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Florida Gov. Rick Scott Rejects Call for State Investigation Into Jacksonville Pension Fund

A state lawmaker, Jacksonville city council members and others have called repeatedly for a state investigation into the city’s Police and Fire Pension fund since late 2014.

Specifically, they want an investigation into whether regulations were broken in the administration of the fund’s DROP.

Florida Gov. Rick Scott finally addressed the issue on Tuesday, and declined to launch a state investigation. The matter, his office said, should be “handled on the local level”.

Louisiana Teachers Pension Fires Back at Think Tank Report

The National Council on Teacher Quality released a report last week that graded the teachers’ pension funds of every state.

[The full report card can be found here.]

The report slapped the Teachers Retirement System of Louisiana (TRSL) with a C- grade, calling the system underfunded, inflexible and not portable.

But TRSL took issue with its C- grade, and is now firing back at the think tank and disputing the claims that led to the low grade.

TRSL’s response to allegations of being inflexible:

TRSL is flexible and portable. It is TRSL’s position that the traditional defined benefit (DB) plan should remain as the retirement plan option available to Louisiana’s K-12 teachers. The DB plan offers a comprehensive retirement program that provides for normal retirement, disability retirement, survivor benefits, potential for retiree permanent benefit increases, and portability through service credit purchase options and reciprocity.

* Members can purchase service credit that provides mobility among public and private teaching positions and other public sector employment.

* TRSL recognizes reciprocal service credit from any other Louisiana state, municipal, or parochial retirement system, and each of those systems recognizes TRSL service credit.

* TRSL members can also purchase service credit canceled as a result of withdrawal of contributions, teaching service while on leave of absence without pay, teaching service in any nonpublic college or university or school in Louisiana, teaching service in any United States dependent school, substitute teaching service, and military service.

Read the system’s full statement here.

See the National Council on Teacher Quality report here.

Photo by cybrarian77 via Flickr CC License

On Pensions, Chicago Mayoral Candidates Mum on Specifics

On Friday, Chicago’s five mayoral candidates debated in front of the Chicago Sun-Times Editorial Board, seeking the newspaper’s endorsement.

Pensions was among the first issues to come up – and while everyone agreed that Chicago’s pension debt needs to be tamed, the candidates were largely mum on specific ways to accomplish that goal aside from a few tax proposals.

From the Chicago Sun-Times:

You might think there would be no avoiding the issue that is sure to dominate the next mayor’s agenda.

Unfortunately, a lack of specifics from Mayor Rahm Emanuel has made it easier for the others to dodge as well.

The mayor couldn’t be budged from what I’ll call his “Trust Me” speech in which he recounts his track record on financial matters, which includes more responsible annual budgeting than his predecessors plus legislative deals that reduce pension benefits and increase pension contributions for some city employees and retirees.

With a great deal of prodding, Emanuel acknowledged he’s not ruling out a property tax increase to help bring down the city’s huge pension liability.

[…]

Fioretti, who flatly rules out a property tax increase, is the only candidate ready to put alternative revenue sources on the table. His calls for a commuter tax and/or a financial transactions tax on Chicago’s trading exchanges undoubtedly have some populist appeal.

[…]

At least Fioretti is willing to stick his neck out for something. Cook County Commissioner Jesus “Chuy” Garcia couldn’t have been more vague about what he has in mind, arguing there are still too many unknowns about the scope of the problem until the Illinois Supreme Court has ruled on pension reform legislation.

Garcia also said he opposes reducing pension benefits to current retirees, which was a key part of Emanuel’s pension legislation. That means Garcia would need to find even more revenue.

Chicago voters have just three more weeks to demand real answers.

Watch the video of the debate here.

Photo by bitsorf via Flickr CC License

Former NJ Official: Christie Used Misdirection on Pension Payments in State of State Address

During his State of the State address last month, New Jersey Gov. Chris Christie made a few remarks defending himself against accusations of short-changing the state’s pension system.

He claimed that he had contributed more to the pension system than any governor in New Jersey history.

That’s not a false statement. But it also doesn’t tell the full story.

Edward Buttimore, formerly of the state’s Attorney General’s Office, penned a column on Tuesday explaining the misdirection.

Buttimore writes:

When Gov. Chris Christie praised himself during the State of the State address for making the largest contributions to the State pension funds of any governor in New Jersey history, that statement was true, but not accurate.

While Gov. Christie has contributed $2.9 billion (if he makes the reduced $681 million payment for FY2015), what he fails to be clear about is that he will have skipped $14.9 billion in required pension payments during the past five years as Governor, according to his own Pension & Health Benefit Study Commission’s Status Report.

Former Gov. Corzine made $2.1 billion in pension payments while skipping an additional $6.4 billion required from 2007 to 2010.

In fact, Gov. Christie’s $14.9 billion skipped pension payments eclipses the $12.8 billion combined missed payments of his five predecessors over a 15-year period from 1996 to 2010. That was a pretty important fact that he omitted from his State of the State address.

For the last three years Gov. Christie has traveled the country congratulating himself for his 2011 bipartisan pension reforms, including prominently mentioning it during his keynote address for Mitt Romney at the 2012 Republican National Convention. He then he failed to follow through on making the required payments.

