Montana Teacher Retirement System Pension Solvency Analysis

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The latest analysis by the Pension Integrity Project at Reason Foundation, updated this month (February 2021), shows that deviations from the plan’s investment return assumptions have been the largest contributor to the unfunded liability, adding $897 million since 2002. The analysis also shows that failing to meet investment targets will likely be a problem for TRS going forward, as projections reveal the pension plan has roughly a 50 percent chance of meeting their 7.5 percent assumed rate of investment return in both the short and long term.

In recent years TRS has also made necessary adjustments to various actuarial assumptions, exposing over $400 million in previously unrecognized unfunded liabilities. The overall growth in unfunded liabilities has driven Montana’s pension benefit costs higher while crowding out other education spending priorities in the state, like classroom programming and teacher pay raises.

The chart below, from the full solvency analysis, shows the increase in the Montana Teacher Retirement System’s debt since 2002:

Author(s): Jen Sidorova, Swaroop Bhagavatula, Steven Gassenberger, Leonard Gilroy

Publication Date: 1 March 2021

Publication Site: Reason

New York City Comptroller Scott Stringer Loosening City Pension Private Equity Rules Will Help Him, Hurt Pensioners

Link: https://www.forbes.com/sites/edwardsiedle/2021/02/24/new-york-city-comptroller-scott-stringer-loosening-city-pension-private-equity-rules-will-help-him-hurt-pensioners/?sh=6bdb3ceb2592

Excerpt:

What a remarkable coincidence that New York City Comptroller Scott Stringer is looking to loosen strict rules that govern private-equity firms managing the city’s pensions when the Democrat is running for mayor in this year’s election. Presumably, private equity firms who may earn hundreds of millions in fees if the pension restrictions are lifted will let him know just how grateful they are.

Author(s): Edward Siedle

Publication Date: 24 February 2021

Publication Site: Forbes

TRUST? ILLINOIS STILL REFUSES TO PAY ITS PENSION BILL.

Excerpt:

Only the statutory contribution is not what the state owes to meet its obligation and prevent more debt. “Statutory” should be translated as the legislature made up a number and blew it out their collective butts.

The actuarial amount owed, the amount actually needed to keep from growing the liability is several billion more that the statutory amount.

They short the pension system every year, after year, after year, after year. And this year again.

Not exactly a trust-building thing, right?

Author(s): Fred Klonsky

Publication Date: 28 February 2021

Publication Site: Fred Klonsky

Illinois’ record-setting pension debt jumps to over $300 billion – Wirepoints

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The state assumes the pension funds will continue to earn an average of nearly 7 percent a year, while Moody’s lowered its assumptions for 2020 to just 2.7 percent: “the FTSE Pension Liability Index, a high-grade corporate bond index Moody’s uses to value state and local government pension liabilities, fell to 2.70% as of June 30, 2020, from 3.51% the prior year.”

Moody’s also reported that the asset-to-payout ratio for the state’s funds are now equal to about seven years’ worth of payouts.

That’s down compared to Wirepoints’ report on asset-to-payout ratios we released last year in this report: COVID-19 pushes nation’s weakest public pension plans closer to the brink: A 50-state survey

Author(s): Ted Dabrowski and John Klingner

Publication Date: 4 March 2021

Publication Site: Wirepoints

Damschroder: Ohio teachers pension mauled by Panda

Link: https://www.thenews-messenger.com/story/news/2021/03/03/damschroder-ohio-teachers-pension-mauled-panda/6883736002/

Excerpt:

The Ohio Retirement Study Council (ORSC) revived oversight theater, a suit and tie simulation of supervising the $200 billion state pensions. In the first act, ORSC started the process for fiduciary audits of the teachers and police and fire pensions a mere five years after their legal deadline.

….

In reality, STRS has recent evidence that alternative investments come with the risk of massive losses. The Ohio teachers’ pension was one of the first investors in Dallas-based Panda Power. Panda is a merchant generator building plants run by cheap shale gas to produce more profitable electricity. The business model collapsed when utility regulators did not approve anticipated rates. Panda’s bankruptcy filing showed debt of $400 million against cash on hand of $2,000.

Author(s): John Damschroder

Publication Date: 3 March 2021

Publication Site: Fremont News Messenger

Advisory committee says North Carolina should put more toward pensions

Link: https://www.montgomeryherald.com/news/article_ac128a46-7b94-11eb-b480-230aa039ee18.html

Excerpt:

North Carolina’s Debt Affordability Advisory Committee says the state should set aside $100 million a year to help the state pension systems remain solvent.

A draft released Wednesday, Feb. 24, of the committee’s 2021 debt affordability study also calls for North Carolina to maintain its 4% borrowing cap.

The committee said more money is needed to support post-employment benefits, including pensions and health care. Officials said the state’s pension systems show a $12.1 billion shortfall, while the State Health Plan is underfunded by $27.7 billion.

The committee said the state should put $100 million annually into the Unfunded Liability Solvency Reserve through fiscal 2025 to help lower that number.

