Category: Retirement

Vietnam adds private pension as silver tide rises

Mary Pat Campbell

Link:https://asia.nikkei.com/Economy/Vietnam-adds-private-pension-as-silver-tide-rises

Graphic:

Excerpt:

When communist Vietnam recently introduced private retirement funds, it was taking a step not only closer to capitalism, but also toward changing a young pension system that some worry may buckle if citizens get old before getting rich.

Last year marked the first time workers could put part of their paychecks into private retirement accounts, on top of the share contributed to the state pension. But analysts say bigger, systemic change is needed to enable retirement for all, even as the International Labor Organization says the state fund is robust. 

….

Retirees would seem to be the envy of the neighborhood, receiving payouts worth 75% of their prior wages — the fifth-highest among 70 countries in the Allianz Global Pension Report 2020.

But Vietnam’s system covers just 40% of the elderly, which explains why women keep working longer there than in all but five other countries, the report shows.

Author(s): LIEN HOANG

Publication Date: 17 Jan 2022

Publication Site: Nikkei Asia

Washington State’s Celebrated Long Term Care Program Is Headed Towards Trouble

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2022/01/09/washington-states-celebrated-long-term-care-program-is-headed-towards-trouble/

Excerpt:

A requirement to have paid into the system is characteristic of a social insurance program, and the 10 year contribution requirement is essentially the same as the eligibility requirement for Old Age benefits in Social Security. However, true social insurance programs pay out benefits to those eligible regardless of residence — again, once you’ve paid into Social Security long enough to have earned your benefit, you can collect regardless of where you live, even if you have moved abroad. In fact, even noncitizens who worked in the United States long enough to have accumulated sufficient Social Security credits, can receive benefits after having moved back to their home countries. What’s more, many social insurance systems provide some sort of refund mechanism for workers who do not accumulate enough contribution years to be eligible.

And this hybrid system will likely prove to be unsustainable politically. Even if ordinary Washingtonians are not well-versed in social insurance concepts and theories, it will not sit right with them that those who retire with 10 years of payroll taxes have “earned” their benefits but those with 9 years have not, and, likewise, that those who have “earned” benefits would lose those “earned” benefits merely by moving out of state. How precisely this will play out over the long term remains to be seen, but the new bills are not likely to be the end of the story.

In any case, these problems will not be easy to remedy.

Author(s): Elizabeth Bauer

Publication Date: 9 Jan 2022

Publication Site: Forbes

Revisiting The ‘Retirement Crisis’ And Retirement Legislation In 2022 – What’s In Store In The New Year?

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/12/31/revisiting-the-retirement-crisis-and-retirement-legislation-in-2022whats-in-store-in-the-new-year/

Graphic:

Excerpt:

First, we need to keep a distinction in mind between efforts to ensure the elderly do not suffer actual material deprivation, whether that’s lack of nutritious food or adequate housing or medical needs, for instance, and efforts to help Americans plan for retirement and alleviate their expressed worries about the unknowns of retirement.

Second, issues of well-being, such as social isolation, and larger questions of the “right” form of provision of long-term care assistance, are not simple issues of finances but are nonetheless important as Americans age, and these topics should not be drowned out by a “retirement crisis” narrative. It should also go without saying that we will urgently need to turn our attention to the Medicare system as well.

And, third, in one crucial respect our models may fail us: experts have worked out a set of recommendations for asset allocation and income spend-down in retirement, and a set of projections for building those models, which fall apart if our new low-interest world continues, Japan-like, rather than being a temporary situation that resolves itself as we recover from the pandemic. Whether this is a result of government policies or an inevitable consequence of the changing economy, this could upend both Biggs’ projections of retiree well-being and the path to retirement security envisioned by legislation like the SECURE Act 2.0.

Author(s): Elizabeth Bauer

Publication Date: 31 Dec 2021

Publication Site: Forbes

On Social Spending, the Question Isn’t “Can We Afford It?” but “Who Will Pay?”

Mary Pat Campbell

Link:https://jacobinmag.com/2021/11/social-spending-biden-reconciliation-bill-build-back-better

Excerpt:

There are three possible answers to the question of who pays for social expenses. First, governments can pay by taxing their citizens to fund social programs. Second, employers can pay by using corporate revenues to provide employment-related benefits. Third, individuals and families can pay out of pocket, rely on unpaid labor from friends and relatives, or make do without.

For much of the twentieth century, the United States had a workable answer to the “Who pays?” question that drew on a mix of all three sources. Government provided certain social benefits like Social Security, Medicare, and public education. Aided by government tax incentives, many employers offered a wide range of benefits like health insurance and pensions, creating what political scientist Jacob Hacker refers to as a “public-private welfare regime.” And with one-third of the labor force unionized, and even nonunion employers pressured to match union-scale wages and benefits, many workers earned enough to support their families and handle the social expenses not covered by government- and employer-based programs.

