04-25T18:40:00.000-07:00

Did you know that the Federal Reserve Bank of Chicago has blogs? I didn't. Who would have imagined such a thing?

The Chicago Fed's homepage features links to three blogs, which deal with the Midwest economy, economic education, and pensions.

The pension blog features highlights from the Fed's State and Local Government Pension Forum. It has links to some interesting articles, including one about GASB 45, which we have written about previously on this site.

The pension blog is written by Rick Mattoon, Senior Economist and Economic Advisor of the Federal Reserve Bank of Chicago. He calls GASB 45 "The 800 Pound Gorilla in the Room." He says the new accounting standard, which requires public pension funds to estimate the future cost of benefits to their members, presents many challenges:

Estimating the total OPEB liability is an accounting nightmare. Unlike pensions where actuarial estimates can be at least somewhat understood, OPEB requires making guesses about things like health care and prescription drug inflation and utilization. One estimate suggests the unfunded liability is around $700 billion, but this is a back of the envelope guess. Other estimates suggest that OPEB exposure could range from five to ten times current outlays for retiree health care.

Managing OPEB costs is tricky. In most cases, retiree health care is not a contractual responsibility like pensions. It is a voluntary benefit offered by the employer. However where it is a contractual responsibility, the ability to require retiree contributions, increase co-pays or cut benefit coverage is limited. Where retiree health insurance can be modified, a concern is that when these liabilities are reported, some governments may choose to abandon or significantly reduce coverage, forcing the federal government to serve as the health care insurer of last resort.

There are strategies for managing OPEB costs. Efforts to contain health care costs and slow increases in health insurance premium costs can help. Shifting more costs to retirees can be an option, along with trying to limit future OPEB obligations by changing benefit packages for new employees. One strategy that is popular (and essentially required) for addressing OPEB costs is to set up a trust fund. A trust fund meets the new accounting standard requirement that an irrevocable source is identified for meeting OPEB obligations. It also has the advantage of allowing governments more flexibility in the use of investment options. Like pension funds, OPEB trust funds would permit investments in equities and other potentially higher yielding investment vehicles. A potentially attractive option that a trust fund may allow is the ability to issue OPEB bonds to cover part or even all of a government’s OPEB liability. Like pension bonds, these are essentially an arbitrage strategy, where the bond issuer anticipates that the investment yield they will receive from the bond assets will exceed the interest that will be paid to bond holders. Also like pension bonds, the OPEB bonds are not free from federal taxes so they must carry slightly higher interest rates than tax-free investments.

The impact on credit ratings for governments is another real concern. Once this liability is recognized, some governments’ finances might appear more fragile. To date, several of the major rating agencies have indicated that they will judge the creditworthiness of these governments based on whether their plan for meeting OPEB liabilities appears prudent rather than on the size of the liability on the balance sheet when it is first recognized. Credit agencies do expect OPEB liabilities to be largest in the Northeast and Midwest, where government entities have large unionized work forces and slightly older workers on average than in other areas.

Finally, OPEB is still a major concern for the private sector. It is estimated that for the 337 companies in the S&P 500 that have OPEB obligations, the funding ratio is around 27% (versus 88% for pensions). For the 282 companies with the most complete financial records, the unfunded liability in 2005 was estimated at $292 billion versus an unfunded pension liability of $149 billion. OPEB liability is concentrated in Ford and GM. Their unfunded liability alone is $94 billion, representing 32% of the S&P 500’s total. (These two companies also have 13% of the total pension underfunding.) Telecom is the other industry where OPEB is a significant issue.

The Chicago Fed's pension blog has a lot of good stuff, but it is not updated frequently. Of course, if that were a crime, I'd be doin' time. ;-)

Panel to examine Montana pension system

2006-04-23T09:16:00.000-07:00

From the CBS affiliate in Billings:

A new state panel meets for the first time today, to begin improving communications among the three boards that oversee the state pension systems in Montana.

The Joint Issues Committee was created by the governor's office. It includes two members each from the Board of Investments, the Public Employees Retirement Board and the Teachers Retirement Board.

Unlike other states, where pension boards invest retirement money and administer benefits, the state pension systems in Montana divide those duties. The boards of the two retirement systems administer retirement benefits, while the Board of Investments is charged with investing the money paid in.

Is Hawaii pension system too expensive?

2006-04-23T09:07:00.000-07:00

Hawaii is beginning to engage in the same debate taking place in other parts of the country. The question is whether the pension system for the state's public employees is too costly.

This story in the Honolulu Advertiser casts the issue as a conflict between state workers and their private-sector couterparts.

Kaimuki resident Ward Fukunaga can only wish he had the pension benefits that state and county workers receive. As a self-employed businessman, he hasn't been able to save anything for his retirement.

"When you're in the private sector, you take that risk," said the 34-year-old Fukunaga.

Hawai'i's more than 63,000 state and county workers are enrolled in a traditional pension plan that guarantees payments for life, a benefit that is becoming more rare among private employers.

Only four in 10 Hawai'i companies offer traditional pensions, according to one survey. The move away from traditional plans is prompted by the high cost. This year taxpayers will contribute $400 million, or about $300 per person, to the pensions of state and county workers.

Is it time to consider a less expensive pension system for government workers?

"It's something that people should talk about," said state Rep. Kirk Caldwell D-24th (Manoa, Manoa Valley, University). "They're going to have to be looking at some of the things the private sector is doing."

George Ryan could lose pension

2006-04-21T17:47:00.000-07:00

The Illinois public pension board will consider revoking the $200 thousand annual pension of former Governor George Ryan, who was convicted Monday on charges including conspiracy, racketeering and mail fraud.

Ryan makes more in retirement than he did as the state's chief executive, thanks to a generous public pension system and a tenure that included stints as speaker of the Illinois House, lieutenant governor, secretary of state and governor.

Ryan was making $150,691 a year when he left the governor's mansion in January 2003. Currently, he is collecting $197,037 a year in state pension.

Robert Knox, who heads the state pension system for elected officials, said that after Ryan is sentenced the pension board will decide whether the crimes Ryan was convicted of breached the public trust.

CalPERS flexes its muscles on performance, governance

2006-04-21T17:41:00.000-07:00

The California Public Employees' Retirement System issues warnings to six companies on corporate governance and financial performance.

The Columbus Dispatch reports:

Cardinal Health Inc. is among six companies that need to improve their financial performance and corporate-governance practices, the California Public Employees’ Retirement System said.

Calpers, as the biggest U.S. public pension fund is known, also named Brocade Communications Systems Inc., Clear Channel Communications Inc., Mellon Financial Corp., Office-Max Inc. and Sovereign Bancorp Inc. to its annual "Focus List" of companies that the fund said are in need of the most improvement.

"The stock performance and governance of these companies is unacceptable to us and other shareowners," said Rob Feckner, Calpers board president.

The pension fund each year targets as many as 10 of the public companies in which it invests with the goal of forcing them to improve practices such as executive compensation, auditor independence or financial returns.

Lawmaker calls for CalPERS audit

2006-02-08T10:54:00.000-08:00

California Assemblyman Keith Richman, R-Granada Hills, is calling for an audit of the California Public Employees' Retirement System (CalPERS). Richman says he is alarmed over a $2 billion discrepancy in what a benefit increase is likely to cost state taxpayers.

Richman's bill requires the Bureau of State Audits to examine the practices of the California Public Employees Retirement System in an effort to determine whether the system is following the best policies and to learn what factors led to inaccurate projections.

The audit would also look at whether the system's policies are subject to political influence, whether its employees receive the proper training and whether its practices compare favorably to those of other pension systems.

"This is really to determine whether or not CalPERS is acting at the highest standards or not," Richman said.

Richman, who has been involved in pension reform efforts the past several years, is running for state treasurer. The treasurer has a seat on the CalPERS board.

The L.A. Daily News reports CalPERS officials blame the $2 billion difference on unexpected drops in the stock market.

Bush offers unlikely fix for imperiled private pensions

2006-02-08T04:08:00.000-08:00

President Bush's proposed budget would inject more than $16 billion into the federal fund that backstops troubled private pension plans. But, some experts say Bush's proposal amounts to little more than window dressing.

Of the $65 billion in savings from entitlement programs that President Bush has proposed, one-fourth would come from steps to restore solvency to the federal agency that insures employer-based pension plans.

