Author: Ted Ballantine

The US Defense Department created a 3-minute video, which provides information about their new retirement system that is set to take effect in the year 2018.

Pension360 has extensively covered the overhaul, which took place in 2015 and early 2016.

The newly released video aims to provide a complete financial literacy campaign offer by the Pentagon as they prepare troops and their families for the changes.

The military’s new retirement plan is quite comparable to the 401k plan offered by the private sector.

Find out more about the campaign at MilitaryTimes:

Starting in January 2018, military personnel with fewer than 12 years of service must choose whether to opt into the new “blended” system or stay enrolled in the traditional pension plan. Officials estimate that group includes 1.6 million people.

Those with more than 12 years in uniform will remain enrolled in the traditional pension plan.

[….]

Everyone who joins the military in 2018 and beyond will automatically be enroll in the new system.

In approving the new system, officials both in the Pentagon and on Capitol Hill have championed the fact that this new system will, for the first time, ensure service members who don’t stay in uniform for a full 20-year career will receive at least some retirement benefit upon leaving.

[….]

Notably, officials have yet to resolve one of the plan’s key components: its lump-sum payout option. The American Academy of Actuaries issued a warning to the Pentagon in May, saying it risks shortchanging enlisted personnel specifically.

Meanwhile, officials have introduced the first of four courses that will help the force prepare for decision time. They’re targeting the military’s leaders now, individuals expected to be on the receiving end of questions from rank-and-file personnel, but the course is open to anyone. It’s accessible via the department’s Joint Knowledge Online portal.

You can learn more about the new retirement plan here.

The New York Common Retirement Fund generated a 0.19% return in fiscal year 2015-16, the lowest ROI since 2009.

The New York State Common Retirement Fund said that its non-US equities dropped about 8.54% from last year whereas their domestic equity investment lost .54% over the same time frame. These trends were in-line with the drop in the US and global equity markets.

More on the news at Reuters:

New York State Comptroller Thomas DiNapoli said that despite weak equity markets, the fund’s diversified portfolio and investment team delivered a positive return.

“We continue to have confidence in our asset allocation for the long term,” DiNapoli said. “Our investment team is focused on ensuring we remain one of the best funded and top performing plans in the country.”

The losses in equity investments for fiscal 2016 were offset by gains in investments in fixed-income, private equity, opportunistic alternatives and real estate.

[…]

The nation’s largest public pension fund, the California Public Employees’ Retirement System, on Monday forecast flat returns for its current fiscal year, ending June 30.

Calpers’ chief investment officer, Ted Eliopoulos, said returns would “likely to be flat, which is a nice way of saying zero.”

Dozens of federal lawmakers this week requested the Government Accountability Office (GAO) investigate the finances of the Central States Pension Fund.

The fund has 400,000 members across the country and recently attempted to cut its members’ benefits in a bid to remain solvent.

More from Bloomberg:

Ten Democrats in the Senate and 41 in the House requested on June 20 that the Government Accountability Office review the Central States, Southeast and Southwest Areas Pension Fund’s investment decisions going back to 1982, when the fund came under the supervision of a court-ordered consent decree.

The requests seek to determine if there was any wrongdoing that led to the fund’s severe financial woes. The fund has projected it will be insolvent in 10 years or less.

[…]

Thomas C. Nyhan, the executive director and general counsel of the Central States fund, told Bloomberg BNA June 20 that, “While we see no reason for the investigation, we welcome it.”

Nyhan said the fund was “confident the GAO will conclude there was absolutely no wrongdoing at any time in connection with the Fund’s investment practices and finally put to rest all of this groundless speculation. We will cooperate fully in any GAO review.”

He said that every year the fund “undergoes a full scope audit by an independent auditing firm, and files exhaustive, public financial reports with the U.S. Department of Labor.”

The GAO is likely to agree to investigate.

Holy Cross Hospital in Chicago was accused by a group of former employees of illegally categorizing its pension plan as a church plan so that it would be exempted from ERISA regulations.

In the 12-count complaint filed against the Chicago hospital, the hospital allegedly retroactively claimed a church plan classification in 1993. Church plans are exempt from the Employee Retirement Income Security Act that mandates pension plans to have sufficient fund allocation to provide the promised benefits to employees.

