Author: Megan Leo

A bill in Pennsylvania is trying to expand the pension forfeiture law so that all government or school employees who are convicted of crimes must forfeit their pension benefits. While there are currently laws in place, this bill is attempting to expand the current policy to include any employee who is convicted, and not just to wait until the employee is sentenced for the forfeiture to occur.

The Pike County Courier has more on the topic:

Pennsylvania lawmakers are considering a proposal to expand the state law that requires forfeiture of pensions for school and government employees convicted of job-related crimes.

The House voted 188 to 2 on May 18 to require pensions be seized upon conviction rather than waiting until defendants are sentenced.

The proposal also imposes pension forfeiture on those with any felony convictions related to their jobs.

To cover federal offenses, it also applies to convictions that result in a sentence of at least five years.

Current law outlines the crimes that trigger forfeiture, and not all felonies are included.

The bill is currently headed to the state Senate for approval.

 

The New York Police Department is calling for a pension reform that would allow officers who were injured on the job to collect 75 percent of their salary in pension benefits. Currently, legislation has passed that lowered injured officers’ pensions to half of the current salary. Unions are currently pressing the issue.

The Daily News has more information on the topic:

Because of a law change, uniformed officers hired after 2009 are only entitled to 50% of their salary if they are injured and can’t work. Workers hired before 2009 get 75% of their salary.

“If you go out, you do the job, you get injured, you get 50% disability offset by social security,” said PBA President Patrick Lynch. “So that basically comes out to $14,000 to $30,000 depending on where you are on the pay scale.”

“You can’t live in the city of New York on $30,000,” Lynch said.

About two dozen members of the Patrolmen’s Benevolent Association rallied outside of City Hall, pushing for the rules to change back.

Union members spent the lunchtime rally handing out leaflets and holding signs that read, “Protect our officers” and “City Council, we need your support.”

Lynch said that the uneven disability program greatly affects younger officers in the department.

“If they’re injured, disabled on the job, they should get a three quarters pension,” said Lynch.

New York City Mayor Bill de Blasio passed the controversial law last year that gave injured officers half of their salary, but at the highest possible salary for their position.

The city council of Springfield, Massachusetts has delayed voting on the new budget due to issues with pension funding. The delay allows councilors to look over the budgets and deliberate on how to handle the city’s pension liability.

Mass. Live has more on the topic:

The City Council has postponed two special meetings this week to vote on the proposed $616 million fiscal 2017 budget after councilors raised concerns about the city’s pension liability that continues to rank as the worst-funded system in the state.

The council delayed special budget vote meetings on Tuesday and Wednesday, as formally requested by seven of the 13 councilors, led by council Finance Committee Chairman Timothy Allen. New dates are not yet scheduled.

“They wanted more time to deliberate on the extent of our unfunded pension liabilities,” said council President Michael Fenton, who has also raised concerns.

[…]

The city budget for the new fiscal year, beginning July 1, includes $50.6 million for pension costs and retiree health insurance, reflecting an 8 percent increase over the current year.

Allen and other councilors questioned if that increase is enough given that Springfield’s pension system is 26 percent funded — the lowest percentage in the state.

[…]

Timothy Plante, Springfield’s chief administrative and financial officer, told councilors Monday that the city has an “aggressive” plan to fully fund the pension system with a planned 14 percent increase in fiscal 2018 and another 14 percent increase in fiscal 2019.

Allen asked if more can be done for fiscal 2017, rather than “kick the can down the road.”

[…]

Councilor Timothy J. Rooke said there was no need to delay the vote on the city budget, saying it was “more saber-rattling than common sense.”

The pension liability crisis that faces the city and other communities across the state has been known for a long time and is under a long-term funding schedule, he said, questioning the “befuddlement” of some councilors. Rooke said that he has no problem with new councilors wanting to be educated on the issue, but that councilors with more experience “certainly should not be surprised” by the pension liability crisis

Massachusetts state law requires that all communities pay their pension liabilities in full by 2035.

A bill in Kentucky that aimed to increase transparency surrounding the state pension system did not make it to the floor of the state House of Representatives. The bill had passed in committee and the Senate, but failed to make it past the House. Many Kentucky voters are upset about the lack of transparency.

Heartland has more on the issue:

A bill to reform Kentucky’s pensions by providing greater transparency for taxpayers was halted after it failed to make it to the floor of the state’s House of Representatives.

After being approved by the state’s Senate and a state House of Representatives committee, Senate Bill 2 did not receive consideration by the full assembly before the legislative session ended in April.

SB 2, sponsored by state Sen. Joe Bowen (R-Owensboro), would have required the state government’s public pension program to disclose fees and contracts for goods and services purchased by the pension boards. The bill would have also made appointment of trustees and executive directors subject to confirmation by lawmakers.