Author(s): Johnny Kampis

Publication Date: 3 March 2021

Publication Site: Montgomery Herald

Editorial: Former House Speaker Michael Madigan’s pension illustrates the broken system

Link; https://www.chicagotribune.com/opinion/editorials/ct-edit-fixing-illinois-chicago-budget-madigan-pension-20210226-tt4kmbn7hbetldxgez57x4ioqq-story.html#new_tab

Excerpt:

Former House Speaker Michael Madigan, after 50 years as a member of the Illinois House and a contributor into one of the state’s five pension funds, the General Assembly Retirement System, will receive an annual pension of around $85,117, about 85% of his final salary.

In July 2022, his pension will rise to about $148,995 due to padding lawmakers built into the system for themselves over the years. He’ll receive a guaranteed 3% raise on his pension each year, no matter what the actual cost of living is.

During those 50 years in office, Madigan contributed from his own paycheck about $351,000 toward his retirement account. He quickly will start receiving far more than he put in.

Author(s): Editorial board

Publication Date: 26 February 2021

Publication Site: Chicago Tribune

Stalin Sees Poll Motive In TN CM Raising Retirement Age; Mum On DMK-Congress Seat-sharing

Link: https://www.republicworld.com/india-news/politics/stalin-sees-poll-motive-in-tn-cm-raising-retirement-age-mum-on-dmk-congress-seat-sharing.html

Excerpt:

DMK president MK Stalin on Thursday hit out at Tamil Nadu Chief Minister K Palaniswami for raising the retirement age of government employees to 60 years, saying the announcement was made with an eye on the forthcoming assembly elections in the state. Though increasing the retirement age of state government employees was welcome, it appears that the announcement was made with the elections in mind, Stalin alleged.

….

“Raising the retirement age is welcome, albeit the announcement made for the election,” the DMK leader said in a Facebook post on Thursday. He said the Chief Minister should have fixed the age criteria of 60 years when he had increased the retirement age to 59 from 58 years in May last year.

Publication Date: 26 February 2021

Publication Site: RepublicWorld.com

Raising of retirement age flayed

Link: https://www.thehindu.com/news/cities/Tiruchirapalli/raising-of-retirement-age-flayed/article33934131.ece

Excerpt:

The upward revision of retirement age for State government employees will affect opportunities for younger generation in getting employment in government departments, said K. Balakrishnan, state secretary, CPI (M) on Thursday.

Addressing journalists in Thanjavur, he said the State government, which was struggling to settle the retirement benefits of the State Transport Corporation employees, had announced that the retirement age for government employees would be increased to 60 years. This was nothing but an attempt to evade its responsibility of shouldering the financial burden of settling the retirement benefits of those due to retire from government service during this year.

Publication Date: 25 February 2021

Publication Site: The Hindu

Murphy will think about extending retirement age for judges

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Gov. Phil Murphy said he will think about increasing the mandatory retirement age of New Jersey judges beyond the age of 70.

“You do have the reality.  You’ve got a 78-year-old president who succeeded a 74-year-old president, so this is not a blip anymore,” Murphy said in response to an inquiry from the New Jersey Globe on Friday.

When New Jersey approved a new State Constitution in 1947 that forced judges to retire at 70, the average life expectancy of men in the United States – there was only one woman on the bench at the time, Libby Bernstein Sachar in Union County – was 62.

Author(s): David Wildstein

Publication Date: 26 February 2021

Publication Site: New Jersey Globe

Retirement age raised with eye on poll: Stalin

Link: https://www.thehindu.com/news/national/tamil-nadu/retirement-age-raised-with-eye-on-poll-stalin/article33936796.ece

Excerpt:

DMK president M.K. Stalin on Thursday said Chief Minister Edappadi K. Palaniswami had increased the retirement age of the State government employees with an eye on the Assembly election.

In a statement in Chennai, he said although it was welcome, the decision could have been taken last year when the retirement age was raised to 59.

Publication Date: 26 February 2021

Publication Site: The Hindu

Florida pension revamp would push public workers into 401(k)-type investment plan

Link: https://www.thecentersquare.com/florida/florida-pension-revamp-would-push-public-workers-into-401-k–type-investment-plan/article_e9cfb564-7b87-11eb-a9b5-cfb50af7e2ac.html

Excerpt:

Senate Bill 84, filed by Sen. Ray Rodrigues, R-Estero, would require new public employees enroll in a 401(k)-type investment plan rather than in the Florida Retirement System (FRS), the nation’s fourth-largest public pension plan that serves about 5.1 million Floridians, including 4.425 million retirees.

According to SB 84’s legislative analysis, the 51-year-old FRS carries $36 billion in “unfunded liabilities,” the gap between assets and obligations, an exposure critics insist put the state at risk.

The bill offers an “investment plan” as an option to more than 644,000 active employees, 432,258 annuity recipients, 15,512 disabled retirees and 33,593 enrolled in the Deferred Retirement Option Program (DROP).

Author(s): John Haughey

Publication Date: 2 March 2021

Publication Site: The Center Square