….

For its part, government social spending has been uneven. Large universal programs like Medicare and Social Security have proven resistant to most retrenchment efforts, and Obamacare included a major expansion of Medicaid — though this was blocked in some Republican-dominated states. Meanwhile, more means-tested programs targeting low-income Americans have proven more vulnerable. In a context where employers have sharply cut back their commitment to providing social benefits, and individuals and their families are faced with stagnating wages, government’s response has proven inadequate.

Author(s):Barry Eidlin

Publication Date:28 Nov 2021

Publication Site: Jacobin

Millions of workers retired during the pandemic. The economy needs them to “unretire,” experts say.

Mary Pat Campbell

Link:https://www.cbsnews.com/news/retirement-covid-pandemic-unretire-labor-shortage/

Excerpt:

An economist will tell you it’s a hot labor market: A record number of people quit their jobs in September, and the U.S. is seeing record job openings as the economy chugs back to life from the coronavirus pandemic. The pandemic drove millions of workers into early retirement — and experts say they could be key to reviving the economy.

The number of people who retired rose much faster than the typical pace during the pandemic. More than 3 million additional people retired compared with normal, a Federal Reserve Bank of Saint Louis analysis found. Meanwhile, the economy is still down nearly 4 million jobs from before COVID-19.

“40% of the older workers that were pushed out of the labor market because they were unemployed, they were laid off, they were fired during the pandemic, 40% of them were permanent job losers and most of them said OK, I’m not just a discouraged worker, I’m not a long-term unemployed, I’m going to tell the [Labor Department] survey I’m retired,'” said Teresa Ghilarducci, labor economist and professor at The New School.

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But even if retirees return to work at the average pre-pandemic pace, it will take more than two years to bounce back from the recent surge in retirements, the Federal Reserve Bank of Kansas found.

Last month, employment among workers 55 and older increased while unemployment dropped slightly. Older workers are typically more likely to face long-term unemployment than younger workers. While long-term unemployment among older workers changed little last month, it has declined in recent months. Older Americans coming out of retirement might not be returning to the same landscape.

Author(s): Sarah Ewall-Wice

Publication Date: 8 Dec 2021

Publication Site: CBS News

Arizona IMO Seeks Bankruptcy Protection From IUL Fraud Fight

Mary Pat Campbell

Link:https://insurancenewsnet.com/innarticle/bankrupt-arizona-imo-at-center-of-iul-fraud-fight

Excerpt:

A prolific pension fraud scheme that spread to the insurance industry before being shut down by federal investigators continues to produce fresh lawsuits.

And it also continues to claim new victims — the latest being Shurwest, a successful Scottsdale, Ariz., independent marketing organization. Shurwest filed for Chapter 11 bankruptcy Aug. 31 after executives realized “there’s not going to be anything left,” one of its attorneys said.

According to bankruptcy documents, Shurwest faces 38 pending lawsuits in state and federal courts.

Author(s): John Hilton

Publication Date: 6 Oct 2021

Publication Site: Insurance News Net

ASPPA 2021 Conference: Day 1

Mary Pat Campbell

Link:https://burypensions.wordpress.com/2021/10/17/asppa-2021-conference-day-1/

Excerpt:

General Session 1: Washington Update

per Brian Graff who has spent 25 years at ASPPA and got some recognition for it at the end of this session.

….

Hispanic and Black coverage in 401(k) plans is low and if this situation it does not improve private sector plans could be eliminated in favor of a government option as in Australia. States (first Oregon, then CA, and 8 others) are setting up their own plans and forcing companies to be in it if they don’t have their own plans. This is good for us in that companies do not want to give their money to states (especially in CA and NJ) so they set up their own plans that need to administered by us.

Proposal that may be effective in 2023 is requiring all companies with at least six employees in the last two years to set up a 401(k) plan with auto-enrollment at 6% going up to 10%. Pie would increase by 62 million participants (from 95 million now) and 600,000 plans (on top of 800,000 now).

Author(s): John Bury

Publication Date: 17 Oct 2021

Publication Site: burypensions

The 80% Pension Funding Myth

Mary Pat Campbell

Link:https://www.actuary.org/node/14645

Excerpt:

Using an 80% funded ratio as a benchmark for whether pension plans are healthy is inappropriate.

No single level of funding defines a line between a “healthy” and an “unhealthy” pension plan.

Pension plans are generally better evaluated on the strategy in place to attain a funded ratio of 100% within a reasonable period of time.

The financial health of a pension plan depends on many factors in addition to funded status— including the size of any shortfall compared with the resources of the plan sponsor.

Projections under a range of scenarios can be particularly useful in evaluating the plan’s expected funding trajectory and assessing plan health.

