Author: Ted Ballantine

A Greek official made it clear last week that further pension cuts would be a non-starter in negotiations with creditors.

But the country’s finance minister this week said he is willing to discuss pension reforms with the IMF – if it means their bailout review will be quick.

From Reuters:

Greece’s international lenders – the IMF and the European Union – are widely expected to launch a review this week of the reforms Athens has adopted as part of a bailout package it clinched last year to avert bankruptcy. Technical teams are already in Athens.

“We are even ready to discuss the pension reform, as long as the IMF wants to conclude this discussion in a timely manner,” Euclid Tsakalotos told a news conference.

[…]

The review, if concluded sucessfully, could pave the way for discussions on debt relief that Greece has long sought, coax back investments and help its crippled economy return to growth.

Meanwhile, several unions are planning a strike to protest the planned reforms. From ABC:

Union discontent is growing in Greece against planned pension reforms, with civil servants joining in a strike by private sector workers next month in what will be the first general strike of the year in the financially struggling country.

The ADEDY umbrella civil service union said Monday it will participate in the Feb. 4 strike, and accused the radical left-led government of aiming to “plunder” pensions through drastic new cuts.

Unions representing lawyers, doctors and engineers have also strongly protested the draft reforms, which would significantly increase their social security contributions.

One condition of the IMF bailout is that Greece trim nearly $2 billion in pension costs.

 

Photo credit: “Flag-map of Greece” by en.wiki: Aivazovskycommons: Aivazovskybased on a map by User:Morwen – Own work. Licensed under Public Domain via Wikimedia Commons

A proposed California ballot measure, which seeks to curb the state’s pension benefits and rein in costs, will not make it on the 2016 ballot.

The initiative’s two backers – former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio – said they are now shooting for the November 2018 ballot.

The measure would have shifted new state employees into a 401(k) system and capped how much employers could contribute to new hires’ pensions.

More from the Sacramento Bee:

Reed said in a telephone interview that he is disappointed but undeterred. Professional fundraisers and potential donors, he said, believed that economics, politics and a pending U.S. Supreme Court decision would strengthen the likelihood of passing a pension measure in two years.

“Enough people in my coalition think so,” Reed said, “and you have to listen to them.”

Labor unions, which opposed Reed and DeMaio’s proposal and others like it, rejoiced at Monday’s news that another “extremist” stab at changing public pensions had failed.

[…]

[Reed] couldn’t persuade donors to come up with up to $3 million needed to gather qualifying signatures by mid-April. Beyond that, Reed estimates he would need another $25 million to wage a campaign against fierce union opposition.

Internal discussions, Reed said, turned to 2018. By then, some of his advisers speculated, the state economy might cool down, putting state and local budgets under more stress and giving voters more reason to pay attention.

There would also be no election for president that year, he noted, which tends to suppress turnout in Democratic, union-friendly California.

It costs about $28 million to run a ballot measure’s “campaign”, and to collect the necessary signatures, according to Reed.

 

Photo by  San Jose Rotary via Flickr CC License

Ontario is moving forward with its planned expansion of retirement benefits, even if other provinces aren’t yet following.

The rest of Canada will eventually follow, but the country is currently studying various angles of retirement benefit expansion. A decision will come in December.

More from The Globe and Mail:

The ORPP will apply to people who do not already have a comparable workplace pension. It will be funded by contributions from workers, matched by their employers. For someone earning $45,000 annually, the ORPP would return $6,410 a year in retirement if paid into for an entire working life; for someone earning $90,000 or more, that figure would be $12,815.

The pension plan will be administered at arm’s length from the government and run by civil service veteran Mr. Rafi. Formerly the top bureaucrat in the province’s massive health ministry, he most recently handled the high-profile assignment of steering the Pan American Games in Toronto last summer. Between salary and bonuses, he will be eligible for up to $656,250 in annual pay in his new job.

While Ontario leaps off the diving board, the rest of the provinces are huddled nervously by the shallow end, tentatively dipping their toes in the water.

Prime Minister Justin Trudeau pledged to pursue CPP enhancement in his winning campaign last year, and Mr. Morneau is now trying to reach a consensus with the provinces. Any expansion of CPP must be agreed to by Ottawa and at least seven provinces representing two-thirds of the country’s population.

Mr. Morneau’s spokesman said he is “absolutely committed to ‎moving forward on enhancing the CPP,” but he does not have a preconceived notion of exactly what the enhancement will look like – whether similar to the ORPP or something else.