[…]

Bowen says the proposed reforms would have helped relieve taxpayers’ concerns about state pensions and make pension program managers more accountable to the people funding those plans.

“Unfortunately, the transparency bill did not make it through the process,” Bowen said. “People want transparency. You know, when you’ve got a $30­ billion to $40 billion pension liability, and you don’t have transparency, people are concerned. They want to know what is going on. They want to know what these investments are, what the contracts look like, what the fees are.”

Many local watchdog associations believe that Kentucky is concealing much deeper debt than what the state lists in reports. For more information, read the full article here.

This is the third time that a New York bill that would offer all veterans an extra three years of pension has reached Governor Andrew Cuomo’s office. The bill aims to include all veterans, regardless of when or where they served. Every time the bill has reached the Cuomo in the past, he has vetoed it, reportedly due to funding concerns.

Press Connects has more on the issue:

Now, with the bill on Cuomo’s desk a third time, representatives of various veterans groups traveled to the state Capitol on Tuesday, hoping to convince the governor to change his mind.

“We’ve got to get the governor to sign the bill,” said Bob Becker, legislative coordinator for the New York State Veterans Council. “I’m not a state employee, never was. I’m here supporting our veterans that are in the state of New York for this bill. The veteran community supports all veterans, male or female, who serve our country.”

The legislation — sponsored by Assemblywoman Amy Paulin, D-Scarsdale, Westchester County, and Sen. William Larkin, R-New Windsor, Orange County — would expand the state’s veterans pension buyback program, which currently allows certain veterans who are now state, local government or school employees and served in combat or during certain wars to claim an extra three years of service when they file for their retirement.

Both the Senate and Assembly passed it earlier this year.

If signed by Cuomo, any veteran — regardless of whether they are combat veterans or when they served — would be eligible for the credit.

Supporters of the bill say the state’s current eligibility rules lead to arbitrary results. Afghanistan veterans, for example, are excluded, as are women who served in certain conflicts prior to being able to hold combat roles.

In vetoing the bill each of the past two years, Cuomo has pointed to the financial implications. Like in previous years, the bill doesn’t include a funding source, meaning the state would still have to figure out how to pay for the added pension costs.

Cuomo must sign or veto the legislation by June 1.

Chicago unions have reached an agreement with Mayor Rahm Emmanuel that may fix Chicago’s massive pension debt. The new plan would allow workers to choose when to retire based on how much of their salary they would like to donate to the pension fund.

Reuters has more on the plan:

Chicago would increase its annual contribution to its laborers’ retirement system, as would newer workers, in order to save the fund from insolvency, under an agreement in principle announced on Monday by Mayor Rahm Emanuel and unions.

While the city hailed the deal for the smallest of its four pension systems, a solution has yet to emerge for its largest fund, covering more than 50,000 active and retired municipal workers.

The city will dedicate $40 million a year from a 2014 increase in its 911 telephone surcharge to the laborers’ fund, under the agreement. Workers hired after Jan. 1, 2017, would have to contribute 11.5 percent of their salaries, while those hired after Jan. 1, 2011, would choose between contributing 11.5 percent and retiring at age 65 or contributing 8.5 percent and retiring at 67.

Chicago needs the Illinois legislature to approve later this year a five-year phase-in of the higher contributions by the city to the laborers’ system to attain a 90 percent funding level by 2057. The fund, which had $1.36 billion in assets at the end of 2014, covers nearly 3,000 active workers and 2,700 retirees.

In March, the Illinois Supreme Court tossed out a 2014 state law aimed at making the laborers’ fund and the municipal pension system solvent by requiring higher contributions from the city and affected workers and reducing benefits.

Emanuel has said that ruling put Chicago into a straitjacket by reaffirming iron-clad protection in the Illinois Constitution against reducing public sector worker pension benefits.

Chicago Budget Director Alex Holt said the deal for the laborers’ fund does not reduce benefits but gives newer workers choices as to when they can retire.

“Choice is one of the areas that the Illinois Supreme Court indicated should pass constitutional muster,” she told reporters in a conference call.

Without increased funding, the city’s municipal fund is expected to run out of money within the next ten years.

A new study by Truth in Accounting discovered that while Illinois’ Comprehensive Annual Financial Report says that the state has $108.6 billion dollars in pension debt, the truth is even worse. Due to accounting loopholes, Illinois is able to hide the fact that its true pension debt is $116.7 billion.

Reboot Illinois has more on the topic:

Truth in Accounting’s annual financial state of the state report found Illinois has amassed nearly $213 billion in unpaid bills, including more than $40 billion in hidden pension debt.

Despite new accounting rules put in place by the Governmental Accounting Standards Board that require state and local governments to report all of its pension liabilities, Illinois continues to omit billions in unfunded pension obligations, says Truth in Accounting CEO Sheila Weinberg.