Read more about the issue at Becker’s Hospital Review:

In 2013, when Holy Cross merged with Chicago-based Sinai Health System, the plan was allegedly underfunded by $31 million. At that time, the hospital allegedly illegally transferred liability for the pension plan to an order of nuns called the Sisters of Saint Casimir of Chicago.

Two years later, the Sisters of Casimir announced that the pension plan would be terminated. The benefits were paid out in lump sums, which were calculated using discount rates that would not have been available under ERISA, according to the report.

In their lawsuit, the former Holy Cross workers are seeking class treatment for about 2,000 participants in the pension plan. They also seek a declaration that the plan is governed by ERISA and damages for the allegedly improper termination of the plan.

In their lawsuit, the former Holy Cross workers are seeking class treatment for about 2,000 participants in the pension plan. They also seek a declaration that the plan is governed by ERISA and damages for the allegedly improper termination of the plan.

Based on the reports by Bloomberg BNA, there are 30 similar cases that involve numerous healthcare companies with religious affiliations over the past three years.

At the end of 2014, the average 401k balance was about $18,127. That figure, however, doesn’t begin to tell the full story.

According to the recent analysis by the Employee Benefit Research Institute of 24.9 million 401(k) plan participants, 40% of these have less than $10,000 and 20% have more than $100,000 in their balance.

The study also revealed the median account balance in various income brackets.

U.S. News has the results:

$20,000 to $40,000. It is difficult to save for retirement when you earn a modest salary. “Many people with small incomes think that it isn’t possible to save for retirement, but it really isn’t the case,” says Tim Baker, a certified financial planner for Script Financial in Baltimore. “When you’re young, one of the things that you have a lot of is time, which means lots of compounding periods for your money to go to work for you.” Many workers earning between $20,000 and $40,000 have managed to save something for retirement. The median 401(k) balance for people who have been on the job for five or more years ranges from $7,474 among workers in their 20s to $77,659 for people in their 50s.

[…]

$40,000 to $60,000. Employees earning between $40,000 and $60,000 are likely to have a little more room in their budget to save for retirement. The median 401(k) balance ranges from $16,502 among 20-somethings to $113,504 for workers in their 50s, according to the EBRI analysis.

[…]

$60,000 to $80,000. In this income bracket, even 20-somethings with a few years on the job have managed to accumulate $33,469, which still has decades to grow until retirement. And workers in their 30s have $60,504. Employees who are in their 50s have a median of $174,016, and 40-somethings have $123,554, according to the EBRI analysis.

[…]

$100,000 or more. Workers earning a six-figure salary generally have a much easier time saving for retirement than those who earn less. Fifty-something workers in this income bracket have a median of $434,733 in their 401(k) plan, and long-tenured 40-somethings have $325,054, according to the EBRI analysis.

 

Two former trustees of the Kentucky Retirement Systems are suing Kentucky Governor Matt Bevin after he ousted them from their positions recently.

The lawsuit claims Bevin didn’t have the authority to remove the trustees, one of whom was the board chairman.

The state’s Attorney General issued a statement siding with the trustees.

From the Lexington Herald Leader:

Two members of the former Kentucky Retirement Systems Board of Trustees are suing Gov. Matt Bevin, claiming Bevin did not have the authority to remove board chairman Thomas Elliott of Jefferson County from the panel.

Elliott and board member Mary Helen Peter filed the lawsuit Friday in Franklin Circuit Court.

They are seeking a temporary injunction to block Elliott’s removal.

It was not clear Sunday what effect, if any, Bevin’s executive order last Friday to abolish the board and replace it with a new board will have on the lawsuit.

Bevin ordered Elliott off the board in April and sent state police to last month’s board meeting to threaten Elliott with arrest if he tried to participate in KRS business with other trustees.

[…]

In a statement, Attorney General Beshear questioned Bevin’s “unprecedented actions” Friday, citing the governor’s decisions to remake both the KRS and University of Louisville governing boards.

“Lawmakers mandated that these boards be independent,” said Beshear, who said his office is reviewing Bevin’s actions.

The New York State Assembly on Thursday passed a measure that would strip government pensions from public officials convicted of corruption-related crimes.