But experts say the estimates of $16.7 billion in savings over the next five years from reforms to the Pension Benefit Guaranty Corp. may be overly optimistic. They say companies can't realistically be expected to fork over enough in increased payments to reach that goal.

The proposal, part of Bush's budget plan for 2007, assumes larger PBGC premiums ``than are likely to be practically or politically feasible,'' said Douglas J. Elliott of the Center on Federal Financial Institutions.

Retired CA teachers fight to protect benefits

2006-02-03T06:24:00.000-08:00

Retired teachers in California acknowledge the need to address a multi-billion-dollar shortfall in their pension system, but they are asking CalSTRS trustees to avoid the most draconian measure for closing it: benefit cuts.

Sell billions of dollars in pension obligation bonds. Slowly raise retirement contributions. Increase the number of years required to amortize the pension obligation.
But don't cut retirement benefits.

That's the message more than a dozen retired schoolteachers and administrators delivered Wednesday to trustees of the California State Teachers' Retirement System as the 12-member board began the task of crafting a strategy to bridge a long-term funding gap of $24.2 billion.

Union representatives for educators and teachers also urged CalSTRS leaders to guard against harsh solutions that could erode benefits for the fund's 776,000 members and future teachers.

"We would not support benefit cuts and go back to a time where the benefits were not adequate," said David Walrath of the California Retired Teachers Association.

"This is one of the world's best retirement systems. It has taken us a long time to get there. I would hate to see it destroyed in a matter of months," said retired teacher Don Maxwell.

CalSTRS, unlike the California Public Employees' Retirement System (CalPERS), cannot raise employee contributions or enact benefit cuts without enabling legislation.

Teamsters want audit of Nashville pension fund

2006-01-31T08:03:00.000-08:00

The Teamsters union is preparing legislation that would require regular performance audits of the $1.7 billion Nasvhille Metro pension fund.

City Paper reports:

Jesse Case, coordinator with the Teamsters Law Enforcement League, said public employee pension plans need to be transparent.

“Even if there is nothing wrong with the plan, Metro needs to have a transparent policy in order to avoid any perception of problems,” Case said. “So there needs to be a Metro ordinance passed that compels periodic audits of Metro’s retirement fund. Right now the fund lacks checks and balances.”

The Teamsters government affairs department is currently working on possible legislation, and Case said the Teamsters will contact Metro Council members after the upcoming representation election Feb. 8.

San Diego pension board will not pay legal fees

2006-01-31T07:29:00.000-08:00

Two former officials of the San Diego public employees' pension system cannot rely on the pension board to pay their legal fees. The Union-Tribune reports:

Former system administrator Lawrence Grissom and former general counsel Loraine Chapin face federal charges stemming from their roles in a 2002 deal that linked employee benefits to a proposal to continue to underfund the pension system. The practice began in 1996.

Though proposals to offer the indemnity attracted a majority vote – 5-2, with one abstention – they failed because seven votes are needed for the board's approval. Eight of the board's nine members were present; four seats are vacant.

Board members debated the issue for more than an hour, after hearing from attorneys for Grissom and Chapin, who criticized the federal prosecutors' case, and City Attorney Michael Aguirre, who has opposed using public funds to pay the legal fees of those facing criminal charges.

Accounting change could affect govt. retiree benefits

2006-01-31T07:02:00.000-08:00

A change in accounting procedures will force state and local governments to calculate the actual and projected costs of health benefits for their retirees. The rule change by the Government Accounting Standards Board (GASB) takes effect at the end of this year.

The Washington Post reports that GASB rules do not carry the weight of law, but are considered an important measure of financial health by Wall Street analysts and bond rating agencies.

That means the rule is likely to have far-reaching consequences, finance experts and local officials say. Governments, school boards and other public bodies throughout the country will be compelled to report what they owe retirees for health care over the next 30 years -- and to begin setting aside additional millions of dollars to pay for it.

It will take two to three years for the full effects of GASB 45, as the rule is known, to play out. But officials say it could lead to reduced benefits for retirees. Governments that don't have a plan for fully funding their obligations could have their bonds downgraded, limiting their ability to borrow at favorable rates and costing taxpayers millions in additional interest payments for new schools, roads and other capital improvements.

"It's a big deal, and it will have a big impact on our financial statements," said Gail Francis, deputy finance director for Prince George's County.

Parry Young, public finance director for Standard & Poor's Corp., said many governments will be able to absorb the effects of GASB 45 with relative ease. Some, he warned, especially those providing extensive health benefits, will face "painful decisions," forced to choose between funding critical services now and investing in needs that will have to be met decades down the road.

An official with the American Federation of State, County and Municipal Employees (AFSCME) says state and local governments will likely feel the pressure to reduce retiree health benefits as a means of keeping the projected costs from affecting their bond ratings.

Voice of America: Pensions an endangered species

2006-01-27T07:38:00.000-08:00

VOA reports on the trend among private-sector employers of abandoning traditional pension benefits.

The number of Americans over the age of 65 is expected to double between now and 2030. This next generation of retirees will be the healthiest, best educated, and most affluent in American history. But many of them will not have a retirement benefit their parents' generation fought hard to get.

It is something known as a defined-benefit plan, or "pension." Retired workers who have a pension continue to be paid a certain percentage of their highest annual salary - usually anywhere from one to three percent - multiplied by the number of years they worked for the company.

***[Olivia Mitchell, a professor at the University of Pennsylvania's Wharton School of Business] says she believes in the future, more and more employers are going to be abandoning defined-benefit plans in favor of defined-contribution plans. She says the one exception to this rule, though, could be the public-service sector. She says local, state, and federal government employees do not tend to change jobs quite as frequently as other American workers do - which is why public transportation workers in New York City recently went on strike in a bid to preserve their defined-benefit plans.

New Jersey pension system invests in hedge funds

2006-01-27T07:02:00.000-08:00

Bloomberg reports:

New Jersey's state-employee pension fund for the first time will put money into hedge funds, the state's top investment official said.

The fund also plans to hire advisers to try to double or triple its investment in emerging markets, William Clark, head of the state Division of Investment, said this week.

State documents show that the pension fund will give a total of $300 million to four hedge-fund firms - Archipelago Partners L.P., AG Super Fund L.P., BGI Multi-Strategy Fund, and OZ Domestic Partners.

New Jersey's $72 billion public pension fund, the eighth-largest in the United States, invested only in stocks and bonds until last year. The fund's policymaking board then committed to putting at least $9 billion into private-equity, real estate and hedge funds.

The changes were made as part of efforts to improve returns and offset a deficit that investment board chairman Orin Kramer estimates at more than $30 billion.

Hedge funds use sophisticated investment strategies to try to wring higher, or at least steadier, profit than traditional investments, such as stocks and bonds.

New York transit union leader: New contract offer is unacceptable

2006-01-27T06:57:00.000-08:00

The president of the New York Transit Workers' Union says the city's latest contract offer, which would increase pension and health insurance contributions from employees, is unacceptable.

Asked whether the union's leadership would put the proposal to a vote, [Roger] Toussaint said, "No, we downright reject it," the transcript said.

According to the newspaper, the contract terms include a requirement that workers begin contributing 1.5 percent of their wages toward health insurance premiums, which is an item objectionable to union members.

When asked why his own union members reject a contract that he had negotiated, Toussaint blamed what he called a "right-wing conspiracy" by dissident union leaders who are gunning for his job.

Convicted Indiana officials could lose pensions

2006-01-27T06:45:00.000-08:00

A state senate committee in Indiana has approved a bill that would strip pension benefits from public officials convicted on corruption charges.

Senate Bill 322 would allow the Public Employees Retirement Fund board to eliminate the pensions of convicted felons.

It has been a high profile source of consternation in Northwest Indiana, where such high-profile convicted felons as former sheriff Rudy Bartolome and former County Councilman Troy Montgomery remain eligible for the state pensions, even after pleading guilty to accepting bribes.

“If a person is going to steal from the public, then the public should not have to pay their pension,” said Sen. Karen Tallian, D-Ogden Dunes.

She was a co-sponsor, along with Sen. Earline Rogers, D-Gary, of a bill by Sen. Dennis Kruse, R-Auburn. They met with Gov. Mitch Daniels earlier in the week. The governor has made the package part of his legislative plan.