Read the entire piece here.

Photo by Bob Jagendorf from Manalapan, NJ, USA (NJ Governor Chris Christie) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Canadian Pensions Bought $2.75 Billion in Commercial U.S. Property in January

Canadian pension funds have collectively invested $2.75 billion in commercial U.S. real estate in 2015, according to a survey conducted by the Financial Post.

Canadian entities, including pension funds, invested $9.7 billion in U.S. real estate in 2014.

Former Jacksonville Mayor Calls for Tax Increase to Fund Pension Reform

Former Jacksonville mayor and current city Chamber president John Delaney said Monday that a tax increase is likely the best way to fund the city’s pension reform measure.

The city has been weighing a pension reform bill for months, and one of the points of debate has been the source of funding for the measure. Current Mayor Alvin Brown’s plan was to team with a public utility company and borrow the money.

But Delaney says a tax increase is more likely.

From the Florida Times-Union:

JAX Chamber Chairman John Delaney said Monday a pension financing plan supported by Mayor Alvin Brown is “not viable” and the solution “probably is going to be a tax increase to solve that problem.”

[…]

In regard to pension reform, Brown favors a plan for the city and JEA to borrow $240 million to more quickly pay down the city’s $1.62 billion debt to the Police and Fire Pension Fund.

JEA would pay off its $120 million in borrowing by getting reductions in the amount it pays in annual contributions to City Hall. The city would repay its $120 million by using savings from its annual pension contributions to the Police and Fire Pension Fund, along with projected growth in tax revenues from an improving economy.

[…]

But Delaney said City Hall already is financially strained in paying the day-to-day costs of city services, so reductions in future JEA revenue would hurt the city. He said the same financial constraints affect the city’s ability to borrow $120 million and repay it.

He said to “dig out of the pension hole, it’s going to take a new independent slug of money, which ultimately probably is going to have to be a tax increase to solve that problem.”

Photo by pshab via Flickr CC License

Dutch Pension Funding Ratios Drop By 5 Percent in January

The funding ratios of Dutch pension funds have fallen on average by 5 percentage points in January on the back of low interest rates, according to Mercer and Aon Hewitt.

Average funding, according to estimates by Aon Hewitt and Mercer, fell by 5 percentage points over the period, due to persistently low interest rates, the criterion for discounting liabilities.

[…]

The consultancies also attributed the sudden drop in funding to a new accounting method for calculating coverage ratios.

Since 1 January, when the Netherlands introduced its new financial assessment framework (FTK), schemes’ funding has been based on actual interest rates while applying the ultimate forward rate (UFR), rather than the three-month average of interest rates plus UFR.

In addition, the new FTK came with a ‘policy funding ratio’ – meant as a criterion for rights cuts and indexation – consisting of the average coverage of the previous 12 months.

According to Aon Hewitt, policy funding stood at 109% at January-end, while Mercer placed the figure at 109.6%.

[…]

[Aon Hewitt chief commercial officer for retirement and financial management Frank] Driessen said the ECB’s recently announced quantitative-easing programme had led to a further slide of interest rates and predicted that rates would remain low for “a long time”.

The average funding ratio of Dutch pensions stood at 103 percent at the end of January, according to Aon Hewitt.

Canada Pension To Invest $400 Million in Australian Freeway

The Canada Pension Plan Investment Board (CPPIB) announced on Sunday a $407 million investment in an Australian freeway project.

CPPIB is part of a group of investors that bought the toll road. The pension fund’s $400 million investment will snag it a 25 percent stake.

Report: Hedge Funds Expect Pensions To Up Their Allocations in 2015

State Street has published a new report, titled The Alpha Game, which analyzes a survey that quizzed 235 hedge fund managers on what the future holds for pensions investing in hedge funds, and other industry trends.

The majority of managers think pension funds will increase their hedge fund holdings over the next few years.

Some key points, from ValueWalk:

The State Street report points out that hedge fund managers are expecting increased capital flows over the next few years. The survey highlighted that nearly two-thirds (65%) of hedge fund managers anticipate ultra-high-net-worth investors will increase their hedge fund holdings, and almost the same number (63%) expect institutional investors will also up their alternative positions. Furthermore, over half (55%) of managers believe pension funds will increase their allocations to alternatives as they look for improved performance and greater diversification

Hedge fund managers also think the main reason for pension funds reducing exposure to Hedge Funds will be disappointment with returns. Nearly half (47%) noted this as their primary concern. The report noter: “This highlights the sharp focus on hedge funds’ ability to deliver value and align with institutional needs.”

Over half of the hedge fund professionals surveyed (53%) think the main reason why pension funds will invest more in hedge funds is to try and boost portfolio performance. Just over one-third (35%) think pension funds are mostly trying to improve portfolio diversification.

The full report can be read here.

Photo jjMustang_79 via Flickr CC License

Ontario Teachers’ Pension Completes Purchase of Portable Storage Company

The Ontario Teachers’ Pension Plan (OTPP) has completed its acquisition of PODS, a portable storage company that the pension plan bought for over $1 billion.

OTPP announced the acquisition in December, but the sale wasn’t finalized until Monday.