Canada is currently studying the effects of expanding retirement benefits; how businesses would react, how GDP would be affected, and which workers the expansion should affect in the first place.

 

Photo credit: “Canada blank map” by Lokal_Profil image cut to remove USA by Paul Robinson – Vector map BlankMap-USA-states-Canada-provinces.svg.Modified by Lokal_Profil. Licensed under CC BY-SA 2.5 via Wikimedia Commons

A new accounting requirement, issued by the Governmental Accounting Standards Board (GASB) and directed at cost-sharing retirement plans, could lead to in-fighting between cities and states, according to a recent report.

The report, released by the Center for State and Local Government Excellence and the Center for Retirement Research at Boston College, says cities and states could bicker over their respective shares of unfunded pension liabilities.

More details from BenefitsPro:

[The new GASB rule] requires employers that participate in cost-sharing pension plans to report their share of a state’s “net pension liability” on their balance sheet is having a substantial impact on many large cities that participate in cost-sharing state plans.

[…]

GASBB’s rule change not only requires employers to move pension funding information from footnotes onto their balance sheets, but also requires those who participate in cost-sharing plans to provide information regarding their share of the net pension liability on their books.

The liability isn’t new, and does not affect the funded status of a pension plan.

However, reporting their share of such liabilities has nearly doubled the burden of the 92 cities in the study that are in such plans.

“Local governments—now saddled with a portion of the state plan’s unfunded liabilities on their books—may be more interested in seeing the unfunded liability decline over time and will have a vested interest in ensuring that their contributions are doing just that,” [the report says].

In its footnotes, the study reported that, because of the change, “political tensions have already begun to emerge between a state and the local governments involved in its cost-sharing plans.”

Read the report here.

 

Photo by Laura Gilmore via Flickr CC License

State Street has agreed to a settlement with the SEC of $12 million after one of its executives, who has since been fired, was found to have been involved in a pay-to-play scheme for Ohio pension contracts.

The details of the scheme, from the Boston Globe:

An investigation by the Securities and Exchange Commission found that a former State Street executive made a deal with Ohio’s then-deputy treasurer to provide illicit cash payments and campaign contributions in exchange for business.

In return, the SEC said, the Boston-based financial services giant received contracts to handle administrative services for three public pension funds.

[…]

[Former State Street executive Vincent] DeBaggis allegedly led State Street to enter into a purported lobbying agreement with an immigration lawyer named Mohammed Noure Alo, the SEC said, who had connections to Ohio’s then-deputy treasurer, Amer Ahmad.

From February 2010 to April 2011, State Street paid $160,000 in fees to Alo, and a substantial portion of that was routed to Ahmad, the SEC said.

[…]

“Pension fund contracts cannot be obtained on the basis of illicit political contributions and improper payoffs,” said Andrew J. Ceresney, director of the SEC’s Enforcement Division, in a statement. “DeBaggis corruptly influenced the steering of pension fund custody contracts to State Street through bribes and campaign donations.”

Pension360 covered the investigation when it was in its infancy last year.

 

Photo by Securities and Exchange Commission via Flickr CC License

In March 2014, Boeing froze defined-benefit pensions for all of its non-union employees and shifted them into a 401(k) plan. The change affected 68,000 workers.

This week, Boeing struck a deal with the Society of Professional Engineering Employees in Aerospace (SPEEA), the union that represents its engineers.

The union agreed to a deal that freezes some engineers’ pensions and shifts them into a 401(k) plan.

Details from Nasdaq:

Boeing Co. and its white-collar engineers’ union said Wednesday they had reached a tentative agreement on a six-year contract extension, avoiding a potentially bruising fight that would’ve renewed long-standing tensions between employees and management.

The existing four-year contract was set to expire in October, and, if renewed, would provide Boeing with labor stability into the 2020s and shift the last large group of its unionized employees away from a defined benefit pension program.

The union’s leadership said it had unanimously endorsed the agreement, recommending its members ratify the extension which, if approved, would take effect Feb. 11 and continue through Oct. 6, 2022.

[…]

Under the new agreement, all Speea represented employees hired before March 2013 would shift to a defined contribution pension at the end of 2018. A traditional pension had been preserved for existing engineers during the last round of talks in 2013. The machinists and Boeing’s non-represented employees are slated to switch fully to a 401(k) defined- contribution plan later this year, following a freeze of its existing pension benefits.

Union members still have to ratify the contract extension.

 

Photo by Christian Junker via Flickr CC License

In Kentucky, like all states, lawmakers earn a public pension.

But unlike most states, the details of those pension benefits are secret in Kentucky, and do not qualify for disclosure under open records or FOIA laws.