It is a followup to a bill by Sen. Frank Mrvan, D-Hammond, that passed the General Assembly in 2005, which required elected officials to give up their seats after conviction, rather than waiting for sentencing. It came in the wake of the federal “sidewalks as bribes” trial, that included two sitting East Chicago city councilmen.

OPERS chief departs for Minnesota

2006-01-27T06:40:00.000-08:00

The new leader of the teachers' pension fund in the Land of 1,000 Lakes is the former head of the largest public retirement system in the Buckeye State.

Laurie Fiori Hacking, who has led the Ohio Public Employees Retirement System for six years, leaves at the end of February. The Board of Directors will appoint Chief Operating Officer Blake Sherry as interim executive director and use a recruiter to help find a replacement by midyear.

During Hacking's tenure, the fund's assets grew to $68.6 billion from $56.6 billion in 2000, Chairman Richard Alexander said.

MD teacher pension boost faces challenges

2006-01-23T08:26:00.000-08:00

A proposal to shore up teacher pensions in Maryland is getting a mixed reaction from state lawmakers.

Negotiators in the General Assembly say they are hung up on the price tag of the union's proposal: more than $500 million annually. They also are weighing an independent analysis that questions the argument central to the teachers union's campaign.

"We need to improve teachers' pensions, which are the worst in the nation," Maryland State Teachers Association President Patricia A. Foerster tells listeners in radio ads. "Many educators are leaving Maryland schools or changing professions altogether."

By the union's measure, teachers in Maryland who retire after 30 years receive annual pension payments that equal about 38 percent of their salary, compared with 60 percent in neighboring Pennsylvania and a nationwide average of 57 percent.

But an analysis by a consulting firm hired by the legislature tells another story.

"They keep saying, 'We're last in the nation,' and that's not true, and that bothers me a little bit," said Del. Mary-Dulany James (D-Harford), the point person on pensions in the House. "We're actually in the middle."

When other factors, such as yearly cost-of-living adjustments and Social Security benefits are added to the mix, retired teachers and other state employees in Maryland take home slightly more than 80 percent of their final salary after 10 years in retirement, according to the actuarial firm Cheiron Inc.

That puts Maryland behind Pennsylvania and Virginia but ahead of the District and on common ground with states including Delaware and West Virginia. The study also found that teachers in Maryland contribute a smaller share of their salaries toward retirement than in all but seven other states.

David E. Helfman, executive director of the union, took issue with the assessment, which he said was based on unrealistic assumptions.

"They're wrong. Teachers don't retire and ask themselves, 'What will I be bringing in 10 years in the future?' " he said. "What's important is the benefit at retirement."

Louisiana retirement system has own blog

2006-01-20T12:54:00.000-08:00

The Louisiana State Employees' Retirement Sytem, which identifies itself by the acronym "LASERS," has its own blog. It is called The Daily Beam, obviously a word play on "LASERS."

It offers a scan of retirement-related news items similar to what we do here at Public Pension News. Not a bad effort.

If you know of a public retirement system that operates its own blog for the benefit of its members, please send the link to:

hkanders@gmail.com

I would love to begin linking to system blogs in the sidebar.

And, what about private pensions?

2006-01-20T09:23:00.000-08:00

On the Washington Post website, cartoonist Tom Toles illustrates the pension problems facing private-sector employees.

A "class war" is brewing over pensions

2006-01-19T08:18:00.000-08:00

Blogger David Sirota takes notice of the multi-front attack on secure pension benefits.

Slowly but surely, pension issues have become the new front in the class war being waged on ordinary Americans. And what's particularly disturbing is politicians and media pundits who constantly portray those who have managed to secure decent pensions as greedy and evil. Big Money interests that be want us to believe that workers who earn a decent pension are evil - as if retirement security is something we shouldn't all aspire to. We saw this during the New York City transit strike, where the political Establishment tried to pit the working class against itself and deflect attention from the real culprits, essentially saying the transit workers were evil for having banded together to secure decent wages/pensions, and that they should just accept economic persecution like other workers are forced to accept. And we are now seeing it again in the debate over state public pensions.

In this USA Today story about how politicians have refused to adequately fund public pension commitments, Alaska Republican state representative Bert Stedman calls for massive cuts to state worker pensions, claiming "If we don't act now, we're going to have social conflict in the future between the haves and the have-nots — those with government pensions and those without." That's exactly the frame the right-wing wants us to see these issues in: the supposedly evil "haves" are those workers who secure a decent retirement, and they are the ones supposedly harming the "have nots." Not surprisingly, this exact frame is parroted on Fox News, most recently with Neil Cavuto hosting a show shamelessly regurgitating the concept that workers with decent retirement benefits are evil.

But really, what a lie it is. Beyond the fact that this line of reasoning actually asks us to treat pension cuts as a virtue and secure retirement as evil, there are the actual economic realities of what's actually going on. For instance, one paragraph before the Alaska Republican made his ridiculous comment, USA Today noted that "average annual benefits for retired state and local workers grew 37% to $19,875 from 2000 to 2004." That's right - we're actually expected to believe there is a crisis because between 2000 and 2004 the average state/local workers' annual pension grew from $14,507 (just above the poverty line) to $19,875. Worse, we're expected to believe that these people earning less than $20,000 a year in their retirement are the evil "haves" who are hurting the have-nots.

New accounting rules endanger pension, health benefits

2006-01-19T08:04:00.000-08:00

New federal accounting rules could cause employers to further restrict or eliminate pension and health benefits for their workers.

The new rules require balance sheets to reflect the cost of current and projected benefits and the effect they have on the bottom line.

The changes — likely to begin by year's end — come as a growing number of companies freeze pensions and cut retiree health benefits, shifting risks and costs to workers. In recent weeks, IBM and Verizon Communications have joined the list of those announcing they will freeze their pension plans.

But some experts say regulations requiring companies to more accurately calculate and show the cost of their retirement promises could speed up the move by employers away from guaranteed pensions and other benefits.

"Changing accounting rules can cause companies to change their behavior," said David Zion, an accounting analyst with Credit Suisse First Boston.

Rules now in place give companies cover. Many have made expensive retirement promises without putting aside all the money needed to meet them. But they don't have to fully disclose the shortfalls in their earnings statements or on their balance sheets.

Instead, firms can post very positive numbers based on assumptions about investment returns, when the actual returns would hurt their results. And while companies are required to disclose pension figures in footnotes to financial statements, even those can be difficult to decipher.

"If you change those rules, you take that protection away, and our thinking is companies may have to go out and protect themselves," Zion said.

"Protecting themselves" could mean scaling back benefits in a climate that is already trending away from the secure pensions that generations of workers came to take for granted. Future generations of American workers may find themselves bearing the majority, if not all, of the risk for their medical and retirement security.

A Defense of DB Pension Plans

2006-01-18T13:45:00.000-08:00

J. Bradford DeLong, an economist and blogger, writes an eloquent defense of defined-benefit pension plans on the website TomPaine.com. He builds his thesis around the corporate trend of abandoning DB plans in favor of 401k-style defined-contribution plans.

DC plans, DeLong emphasizes, place their account-holders at the mercy of the stock market, which many economic conservatives argue is a better model than the guaranteed benefits of DB pensions. He disagrees and argues that governments should resist the temptation to abandon defined benefits in favor of defined contributions.

This fall-off in private defined-benefit pensions is a bad thing, because the configuration of asset prices suggests that young and middle-aged workers value defined-benefit pensions extremely highly. Historically, the gap between expected returns on low-risk assets like government or investment-grade bonds and high-risk assets like stocks and real estate has been very high.

In my opinion, at least, this is partly because the memory of years like 1930 and 2000, when stocks performed very badly, occupies too large a place in investors’ minds. Workers and other asset holders place a very high value on safety, security, and predictability, so a defined-benefit pension plan is extremely valuable.

But in today’s world, only national governments are large enough to be able to ensure that the pension assets will actually be there when workers retire. I am enough of a social democrat to believe that if there is an economic service or benefit that citizens value extremely highly and that only the government can provide, then the government should provide it.

We economists know that there are many drawbacks to expanding the role of government. But the collection of payroll taxes and the writing of pension checks is the kind of routine, semi-automatic task that government can do well. It is even more important and valuable that government does it in our post-industrial, network-age society than it was in the past.

USA Today: Public pensions becoming more generous

2006-01-17T07:56:00.000-08:00

USA Today suggests that, in contrast to the private sector, public pension plans are offering increasingly generous benefits to their members.

