Source: Joshua J. Waldbeser and Heather B. Abrigo, Journal of Pension Benefits, Vol. 25, No. 1, Autumn 2017
This article examines the requirements and standards of conduct associated with social investments in ERISA plans with an emphasis toward reducing risks and protecting participants’ interests.
Source: Jean-Pierre Aubry, Caroline V. Crawford, Alicia H. Munnell, Center for State and Local Government Excellence, October 2017
From the summary:
This issue brief examines whether state and local borrowing costs have become more sensitive to pensions since the financial crisis.
The brief’s key findings include:
Rating agencies have begun to explicitly account for pensions in their methodologies;
Several governments have experienced downgrades attributable, in part, to their pension challenges;
Pension funded status can have a meaningful impact on the borrowing costs for a municipality; and
Adequate funding, monitoring, and management of public pensions should be an important component of state and local governments’ fiscal management.
Source: National Association of State Retirement Administrators (NASRA), Issue Brief, September 2017
From the introduction:
Unlike in the private sector, nearly all employees of state and local government are required to share in the cost of their retirement benefit. Employee contributions typically are set as a percentage of salary by statute or by the retirement board. Although investment earnings and employer contributions account for a larger portion of total public pension fund revenues, by providing a consistent and predictable stream of revenue to public pension funds, contributions from employees fill a vital role in financing pension benefits. Reforms made in the wake of the 2008-09 market decline included higher employee contribution rates in many states. This issue brief examines employee contribution plan designs, policies and recent trends.
Source: Melinda Caskey, Deron Pope, and Gritiya Tanner U.S. Census Bureau, Report Number: G17-QSPP2, September 2017
From the tip sheet:
This survey provides national summary data on the revenues, expenditures and composition of assets of the largest defined benefit public employee pension systems for state and local governments. The report produces three tables: Tables 1 and 3 include data on cash and security holdings, and Table 2 provides data on earnings on investments, contributions and payments.
Source: Liz Farmer, Governing, August 2017
Congress jeopardized the future of state plans to help private employees save for retirement. States don’t seem to care.
Source: Jennifer Brown, Matt Larrabee, National Institute on Retirement Security (NIRS) and Milliman, August 2017
From the summary:
Public employees with retirement plan choice overwhelmingly choose defined benefit pension plans over defined contribution 401(k)-type individual accounts.
Decisions, Decisions: An Update on Retirement Plan Choices for Public Employees and Employers, finds that public sector employees with retirement plan choice overwhelming choose defined benefit (DB) pension plans over 401(k)-type defined contribution (DC) individual accounts.
Among the eight states studied that offer employees such a choice, the DB pension take-up rates in 2015 were 80 percent or higher in six states. Two of the plans studied had pension take-up rates higher than 95 percent, while Florida and Michigan had take-up rates of 76 percent and 75 percent, respectively. Importantly, the research finds that even when the retirement plan default option favors a DC plan, most employees still select a DB pension plan.
For example, in Washington the default retirement plan is a combination DB/DC plan. Employees must affirmatively act to elect to participate in the DB pension plan instead, and they do. The majority of newly-hired employees – six out of every ten new hires – actively choose a pension plan.
Read the press release here.
Watch a webinar replay here.
Download a PowerPoint here.
Source: James Comtois, Pensions & Investments, July 24, 2017
After many fits and false starts to pension reform, Pennsylvania’s governor has a signed a measure that establishes a hybrid defined benefit/defined contribution plan for new state employees. Although some industry observers believe the new law is a step in the right direction, several others said the switch to a hybrid DB/DC plan does little — if anything — to solve the state’s core underfunding problem…..
…. Both Ms. Childers and Ms. Oakley cited West Virginia and Alaska as two states that decided to switch to a DC plan from a DB plan for state employees — and it didn’t go well for either. In 1991, West Virginia closed its teacher retirement system to new employees to address its underfunding issue, according to a 2016 NIRS survey shared by Ms. Oakley. After 10 years, the replacement DC plan was costing the state twice as much, so it went back to a pension. ….
Source: National Conference on Public Employee Retirement Systems (NCPERS), July 2017
From the press release:
State initiatives aimed at helping millions of Americans retire with improved financial security have the momentum to succeed and overcome setbacks, a white paper released today by the National Conference on Public Employee Retirement Systems (NCPERS) has found.
The 36-page white paper, “Secure Choice 2.0: States Blazing a Path to Retirement Security for All,” marks two milestones in the growing movement among states to expand workplace retirement savings programs for private-sector employees:
– Six years ago, in September 2011, NCPERS laid out the rationale for state-facilitated retirement programs for private-sector workers in a white paper, “The Secure Choice Pension: A Way Forward for Retirement Security in the Private Sector.”
– Five years ago, in September 2012, California became the first state to formally act on the Secure Choice model by passing the Secure Choice Retirement Savings Trust Act, which established a board and authorized a comprehensive feasibility study. ….
…..The white paper covers three broad topics: A history of how the Secure Choice approach gained popularity, details on various initiatives underway in the states, and perspectives on what challenges and hurdles states face, especially following the withdrawal earlier this year of ERISA Safe Harbor rules that were designed to make it easier for states to develop their own so-called Auto-IRA programs. In addition, it includes appendixes on state and local developments, model legislation, helpful organizations and websites, and models projecting various savings scenarios….
Source: Meaghan Kilroy, Pensions & Investments, July 19, 2017
The U.S. ranks 17th globally in retirement security, down three spots from last year, the Natixis Global Asset Management 2017 Global Retirement Index shows. The index, launched in 2013, assesses how well retired citizens live in various nations across four broad categories — health, finances, material well-being and quality of life. The 2017 index was released Wednesday. Forty-three countries with developed retirement systems were assessed in 2017, the same number as last year. Natixis, in a report accompanying this year’s release, attributed part of the decline in the U.S. ranking to “lagging life expectancy and a growing gap in economic opportunity.”….
2017 Global Retirement Index
Source: Natixis Global Asset Management, July 2017
Source: Ada S. Cornell, Congressional Research Service, CRS Report, R43194, January 13, 2017
Many private- and public-sector firms offer employer-sponsored health insurance to their employees and contribute toward the cost of that insurance as part of the employee’s compensation package. The federal government, as an employer, also offers health benefits to its employees and retirees. In general, federal employees receive health benefits through the Federal Employees Health Benefits (FEHB) Program, administered by the Office of Personnel Management (OPM). However, Members of Congress and designated congressional staff receive employer-sponsored insurance (ESI) through the District of Columbia’s small business health options program (SHOP) exchange, also known as DC Health Link (hereinafter the “DC SHOP”). ….. In addition to health insurance coverage under the DC SHOP, this report describes other health benefits available to Members and congressional staff, including the Federal Flexible Spending Account Program (FSAFEDS); the Federal Employees Dental and Vision Insurance Program (FEDVIP); the Federal Long Term Care Insurance Program (FLTCIP); the Office of the Attending Physician; and treatment in military facilities. …..