A bill, currently in the Senate, seeks to change that.

From the Lexington Herald-Leader:

Senate Bill 45 would require public disclosure of individual benefits for current and former legislators enrolled in the legislative pension system, the judicial pension system, the Kentucky Retirement Systems for state employees or the Kentucky Teachers’ Retirement System for educators.

“I think we’ll learn that the vast majority of people who retire don’t draw the kind of pensions that people think they do. But there are some select circumstances where people have done things the public would find egregious in terms of spiking benefits,” McDaniel told reporters after the Senate Committee on State and Local Government voted unanimously for his bill.

McDaniel said he expects the full Senate to approve his bill by early next week.

Pension transparency bills in the past have hit a roadblock in the House State Government Committee, where Chairman Brent Yonts, D-Greenville, is an opponent.

“My basic philosophy is, if you’re in public office or if you’re a public employee, then what you’re currently earning as salary should be public information, and it is,” Yonts said Wednesday. “Once you’ve retired, though, what you draw from retirement benefits is nobody else’s business.”

Kentucky’s judicial pension system is 85 percent funded, making it the state’s healthiest pension system by far.

 

Photo by TaxRebate.org.uk

The Pew Charitable Trusts released a report Wednesday analyzing retirement plan access and participation in the United States.

One chart (see above) maps the percent of each state’s population that has access to a retirement plan through their employer. In terms of regions, the Midwest and the Northeast have the highest rates of plan access; Texas, Florida and New Mexico lag far behind.

From Pew:

Because of the differences in retirement plan access and participation across the United States, legislators should consider the unique social and economic features of each state as they try to expand retirement saving through the workplace. For example, certain states have more workers at small businesses or in industries with relatively high turnover. Policymakers will need to balance the goal of increasing retirement savings against the challenges and concerns that such firms face. Other states have higher shares of minority workers who may benefit from targeted outreach materials to expand participation in new or existing plans. Taking these types of characteristics into account can help policymakers improve retirement security while balancing the needs of both workers and employers.

Another chart (see below) maps plan participation; participation rates follow a similar pattern as access rates.

Read the full report here.

Several observers wondered on Tuesday whether retirement would have a place in President Obama’s final State of the Union address.

Turns out, retirement-related topics got a solid 4 minutes of time during the speech [see the above video].

Most notable was Obama’s call for retirement savings to be portable.

Obama’s remarks:

Of course, a great education isn’t all we need in this new economy. We also need benefits and protections that provide a basic measure of security. After all, it’s not much of a stretch to say that some of the only people in America who are going to work the same job, in the same place, with a health and retirement package, for 30 years, are sitting in this chamber. For everyone else, especially folks in their forties and fifties, saving for retirement or bouncing back from job loss has gotten a lot tougher. Americans understand that at some point in their careers, they may have to retool and retrain. But they shouldn’t lose what they’ve already worked so hard to build.

[…]For Americans short of retirement, basic benefits should be just as mobile as everything else is today. Say a hardworking American loses his job – we shouldn’t just make sure he can get unemployment insurance; we should make sure that program encourages him to retrain for a business that’s ready to hire him. If that new job doesn’t pay as much, there should be a system of wage insurance in place so that he can still pay his bills. And even if he’s going from job to job, he should still be able to save for retirement and take his savings with him.

Read the full transcript here.

 

Photo by  Bob Jagendorf via Flickr CC License

In September, Canada’s largest pension fund, the Pension Plan Investment Board, announced plans to open an office in India and to invest $6 billion in the country by 2022.

Now, the second largest Canadian pension fund is following suit: Caisse de dépôt et placement du Québec, says it is making plans to open an India office and make direct investments in the country.

More from the Business-Standard:

CDPQ, which manages $240 billion of depositors’ money, has already hired some executives and is looking for properties, the executive said.

“As a large investor in major financial markets, private equity, infrastructure and real estate, globally, they could look at similar investments here,” said the [pension fund] executive.

Incidentally, CDPQ’s real estate arm Ivanhoe Cambridge entered India in 2007 shut its office in 2011 and CDPQ’s PE arm SITQ also shelved its plans to invest in Indian real estate as it could not find right opportunities,

Set up in 1965, the CDPQ is one of the largest institutional fund managers in Canada and North America. The leading private equity investor in Canada, it is also one of the 10 largest real estate asset managers in the world.

A mail sent to CDPQ did not elicit any response.

For its part, CPPIB has invested at least $1.2 billion in India since 2010.

 

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