Many corporations have replaced traditional pension plans, which pay monthly benefits for life, with plans that cost employers less and pay workers a lump sum when they retire. Alcoa, the world's largest aluminum producer, announced Monday that it would do so for most new employees effective March 1.

Governments have been moving in the opposite direction: increasing monthly benefits, making it easier to retire at 55 and spending more on retiree health benefits. State and local governments, which cover 21 million workers and retirees, have been adding benefits the fastest:

•A December study of 85 big public pensions in all 50 states — covering three-fourths of public employees nationwide — found that governments continued to enhance benefit formulas, ease early retirement and improve other benefits from 2000 through 2004 despite states' financial problems. The increases were enacted on top of even larger benefit changes approved from 1996 to 2000. The study, conducted by the Wisconsin Legislature, is one of the most comprehensive on the issue.

•The New Jersey Legislature has approved 17 benefit enhancements since 2000 that increased the unfunded obligations of public pensions in the state by $6.8 billion, according to a task force studying the issue.

•Average annual benefits for retired state and local workers grew 37% to $19,875 from 2000 to 2004, the most recent data available, according to the Census Bureau. The rising payments reflect the early retirement of baby boomers, who started to qualify for full benefits in 2001, at age 55, under most government pensions.
"These pensions are unaffordable," says Alaska state Rep. Bert Stedman, a Republican. "If we don't act now, we're going to have social conflict in the future between the haves and the have-nots — those with government pensions and those without."

Reg Weaver, president of the National Education Association, which represents teachers, says legislators shouldn't respond to pension problems in the private sector by attacking government pensions. "Pensions are a national problem, but it's not in the interest of workers to diminish either type," he says.

Retirement a factor in shrinking California teacher work force

2006-01-17T07:29:00.000-08:00

California expects to lose 100,000 teachers over the next ten years. The reasons, according to a new study, are two-fold: the prohibitive cost of living in the state on a teacher's salary; and large-scale retirement of baby-boom aged educators.

"We have a large group in the retirement phase and the number of those incoming are not matching up," Victor Valley Union High School District's Senior Director for Certificated Personnel Joseph Andreasen said. "We have a large contingency of teachers that over the next 10 years will be retiring ... about a fourth of our staff, maybe a third."

To simply keep up with the area's growth, district officials had to hire 107 new teachers for the 2005-06 school year — 57 more then they expected. Andreasen anticipates needing 60 additional teachers for the next school year.

Aggressive recruitment is the main method local districts hope to use to beat the odds.

"We're going to several job fairs both in and out of state. We're going to Oregon, Ohio and looking down south in Louisiana and Alabama, areas affected by the hurricane, to hire displaced teachers looking for a job who may be wanting to come to California," Andreasen said.

Indiana weighing pension protections

2006-01-17T07:13:00.000-08:00

Indiana state lawmakers will debate measures designed to protect the pensions of public employees who lose their jobs due to privatization or cutbacks.

Governor Mitch Daniels has proposed awarding contracts to private firms for services now provided by state agencies. This could result in office closures and job eliminations. Two Republican state senators are introducing a bill containing several protections for public employees, including:

- Workers within two years of certain retirement options could opt to retire when their jobs are lost.

- The state could pay workers their current salaries if they take another state job with a lower classification. For example, if someone made $40,000 at the Department of Transportation and the job was lost, the person could take a $35,000-a-year DOT job and still be paid $40,000. However, it would be up to the DOT to opt to pay the higher salary.

- Workers would become vested in their pensions at the time they lose their jobs, regardless of the number of years they worked for the state. Currently, state employees’ pensions are vested only after 10 years. The worker’s benefit received at retirement would reflect the difference.

New Hampshire to bolster public pension funds

2006-01-15T11:48:00.000-08:00

In state after state, public retirement systems are coming under scrutiny and attack. Many say public employees should follow their private sector counterparts by having their retirement accounts put at the mercy of the stock market, with defined-contribution pension plans.

New Hampshire, by contrast, is taking a counter-intuitive approach.

By one estimate, 21 percent of all U.S. companies plan to freeze pensions at current levels, while 17 percent report plans to stop offering them altogether. Most are shifting retirement responsibility to their employees through 401(k)s.

But not for public employees in New Hampshire, where the state retirement board is planning to increase costs to state and municipal taxpayers for funding its workers’ pensions.

Today, there are 20,000 retired public workers drawing a pension through the state retirement board, 51,000 active members and a $4.7 billion trust fund.

Meanwhile, state and local contributions toward firefighter pensions are projected to increase from 22 percent of those firefighters’ salaries to 24.4 percent. The state retirement board plans to bump the bill to municipal and state taxpayers for teacher pensions from 5.7 percent of their pay to 8.9 percent. For police officers, the current local and state contribution of 14.9 percent is projected to increase to 18.2 percent.

Those increases would become effective July 1, 2007.

Colorado GOP to use PERA as political issue

2006-01-14T20:24:00.000-08:00

The Associated Press reports that the Republican Party in Colorado is pulling out all the stops in a bid to regain control of the state legislature. One of the arrows in its quill is the state retirement system.

Besides playing defense, Republicans are pushing their own priorities: cracking down on illegal immigration and tackling the state's troubled pension system, which has an unfunded liability of more than $11 billion.

[House Minority Leader Joe] Stengel doesn't have a specific remedy for the Public Employees Retirement Association, but thinks lawmakers need to consider all their options, such as requiring employees to pay more into the system; switching to defined contribution plans such as 401(k) accounts like the private sector is doing; and reducing benefits.

"Republicans are willing to say let's make the tough decisions now. Let's save the system, let's make sure that all the retirees get the benefits they've been promised and that they've paid into instead of waiting more time," he said.

Wars and Rumors of Wars

2006-01-13T07:19:00.000-08:00

CNN/Fortune posts a dispatch from the pension wars.

A hint of what's to come could be seen in the New York City transit strike. Most of America didn't notice exactly what sparked the first such strike in 25 years, costing businesses, individuals and the city hundreds of millions of dollars. The answer is pensions. The transit authority and the workers were agreed on virtually everything except how much new employees would contribute toward their pensions--6 percent of wages vs. 2 percent -- and neither side felt it could give an inch on that.

The reasons illustrate the larger problem. The transit authority, like many private and public employers, is watching its pension costs rocket as longer-living retirees increase in number. That burden will become unbearable. On the other side, union members are watching employers nationwide dumping or cutting their pensions just as Social Security starts to look shaky. They figure retirement security is the one thing they cannot sacrifice. Result: war.

Ax to fall at San Diego pension board

2006-01-12T12:30:00.000-08:00

In his State of the City address, San Diego Mayor Jerry Sanders is expected to call for the resignations of several members of the city pension system's governing board.

The pension board is comprised of 13 members. Seven of the board members are appointed by the City Council, but one of those positions is currently vacant. Sanders plans to ask the six current city appointees to tender their resignations so that a new slate of seven members can be selected by the city,

Colorado Gov. Bill Owens: We must reform PERA

2006-01-12T11:02:00.000-08:00

In his annual State of the State address, Colorado Gov. Bill Owens spoke about the need to make changes to the retirement system for state employees.

"One of the biggest challenges facing us this session is reforming the Colorado Public Employees’ Retirement Association-or PERA. With current unfunded liabilities of more than $11 billion, PERA will simply not be able to fulfill its future obligations unless we make changes now.

We must tackle this problem this year. I appreciate Treasurer Hillman’s strong leadership on this issue, and I look forward to finding a solution that’s fair-both to state employees as well as to Colorado taxpayers.

Almost everyone agrees that reform is necessary, and most largely agree on what those reforms should look like.

First, we do need to restructure PERA’s board, which the Rocky Mountain News described as "unwieldy," with no representation from the "tax paying public." The Pueblo Chieftain also has called for a reorganized board "with independent trustees who have no skin in the game."

Clearly, the new board should include members who are not part of the pension plan, and who have some investment experience.

I support an 11-member board comprised of five people elected by PERA members and four appointed by the Governor and confirmed by the Senate, with the State Auditor and Treasurer completing the board.

Second, we need to modernize our pension system to reduce current and future unfunded liabilities. This will require a separate tier for newly-hired employees that is stable, sustainable, and less expensive to the taxpayer. This reform will significantly reduce the future burden on government while at the same time attracting quality workers to state government.