The vote was a unanimous 132-0; however, the bill is softer than previous iterations – including a version still supported by the Senate.

More from NewYorkUpstate:

The Assembly voted 132 to 0 to allow a judge to order pension benefits be withheld from public officers hired before 2011 who are convicted of future felony crimes that directly related to their public duties.

The judge may rule that a portion of the corrupt official’s pension benefits should be paid to the official’s spouse, minor children and other dependents.

All state workers would not be subject to the pension forfeiture under the Assembly bill.

Only elected officials, gubernatorial appointees, municipal managers, department heads, chief fiscal officers, judges and government policymakers would be subject to the penalty if they are convicted.

Assemblyman David Buchwald, D-Westchester, said he believed the Senate will pass the same bill, although the Senate leadership wanted a broader bill that could affect more state workers.

Japan’s GPIF – the world’s largest pension fund – announced last year it’d be shifting more money into domestic equities.

When GPIF speaks, the country’s other pension funds listen – and they follow.

That’s what happened in the 2^nd quarter of 2016, when Japan pension funds bought up $9 billion worth of domestic stocks.

From Bloomberg:

The funds purchased 965.4 billion yen ($9.2 billion) of local shares in the three months ended March 31, and sold 1.4 trillion yen of the country’s government bonds, an 11th straight quarter of net selling, according to Bank of Japan data published Friday. Pension managers also offloaded 86.7 billion yen in overseas assets, the first time they’ve been net sellers since the first quarter of 2014.

The BOJ results echo separate data from the nation’s bourse that showed trust banks, which manage pension money, were net buyers of Japanese equities almost every week in the first quarter while foreign investors sold. The Topix index tumbled 13 percent in the period and is down about 18 percent this year for the worst start since 1995, while the yen rose 6.8 percent against the dollar last quarter, its biggest such increase since September 2009.

Bond yields on 10-year Japanese government debt tumbled below zero in February after the BOJ said at the end of January that it will adopt negative interest rates on some bank reserves.

Lawmakers in the New York State Assembly on Thursday may vote on the approval of a bill that would strip state pensions from public officials convicted of corruption.

The measure is the last remaining remnant of a now-forgotten series of ethics reforms.

From Syracuse.com:

Senate Majority Leader John Flanagan and Senate Independent Democratic Conference Leader Jeffrey Klein told reporters Wednesday they were optimistic the full Assembly would vote on the legislation.

[…]

The pension forfeiture bill requires a change to the state constitution. So lawmakers from both houses will have to approve the bill again in 2017 or 2018, and the public will have to approve the measure in a referendum before it becomes law.

Under the bill, any state public official who is a member of a pension or retirement system and is convicted of a felony related to their public office could lose all of their pension benefits.

Under current law, the state can strip away pension benefits from a state official who were hired after Nov. 13, 2011 – when a 2011 ethics reform law became effective – if the official is convicted of crimes related to their public office.

But the state cannot touch the pensions of state officials hired before that date no matter what they are convicted of doing.

So former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos – who were sentenced in May to prison terms for unrelated crimes – may collect their lucrative pensions under the law.

Chicago officials this week began investigating the breaching of over 90 retirement accounts of municipal employees.

The breach affected 91 employees enrolled in the city’s 457 plan, which is similar to a 401(k) plan.

The majority of the accounts had money taken out of them by the hacker(s).

More from the Chicago Tribune:

Workers with Nationwide Retirement Solutions noticed “suspicious activity” with some 457 deferred compensation accounts for municipal employees similar to 401k accounts on June 1, a company spokesman said. These accounts are administered by Nationwide on behalf of the city, according to the city comptroller’s office.

City officials said 91 accounts were breached, of which 58 accounts had money withdrawn and the remaining 33 accounts did not. The theft was apparently undertaken by a person or group who accessed personal information and apparently created a web profile to take out a loan from the retirement account, officials said.

Nationwide notified the accounts holders as well as federal authorities, according to city officials and Nationwide spokesman Ryan Ankrom. Within five days, the municipal employees affected by the breach had their funds returned to their accounts, Ankrom said. “Everybody who was affected by this had their money returned to them,” he said.