Author(s): Pension Practice Council

Publication Date: October 2021

Publication Site: American Academy of Actuaries

British pension funds plough more cash into China

Mary Pat Campbell

Link: https://finance.yahoo.com/news/british-pension-funds-plough-more-155119851.html

Excerpt:

British pension funds are ramping up their investment in Chinese companies despite growing tensions between the West and the Communist state.

According to a new report by Hong Kong Watch, a pro-democracy advocacy group, the amount of cash invested by Western pension funds and other institutional investors in China has hit a record high in recent months.

It comes amid rising criticism in the West about China’s human rights record, including its brutal treatment of Uighur Muslims and its suppression of democracy campaigners in Hong Kong.

…..

The report cites the Universities Superannuation Scheme (USS), one of the UK’s largest private pension schemes, and Legal & General, Britain’s biggest pensions manager, as two British firms with “problematic” investments in China.

It found that L&G’s China fund was previously investing UK pensions in Zhejiang Dahua Technology, which is alleged to produce facial recognition software for the Communist Party that detects the race of individuals and alerts the police when it identifies Uighur Muslims.

L&G has since divested from Zhejiang Dahua Technology.

Author(s): Simon Foy

Publication Date: 22 Sept 2021

Publication Site: Yahoo Finance

Johnson and Sunak urge UK pensions to back riskier investments

Mary Pat Campbell

Link: https://www.theguardian.com/business/2021/aug/04/johnson-and-sunak-urge-uk-pensions-to-back-riskier-investments

Excerpt:

Boris Johnson and Rishi Sunak will urge UK pension schemes to back Britain’s “entrepreneurial spirit” with billions of pounds of savers’ funds to fuel the economy’s post-pandemic recovery in a message to investment bosses.

The prime minister and chancellor will issue a joint call to action on Thursday aimed at “igniting an investment big bang” that would “unlock the hundreds of billions of pounds sitting in UK institutions”.

Citing the success of long-term investment programmes by Australian and Canadian pension schemes, Sunak and Johnson will say that British pensioners are missing out on “better retirements” after investors focused too heavily on the returns from stock market listed companies.

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Critics warned that pension schemes would become riskier and more expensive to run and accused the prime minister of failing to understand how they worked.

John Ralfe, an independent pensions consultant, said: “This is 90% hot air from the prime minister.

“Defined benefit pension schemes need assets that generate a guaranteed inflation linked return to pay guaranteed pensions. Most of the things the PM is banging the drum for don’t do this.

Author(s): Phillip Inman

Publication Date: 4 Aug 2021

Publication Site: The Guardian UK

Advocates want Hochul to address shuttered St. Clare’s Hospital pension crisis

Mary Pat Campbell
Advocates want Hochul to address shuttered St. Clare’s Hospital pension crisis

Excerpt:

Advocates for restoring pension payments to retirees of shuttered Catholic healthcare facilities, including St. Clare’s Hospital, have launched another effort, now that the state is led by a new governor.

In a bipartisan move, state Assemblyman Angelo Santabarbara, D-Rotterdam, state Sen. James Tedisco, R-Glenville, and Mary Hartshorne, chairwoman of the St. Clare’s Pensioners Recovery Alliance, wrote to Gov. Kathy Hochul on Friday, asking for her consideration on the matter.

The legislators’ letter said the pensions of more than 1,100 New Yorkers “evaporated in the snap of a finger, through no fault of their own.” This is no way to treat healthcare workers, they said.

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Since federal law permits a religious exemption, the St. Clare’s pension fund has no benefit guarantee insurance because federal law permits a religious exemption, the lawmakers’ letter to the governor reads.

For reasons not yet fully identified, the lawmakers said, the state did not provide ample funding to cover the St. Clare’s pension fund’s costs.

Author(s): Brian Lee

Publication Date: 19 Sept 2021

Publication Site: The Daily Gazette

House Panel Votes to Rein in Large Retirement Account Balances

Mary Pat Campbell

Link: https://www.asppa.org/news/browse-topics/house-panel-votes-rein-large-retirement-account-balances

Excerpt:

Mega-Roth, backdoor IRAs and large retirement account balances would be limited under legislation approved Sept. 15 by the House Ways and Means Committee.

In a near party-line vote of 24-19, the changes were approved as part of the $3.5 trillion Build Back Better Act reconciliation recommendations that address everything from implementing infrastructure development and green energy incentives, to expanding Medicare, offering paid family and medical leave, and extending Trade Adjustment Assistance. 

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These revenue-raising retirement proposals are included in Subtitle I, “Responsibly Funding Our Priorities,” along with a host of other individual and corporate tax increases. The Joint Committee on Taxation estimates that these tax changes would raise approximately $2.1 trillion over 10 years to help pay for the fiscal year 2022 budget reconciliation bill. (For a more detailed description of the retirement-based revenue proposals, click here.)

Author(s): Ted Godbout

Publication Date: 16 Sept 2021

Publication Site: American Society of Pension Professionals & Actuaries