We also need to take the politically tough step of examining benefit levels for our current employees. We can help make the system more sustainable by changing the age at which retirees receive full benefits and-if necessary-reducing benefits in the "out" years for those furthest from retirement. These changes should not affect those closest to retirement, but could be phased in for those who have years to go.

And I believe that before any change in benefits can occur, the Legislature should be required to obtain an independent actuarial review to determine the impact of the change.

Finally, we should expand the defined contribution plan to give workers more freedom over their money and reduce future unfunded liabilities."

Pressure for Montana to adopt IBM pension model

2006-01-11T04:07:00.000-08:00

The DB versus DC debate comes to Montana.

The Missoulian opines that Montana and its public employees would be better off with a 401k-stlye defined contribution pension plan, as opposed to the traditional defined benefit plan in place now.

Montana should convert its public employee retirement system to a defined-contribution plan for the same reason IBM just did. Many private companies are converting. A Hewitt Associates study cited in a recent edition of USA Today noted that only 67 percent of large employers now offer conventional pensions, compared with 91 percent 20 years earlier. More and more are converting to defined-plans that fulfill the employer's obligation with each paycheck and give employees control over their own funds - and the knowledge of exactly how much money they have for retirement.

People often say they'd like to see government run more like a business. Here's one good way to do it - a way likely to serve employees and taxpayers better over the long-run than the current, unsustainable pension system.

Of course, government is not a business. Government and business are designed to do different things. Businesses exist in order to maximize profits. Government exists to provide for the needs of citizens.

According to the National Association of Retirement System Administrators (NASRA), DB pension plans are one of the tools governments use to attract and retain qualified workers. This, too, is good for public employees and for taxpayers.

In general, public employers recognize that DC plans have many positive attributes, but to make them work well, many factors must fall into place:
participants must consistently make sound investment decisions over their working and retired lives; they must remain in the workforce steadily, avoiding lengthy time off for having children, raising a family, completing an education, or for illness; they must have a sufficient amount withheld from their pay; they must avoid borrowing against and spending their retirement assets; and they must make appropriate decisions regarding withdrawal rates during retirement.
Even then, employees might exhaust their assets after retirement. Hence having a DB plan as the primary retirement benefit protects public sector employees against many of these problems

Public DB pension plans have also enabled public employers to achieve important objectives related to the recruitment and retention of quality workers. These plans financial security in retirement and reduce retiree reliance on public assistance programs. The fact that these plans have evolved relatively independently of the federal regulatory structure governing 16 private pensions has allowed the public plans to engage in an ongoing process of creating and modifying plan designs and governance structures to meet the unique needs of public sector employers. The independence, flexibility, and profitable prudence of these plans will continue to support public employers in their ongoing mission to serve taxpayers, while providing financial security to retired public employees and significant economic benefits to their communities. Public plans are, indeed, a useful component of the new retirement paradigm of the future.

Those who wish to preserve public DB pension plans should not leave unchallenged the simplistic argument that if DC plans are good enough for private-sector employees, they are good enough for public employees.

Changes loom for Washington state pension system

2006-01-10T15:29:00.000-08:00

This article in The Olympian frames it as the end of an era for state employees in Washington, as the legislature looks at ways to close a multi-billion dollar unfunded liability.

When the stock market crashed in 2001, the drop in the investment returns meant the state and workers were not putting enough money into some plans, and a steep increase in contributions was averted by agreeing to pay more than necessary in the future in exchange for paying less than necessary then.

The unmet need — part of a total unfunded liability of more than $4 billion — has lawmakers anxious to make changes. But unions representing state workers will want something in exchange for giving up programs that benefit their members.

NYC Teacher pension fund looted

2006-01-10T08:33:00.000-08:00

Police have made one arrest in an identity-theft scam that targeted members of the New York City Teacers' Retirement Sytem.

The New York Post reports that it was an inside job.

Law-enforcement officials yesterday said they were still investigating what they believe was a multiperson identity-theft ring that accessed pensioners' bank account and Social Security numbers, their dates of birth and security pass codes.

Roughly $42,000 was stolen using the financial information of at least seven pensioners, and checks totaling more than $359,000 made out to 19 members or their beneficiaries were discovered in possession of the retirement-system insider, according to court papers.

The NYCTRS manages more than $30 billion in pension assets for more than 150,000 employees and retirees of the city Department of Education and the City University of New York.

"I still can't fathom what happened," said Diana Shaneberger, 37, who was scammed out of $6,000 last summer. "I'm really disenchanted with the whole system. They're incompetent."

Although as many as 5,800 accounts were said to have been accessed, it was not clear whether data on all of them, or only some, was actually stolen.

Jerome Boyd, a retirement system clerical employee, was arrested in connection with the scam.

Corzine to address NJ pension costs

2006-01-10T06:32:00.000-08:00

One of New Jersey Governor Jon Corzine's first orders of business will be to address rising costs in the state pension system. Gannett reports that measures include a renegotiation of contracts with one of the state's largest public employee unions.

State and local governments face a $12 billion pension deficit. And the state's full payments for teacher and public worker retirement funds are expected to increase to $1.8 billion in Corzine's first budget. The state is spending just $299 million from its general fund for pensions in the current budget. Employee benefits are expected to cost taxpayers $6.9 billion in the 2010 budget, more than 21 percent of all state spending, according to the task force.

State government and public workers should share the pain of correcting a long-simmering problem, Murphy said.

But the plans proposed by the task force could strain an already tight state budget. Increased spending to close the deficit could force lawmakers to choose between higher taxes or cutting state programs. Other proposals to trim costs face opposition from public employee unions, which have aggressively fought cuts in benefits.

At a recent news conference, union leaders blasted a plan that would save the state money but cost retirees more for prescription drugs. Rae Roeder, president of Communications Workers of America Local 1033, was asked what concession the union would be willing to make to cut costs.

"We've already made our concession," Roeder said. "We work and do the job for less pay than private industry. That's the concession we made when we came to work for the state of New Jersey."

Is retiree health care next to go?

2006-01-09T08:58:00.000-08:00

The AP reports on a change in accounting rules that could cause companies to abandon subsidized health coverage for their retirees. This comes amid reports that traditional pensions are falling by the wayside, transfering much of the risk of retirement from employers to employees.

With health care, private employers face the possibility of the costs becoming a threat to shareholder value.

Accounting regulations for both pensions and retiree health-care costs are poised to change in the next five years, in what could be the largest shift in accounting rules in more than 30 years.

"We believe this project will have a significant impact on evaluations, income and balance sheets, and will become the major issue in financial accounting over the next five years," said Howard Silverblatt, equity market analyst at Standard & Poor's.

The Financial Accounting and Standards Board, the arbiter of the nation's accounting rules, has said it will require companies to add their net pension and retiree health-care costs to their balance sheets within the next year. Then, over the next three or more years, the accounting methods for pensions and retiree health-care costs will also change.

The first change, which will move pension and retiree health- care costs from financial footnotes to balance sheets, could be dramatic, increasing companies' leverage and changing computed returns, book value and shareholder equity ratios. These ratios are closely watched, since many loans and bonds deals cap a company's leverage ratio. And the changes could be eye-popping. The aggregate drop in shareholder equity, for instance, will be 10 percent, Silverblatt wrote in a December report.

In today's corporate environment, one imagines companies will not be inclined to accept such a potent threat to the bottom line and to the value of their stock. Forcing a company to choose between its retirees and its shareholders places retirees in grave danger.

New York MTA: Pension demand was a mistake

2006-01-09T07:14:00.000-08:00

From the Times:

The chairman of the Metropolitan Transportation Authority said yesterday that he had erred in making pension changes a central demand in contract negotiations with the city's transit workers, a miscalculation that helped lead to a 60-hour subway and bus strike the week before Christmas.

The chairman, Peter S. Kalikow, did not take responsibility for provoking the strike, the city's first since 1980, but he acknowledged misjudging the union's hostility to his demands that future workers accept a higher retirement age or contribute more to their pensions than current workers do.

"I put out a proposal that I thought would be most palatable to the union, and it turns out I was wrong," he said in an interview. Before the strike, Roger Toussaint, the president of Local 100 of the Transport Workers Union, had repeatedly said he would not accept a pension plan that did not treat future workers the same as current ones.

San Diego pension officials are indicted

2006-01-09T06:59:00.000-08:00

Five public pension officials in San Diego have been indicted on fraud and conspiracy charges.

The New York Times reports:

The charges centered on a 2002 decision by the 13-member San Diego City Employees' Retirement System to enact a plan to increase significantly the pension benefits of city employees, including all the defendants, while failing to provide sufficient money to keep the pension fund solvent.

Federal prosecutors said the five defendants had conspired to hide the details of the proposal from other members of the pension board as part of a scheme to enrich themselves and cover up the financial danger to the pension system posed by the plan.

The decision helped to push the city to the brink of bankruptcy and led to the resignation of Mayor Dick Murphy last spring. The San Diego retirement system now has a deficit of at least $1.4 billion, and the city is unable to borrow in the capital markets.

The local United States attorney, Carol Lam, said the five pension fund officials had violated their obligations to city retirees and the taxpaying public.

NY Times: Corporate America shedding traditional pensions

2006-01-09T06:48:00.000-08:00

The Times pulls together a wrap on its recent coverage of the trend away from defined-benefit pensions and toward 401k-style defined contribution plans.

The death knell for the traditional company pension has been tolling for some time now. Companies in ailing industries like steel, airlines and auto parts have thrown themselves into bankruptcy and turned over their ruined pension plans to the federal government.

Now, with the recent announcements of pension freezes by some of the cream of corporate America - Verizon, Lockheed Martin, Motorola and, just last week, I.B.M. - the bell is tolling even louder. Even strong, stable companies with the means to operate a pension plan are facing longer worker lifespans, looming regulatory and accounting changes and, most important, heightened global competition. Some are deciding they either cannot, or will not, keep making the decades-long promises that a pension plan involves.

The theme of the piece is that the shedding of pensions is characteristic of a trend placing more risk on employees.

Public pensions described as "ticking time bombs"

2005-10-17T10:51:00.000-07:00

Experts say the country's public employee pensions plans face a shortfall of nearly $300 billion. The Arizona Capitol Times quotes an analyst with the Council of State Governments, described as a bipartisan organization for state government officials.

The premise of the article is that traditional public pension plans, known generally as Defined Benefit (DB) plans, are unaffordable and that many states are attempting to replace them with 401k-style Defined Contribution (DC) plans. The primary difference between DB plans and DC plans is that DB plans offer a set pension, a defined benefit, to retirees. It does not go up or down based on external factors such as the performance of a stock portfolio.

Under a DC plan, the contributions and the performance of the investement portfolio determine the value of the pension for the retiree. There is no guaranteed monthly amount.

The article mentions the Republican governors of Alaska, Californina, Massachusettes and Rhode Island who proposed DC plans for public employees in their states and all of whom but Frank Murkowski of Alaska failed in their attempts.

But their proposals also faltered in the face of fierce opposition from public employee unions, which say the 401k-style plans provide less comprehensive retirement security for state and local government employees.

Alaska estimates that its public employee and teacher retirement systems currently are short about $5.7 billion owed to employees when they retire. Supporters say the new program, which will apply to all state employees from Statehouse janitors to highway patrol officers to teachers, will help ensure that the state’s pension systems stay in the black.

The article also points out that one advantage of DB plans is that they give state governments firmer numbers with which to plan for the future since the costs are predictable.

Pension Reform - The government's disgrace

2005-10-17T06:37:00.000-07:00

The Washington Post calls attention to the "Government's Disgrace" in addressing the problems facing corporate America's Defined Benefit pension plans:

Congress has an appalling record on pension legislation, which is why the pension rules are dysfunctional in the first place. Business and labor groups share a common interest in lobbying for lax funding rules, which allow them to keep promising big pensions while sticking the taxpayers with part of the cost. Nobody lobbies on behalf of the taxpayers. This is why the last round of pension legislation, a year ago, made the underfunding problem worse.

This time there was talk of doing better.

As you might guess, and as the editorial explains, all that talk of doing better was just that - talk.

Port workers allowed to withdraw from San Diego pension fund

2005-10-10T04:16:00.000-07:00

Governor Schwarzenegger has signed legislation allowing employees of the San Diego Unified Port District to separate their pension fund from that of the City of San Diego. According to the SD Union-Tribune, the port workers' fund could place its assets with CalPERS, the California Public Employees' Retirement System.

Though port officials have been concerned for some time about having their retirement assets in the city's system, they have not yet made any move to shift the assets to CalPERS.

"That is an option, but it could take a long time to do that," McCormack said.

The Port District has 606 employees and about 250 retirees receiving benefits. The port's pension plan has assets of about $141.4 million.

The city of San Diego's $3.6 billion retirement system has an estimated deficit of $1.4 billion. In recent months, there have been several audits and ongoing investigations into the city retirement board's actions and the city's underfunding of its pension system.

The new legislation "ensures that employees who long have invested in their future will be able to enjoy greater peace of mind when it comes to their retirement options," Ducheny said in a statement released Tuesday by her Sacramento office.

Maryland - Millions more for benefits possible

2005-10-10T03:55:00.000-07:00

From ABC 7 News:

A change in an accounting rule could force the state to set aside hundreds of millions of dollars a year to cover future state employee retirement benefits.

$100 million shortfall in Huntington, WV

2005-10-09T19:34:00.000-07:00

The police and fire public pension plans in Huntington, West Virginia face an mnfunded accrued liability (UAL) of $117 million. The UAL is the difference between what a pension system owes in benefits to its members and the amount of cash available to pay those benefits.

The Herald-Dispatch reports that Huntington's problem began growing in the 1980s "when the state Legislature gave cash-strapped cities an alternative funding method that was similar to making the minimum monthly payment on a credit card with a high-interest rate."

While the alternative funding method temporarily reduced the minimum pension contributions for cities that chose to use it, it also caused their unfunded liabilities to increase. Now, many of those cities are faced with years of skyrocketing pension costs and no revenue source to pay for it.

Huntington, for example, spent about $1.3 million, or 6 percent of its budget, on police and fire pensions in 1993. This year, the city will spend $7.1 million, or 20 percent of its budget, on those pensions.

The problem is expected to get worse. Assuming that the city budget increases at an average annual rate of 3 percent as it has in the past 12 years, pensions will eat up more than 31 percent of the budget in 2018. The annual pension payments then are scheduled to slowly decrease until the unfunded liability is paid off in 2034.

Read the full story for more details.

New Jersey pension fund - Future political headaches expected

2005-10-09T19:28:00.000-07:00

Pension reform in the Garden State is expected to become a chain around the neck of New Jersey's next governor.

The Gloucester County Times reports:

The winner of the Nov. 8 contest between Republican Douglas Forrester and Democrat Jon Corzine will need to find a way to cover the cost or to restructure perks and entitlements for state workers, one political scientist said.

"It's not a sexy issue, or one that grabs the public's attention and holds it for very long," said David Rebovich, director of Rider University's Institute of New Jersey Politics.

"But it is a top issue for the next governor and Legislature because (the cost) is likely to prevent the next governor from pursuing his agenda."

See the full story here.

Pennsylvania fund spent thousands on travel

2005-10-09T19:16:00.000-07:00

The Associated Press picks up a report from a Harrisburg, PA newspaper about out-of-state travel at the Public School Employees' Retirement System.

According to the Patriot-News, the system spend more than $200 thousand on 116 out-of-state trips over a seven year period.

Europe and Asia were among the places board members went on behalf of the Public School Employees' Retirement System, The Patriot-News of Harrisburg reported Sunday.

The system, regarded as a top performer among the nation's public pension systems, received nearly $255 million in funding from the state's budget this year.

Last spring, the conference itinerary for the board's chairman, Williamsport teacher Roger May, included trips to Washington, D.C., Las Vegas, the Czech Republic and Russia.

Retirees benefit from the conferences, he said. He attributed the system's ability to hold down health benefit costs to the board's conference attendance.

W. Virginia voters defer pension fund obligations

2005-06-28T04:12:00.000-07:00

Voters in West Virginia said "no" to $5.5 billion in pension obligations bonds, which leaves in place a 40-year payment plan draws money from the general fund.

The Bluefield Daily Telegraph reports:

This year's payment takes about $350 million from general revenue: the final, 2034 payment is estimated at $724 million - about one-fourth of this year's budget.

The Legislature approved the special election because the state constitution required an amendment for [Gov. Joe] Manchin's plan to devote bond proceeds to the state's pension plans - including its teachers pension program, one of the worst-funded public pension plans in the country.

Changes to Louisiana state pension plan

2005-06-19T19:07:00.000-07:00

The New Orleans Times Picayune reports:

Gov. Kathleen Blanco may soon have to decide between one of two bills aimed at trimming retirement benefits for new state employees.

Already on her desk is a bill by Rep. Pete Schneider, R-Slidell, that says state employees hired after July 1, 2006, would have to work for at least 10 years and wait until age 60 before they can collect normal pension benefits. Current employees can retire at age 55 with 25 years of service, even younger if they've been working for 30 years.

The House on Wednesday approved a similar bill by Sen. Jay Dardenne, R-Baton Rouge, with the same retirement age provision as Schneider's. However, it would apply to employees hired after Jan. 1, 2006. And it includes other changes designed to make bigger cuts in future employees' benefits.

Schneider backs the Dardenne measure, which was approved by the House 58-42. It goes back to the Senate, however, for approval of House language changes, and the Senate may balk at final approval of the tougher bill

It is worth noting that the bills in question address only new rank-and-file members of the Louisiana State Employees' Retirement System (LASERS), one of the Bayou State's four statewide public pension plans.

LASERS is the second-largest of Louisiana's public pension systems. The Teachers' Retirement System of Louisiana (TRSL) remains unaffected.

Also unaffected by the legislation scaling back benefits are the members of special benefits groups of LASERS. LASERS has several categories of membership whose members accrue benefits at a higher rate than the rank-and-file.

Corrections officers, for example, accrue benefits as high as 3.5 percent of annual salary, compared to 2.5 percent for regular members. There are many other special member groups for judges, law enforcement and, interestingly, state lawmakers. Not one of those groups is affected by the roll-back of benefits.

Also, see this piece in the Baton Rouge Advocate.

Pittsburgh Post Gazette: "Who watches the store for public pensions?"

2005-06-13T07:01:00.000-07:00

In an article from Saturday's paper, the Post-Gazette uses some recent high profile scandals, such as Ohio's Coingate, as a jumping off point to examine the accountability of those who make investment decisions for public pension plans.

It isn't as though public pension funds don't have oversight: Most have boards of trustees, formal investment policies -- sometimes set by statute -- and, often, committees to either directly approve asset purchases or hire money managers to do so on pre-agreed terms.

But public funds are not subject to the same federal scrutiny as private pensions, the majority of which are protected by a federal insurance plan. And sometimes the investments they make or the money managers they hire vault into headlines when political favoritism is suspected -- or found.

Those who work closely with public funds contend cronyism is the exception, not the rule. They also argue that the tiny bets on oddball investments that some public funds make often are placed for the same reasons -- and to the same effect -- as risky investments made by private interests: enhancing overall returns.

"I find the people we deal with take their fiduciary responsibility very seriously," said Fred Nesbitt, director of the National Conference on Public Employee Retirement Systems, a nonprofit advocate for public pension plans. "There are some isolated cases of people not using common sense, or getting greedy."

Robert Strauss, a public policy and economics professor at Carnegie Mellon University, was more skeptical. He said that cases of "self-dealing" -- in which public pension trustees or their associates benefit from a fund's activities -- are not uncommon.

Read the whole article.

State employee systems face massive UALs

2005-06-02T08:11:00.000-07:00

Many state employee public pension funds are struggling under enormous UALs.

"UAL" stands for Unfunded Accrued Liability. The UAL is the difference between what a public pension fund (or any such entity) owes in benefits to current and future retirees, and the money available to pay those benefits.

The Financial Times reports that many U.S. state pension funds are facing massive UALs.

State pension funds are facing a shortfall of several hundred billion dollars, and are in much worse shape than their corporate equivalents, the head of one of the biggest state pension funds in the US revealed.

Orin Kramer, chairman of the $70bn New Jersey pension fund, has warned that deficits in the state funds, which provide pensions for teachers, fire and police officers and other public employees, would grow if no action was taken, jeopardising the entire pension system. He estimated the shortfall for the New Jersey fund alone was more than $30bn.

This is the third, wobbly leg of financial security for retirees in the United States. Along with GOP efforts to dismantle Social Security and the disastrous state of private Defined Benefit pension plans, the environment for retirees is growing hostile.

Illinois: Payments reduced to state pension system

2005-05-30T07:15:00.000-07:00

Illinois state lawmakers approved a plan to close a projected gap in the general fund by diverting payments that were intended for the state's public retirement system.

The plan is the result of amendments to Senate Bill 27, the original text of which dealt with making changes to widows' pension benefits:

Pension Note (H-AM 1)(Comm on Gov't Forecasting & Accountability)

Senate Bill 27 (H-AM 1) reduces the required State contributions to the retirement systems by $1,077.9 million in FY 2006 and $1,031.6 in FY 2007. Reducing contributions in FY 2006 and FY 2007 will result in larger required employer contributions for the remainder of the funding plan (FY 2008 - FY 2045). These increases in future required State contributions have not yet been calculated. The bill also makes several changes to the Pension Code which may reduce the growth in accrued liabilities. A reduction in the growth rate of the accrued liabilities will result in lower required annual State contributions over the life of the funding plan. The amount of the annual reductions has not been calculated.

The Chicago Tribune reports on the likely impact of SB 27.

The proposal would take about $2 billion in money that had been destined for public pensions over the next two years and impose some modest changes in pensions to free up cash to close the budget hole.

At the same time, it would set a new payback schedule for state pensions that Republicans said could take as much as $3.5 billion away from pensions over the next five years, add to the long-term debt and force pension systems to sell more assets used for investment.

Rep. Robert Molaro (D-Chicago), the House sponsor of the plan, acknowledged a long-term impact to the systems but said the alternatives to balance the budget were "just horrible."

"This is the best of 10 not-so-nice options," Molaro said.
Some Democratic supporters said a controversy over public employee pensions was less likely to anger voters than raising revenue through higher taxes or more gambling.

In an odd reversal of traditional roles, Democratic lawmakers are the ones promoting the reduced pension fund payments under SB 27. Republicans argue that it will compromise the benefits promised to retirees.

Alaska passes DC plan

2005-05-24T17:05:00.000-07:00

The Alaska House of Representatives joined the state senate with final approval of House Bill 191 which creates a 401(k)-style Defined Contribution retirement plan for public employees and teachers hired after July 1, 2006.

The Anchorage Daily News reports:

Opponents of the retirement bill say the individual accounts would make future retirees' security vulnerable to financial markets, whereas the traditional pension system guarantees a percentage of salary and health care for retirement.

Senate Republican leaders, however, have called the bill the most important legislation this session. It's a way to fix the structure of the systems that face a combined $5.7 billion shortfall for long-term payouts, they say.

More.

Columnist accuses CalPERS of creative accounting

2005-05-24T08:22:00.000-07:00

Daniel Weintraub, of the Sacramento Bee says the apparent improvement in CalPERS' financial health is rather Enron-esque in nature.

After years of bad news about public pensions, California taxpayers caught a break last week when the public employees' retirement fund announced that the state's obligation to the pension system would decline by nearly $200 million in the coming year.
But don't start celebrating yet.

Unfortunately, that reduction didn't come from gains in the pension fund's investments, or from more efficient management of the program.

Instead, the discount was the result of accounting changes that might eventually come back to haunt us all.

More.

San Diego Official: Defendants should pay own legal fees

2005-05-20T19:04:00.000-07:00

From the San Diego Union Tribune:

City Attorney Michael Aguirre today called on the board governing San Diego's retirement system to stop paying legal fees for six former and current trustees facing felony conflict-of-interest charges.

"Effective immediately I am advising you to discontinue any additional payments for legal fees for San Diego City Employee Retirement System, SDCERS, board members who have been charged with criminal law violations by the people of the state of California," Aguirre said in a letter to the board.

Ronald L. Saathoff, 57, John A. Torres, 56, Mary Vattimo, 44, Terri A. Webster, 43, and Sharon K. Wilkinson, 55, are each charged with three conflict-of-interest counts. Cathy Lexin, 54, faces one count.

More...

AK State House says "no" to pension overhaul

2005-05-20T18:56:00.000-07:00

From KTUU:

The House voted 23-17 against the so-called PERS and TERS bill that would put new employees into individual retirement accounts without guaranteed benefits.

More...

Op-Ed: N.J. retirement benefits are earned, not given

2005-05-18T04:43:00.000-07:00

Carla Katz, president of the Communications Workers of America, Local 1034 has an op-ed in the Asbury (New Jersey) Park Press in which she attacks politicians and the press for characterizing public employees' retirement benefits as "entitlements."

This is wrong. Entitlements are government-provided benefits automatically available to eligible citizens because of financial, age or health status, such as welfare, Medicare and Medicaid.

The benefits of New Jersey's public workers are hard won and hard earned — the product of the collective bargaining process. Collective bargaining does not result in entitlements. It results in negotiated contracts that must be honored.

Public workers are not getting rich on the backs of taxpayers. Public workers, who earn an average of $50,000 a year and who can retire after 25 years with an average pension of $27,000, are not the culprits in the state's fiscal crisis. Public workers have traded hundreds of millions of dollars in wage increases, and forgone promotions and higher private-sector wages to help the state and local governments meet their fiscal challenges.

We are not the problem. Bad decision-making and ethical lapses by some of our elected leaders, the failure of the state to pay its fair share into the public employee pension system for years, and rising costs — especially in health care — are the real issues beneath New Jersey's fiscal crisis.

More.

Louisiana retirees could see reduced benefits

2005-05-18T04:08:00.000-07:00

The Louisiana legislature has advanced a proposal to curb retirement for future members of the Louisiana State Employees' Retirement System (LASERS). The measure would reduce the benefit accrual rate for members who join the system after July 1, 2006. It would also increase the employee contribution rate for those members.

LASERS Executive Director Bob Borden said he understands that changes are needed and that the system wants to be involved in crafting holistic solutions to its financing woes.

"I think it's to the point where we realize that we're going to have to proactively be recommending a solution," Borden said.

Schneider's bill would require state workers hired after Jan. 1, 2006, to contribute 8 percent of their paychecks toward retirement benefits that would build up more slowly than the benefits promised to current workers.

Current members of LASERS contribute 7.5 percent of their paychecks for retirement benefits that build up at a rate of 2.5 percent of their highest average salary for each year of service. Schneider's bill would let new workers build up benefits at a rate of 2 percent per year.

New hires would also have to work at least 10 years and wait until age 60 before they could collect normal retirement benefits, a change from the current system that allows some workers to retire with full benefits in their late 40s.

More.

San Diego pension officials charged

2005-05-18T03:58:00.000-07:00

San Diego District Attorney Bonnie Dumanis has charged six current and former board members of the San Diego City Employees' Retirement System with felony conflict-of-interest.

According to the San Diego Business Journal, the D.A. claims the six voted for a proposal that granted them increased retirement benefits.

Those facing three charges each, following an 11-month investigation, are Ronald L. Saathoff, John A. Torres, Sharon K. Wilkinson, Mary Vattimo and Terri A. Webster. Cathy Lexin faces two charges.

Each faces a maximum sentence of three years in state prison.

According to information supplied by Dumanis’ office, the SDCERS board on July 11, 2002, voted to approve an amended version of a city proposal, which deferred a percentage of employer contributions and avoided the city’s obligation to make a balloon payment to SDCERS as negotiated under the terms of a prior city agreement.

The amended proposal included a negotiated enhanced retirement benefits agreement between the city of San Diego and three city employee bargaining unions – the San Diego City Firefighters Local 145; Municipal Employees Association; and the American Federal of State, County and Municipal Employees Local 127. Each of the trustees named in the criminal action voted in favor of this proposal and personally benefited as a result of their involvement with the amended proposal, according to Dumanis.

More.

NASRA: Public pension plans are healthy

2005-05-17T13:00:00.000-07:00

The National Association of State Retirement Administrators (NASRA) has a useful guide to the health of the nation's state and local pension plans.

On average, according to NASRA, and contrary to popular misconception, taxpayers do not bear the burden of supporting public pension plans.

In fact, employer (taxpayer) contributions to state and local pension systems make up only one-fourth of revenues. Earnings from investments comprise the majority of public pension fund revenues. Unlike in the private sector, most public employees are also required to contribute to their pension plans. The chart below summarizes the sources of public pension revenue for the 20-year period ending in 2002.

Read the whole thing.

Editorial: Schwarzenegger was right

2005-05-16T16:30:00.000-07:00

From the Sacramento Bee:

Schwarzenegger was on the right track with his pension reform, limiting new public employees to defined-contribution plans, rather than cost-be-damned defined-benefit plans, to produce some stability in taxpayers' burden. It was widely condemned as "privatization" to tie it to President Bush's controversial Social Security overhaul, but in fact the administration said that the new plans could be administered by CalPERS and other pension systems, not private firms.

A Climate of Uncertainty

2005-05-16T14:28:00.000-07:00

The environment in which workers retire will look very different in the next 20 years than it did in the last 20 years.

Serious threats to Social Security and private Defined Benefit pension plans have emerged.

Almost unnoticed, however, are the threats to public Defined Benefit pensions enjoyed by employees of state and local governments across this country.

Governor Arnold Schwarzenegger's plan to alter the benefit structure of CalPERS made national news. Few are aware that similar efforts are underway in many other states. Unlike the California case, in many states, the effort to convert Defined Benefit plans to 401(k)-style Defined Contribution plans rolls on.

As an example, a New Jersey newspaper has published a ten-point plan to "put public employee benefits programs back on a firm footing, and to give taxpayers much-needed relief."

- Eliminate all pension and health benefits for elected officials, part-time public employees and professionals who contract with government. There is no justification for providing benefits to any part timer.

The arguments against doing so for elected officials are the most compelling of all. Since they personally benefit from any negotiated or statutory obligations, they have no incentive to play hardball. The allure of the benefits also gives them a strong incentive to maintain their grip on office for the wrong reason — self-interest, rather than the desire to serve the public.

Eliminating benefits for part timers also would end pension tacking, the practice of taking multiple part-time government jobs to create an exorbitantly high salary and a commensurately high pension. The "Pension Peril" series found that the state in 2002 paid out at least $238 million in salaries to 9,500 individuals holding 24,700 government jobs.

- End pension boosting, which allows officials to move from a lower-paying job into a higher-paying patronage job shortly before retirement to pad their pensions. Retiree payouts in most cases are based on the three highest annual salaries. Pension rules should cap spikes in pension payouts due to dramatic late-career salary hikes at 15 percent.

- Eliminate defined-benefit plans for government employees and offer 401(k)-type accounts instead (emphasis added), as is done in Michigan and is being considered in several other states. Only 20 percent of private-sector employees have defined-benefit plans, down from 40 percent in 1977. The public sector needs to change with the times.

- Eliminate cost-of-living adjustments for pensions. Most private-sector employees fortunate enough to have defined-benefit pensions do not get cost-of-living adjustments. Neither should public-sector workers.

- Tweak the pension formula to reduce the payouts. In July 2001, soon after the stock market began its precipitous slide, acting Gov. Donald DiFrancesco increased pension payouts by 9 percent. At minimum, the formula should be changed to restore the pre-2001 criteria.

- Convene a panel of benefits experts to make recommendations to bring New Jersey more closely into line with the private sector and to establish a fair framework to calculate pension benefits of all government employees. It's been more than 10 weeks since Codey announced he planned to set up a committee to study the benefits issue. He's still recruiting members. He needs to pick up the pace.

- Cap the number of sick, vacation, holiday and other benefits local and county governments and school boards can provide employees in contract negotiations. State government already provides caps on sick day and vacation day accruals.

- Mandate that all government employees pay at least 25 percent of their health coverage premiums. Eliminate health care coverage for newly retired employees and require that previously retired teachers — the only public employee group not required to contribute anything toward the premiums of traditional health care plans — contribute at least 25 percent of the cost.

- Revoke pension and health benefits for any public official found guilty of corruption. Two bills pending in the Legislature would do that.

- Require that "retired" superintendents who serve on an interim basis be ineligible to collect pension benefits while serving in that capacity. This is one of the most egregious abuses of the pension system.

From the article, it is not hard to discern that most of the outrage comes from abuses by a select few, rather than the majority of New Jersey public pension system members. But, when taxpayers' dollars are at stake, many commentators find it more effective to paint the picture with the broadest brush.