“Because of budgeting and accounting gimmicks the state uses, Illinois has been able to exclude massive debts off its balance sheet and hide related costs from taxpayers,” Weinberg said in a news release. “Unfortunately all of these financial problems are coming to a head in Illinois.”

While the Illinois comptroller’s Comprehensive Annual Financial Report for fiscal year 2015 puts the state’s net pension liability at $108.6 billion, Truth in Accounting’s analysts say that figure is underreported by about $8.1 billion, meaning Illinois’ unfunded pension liabilities are actually $116.7 billion.

The report also found an additional $32.3 billion in hidden retiree health care debt, bringing the state’s total hidden debt to $40.4 billion.

[…]

As of June 30, 2015, Illinois had $74 billion in assets. But when capital and restricted assets are excluded, the state only had $25.9 billion to pay $212.8 billion worth of bills — a $186.9 billion shortfall.

Read the full report here.

Due to an act recently passed in Congress, companies are required to pay significantly less money to pension funds than was expected in previous years. By using a model similar to what was in place during the recession, companies are allowed to base their payments on interest rates from 25 years ago.

The Boston Globe has more on the story:

A recession-era measure aimed at giving companies a temporary break from large pension obligations has been extended to 2021, allowing corporations to put off hundreds of millions of dollars in payments to fund employee retirement plans.

The amounts can be eye-popping at individual companies. Under the old rules, Massachusetts Mutual Life Insurance Co. of Springfield, for instance, would have had to put $129.8 million into its $2 billion pension plan last year, according to a notice sent to employees. With the break from Congress: $0.

[…]

This steep dive in pension funding is playing out across corporate America, retirement specialists say, and in some cases is pushing big bills out into the future.

“The rules from Congress have really allowed sponsors to kick the can’’ down the road, said Matt McDaniel, a partner in Philadelphia with Mercer, a benefits consultancy. “By saying you have to put in less today — at some point down the road, you’ll have to put in more.”

[…]

In an example of how this works, if the two-year average rate on high-quality corporate bonds for part of a pension was 1.47 percent, the adjusted rate under the 25-year average would be 4.43 percent, according to the IRS.

[…]

Thirty percent of pension plan sponsors in a study last year told Mercer, the consultant, they planned to pay only the minimum required into their pensions.

The other 70 percent are paying more than the minimum. ConEdison, for one, plans to contribute $507 million to its pension plans for 2015, according to a filing with securities regulators. That’s close to its $534 million that would have been required under the old interest rate assumption.

Congress has recently renewed the plan for the next six years.

Due to a series of steep pension plans, Philadelphia is currently $5.9 billion short of what it needs for pensions this year. The shortage comes from a series of previous legislation that guarantee private sector workers up to 100% of their highest salary in pensions.

The Inquirer has more on the topic:

In fact, taxpayers continue to send each more than $100,0000 a year for their former service as mayor, district attorney, and police commissioner, respectively.

The trio of retirees are among 33 former city employees, including elected officials, who are paid more than $100,000 annually, despite no longer coming to work. Johnson tops the list with an annual pension of $152,439. Second is recently retired Mayor Michael Nutter at $141,906.

The pensions stand as a reminder of the roots of Philadelphia’s pension crisis – an arguably overly generous benefit formula combined with underfunding of the system along the way. Exacerbating the problem is the fact that there are now more retirees collecting pensions than active employees contributing to the fund. And those retirees are living longer than anticipated.

The end result is a pension funding crisis. The city is $5.9 billion short of its $11 billion pension liabilities.

[…]

Diane Oakley, of the National Institute on Retirement Security, said the public-pension levels are more understandable when the whole compensation package is taken into account. Public-sector employees generally receive lower salaries for similar jobs in the private sector, she said.

“They’ve made this deal that the benefits are more important to us than salary,” Oakley said. The pensions, then, are a draw to get people to work for the government.

The median private-pension benefit of individuals age 65 and older was $9,227 a year in 2014, according to the Pension Rights Center, a nonprofit advocacy group based in Washington. That same year, the median state- and local-government pension benefit was $14,158.

[…]

Take last year. Nearly 28,000 employees contributed $58.7 million to the pension fund, while the city paid in $577.2 million. The fund paid out $719.5 million to the 37,945 retirees and beneficiaries. The city’s expense included $1.7 million in the controversial DROP retirement benefit.

An additional cost to the fund last year was the $62 million in pension bonuses doled out as result of legislation that was sponsored by Mayor Kenney when he was a councilman.

Those payments, plus a bad investment year, contributed to millions lost in asset value, dropping the pension system’s funding status to 45 percent.

City officials are currently speaking with union representatives to see if a solution can be found.

The Central States Pension Fund is rapidly running out of money, and is expected to be completely out by 2026. In efforts to save the fund, the Central States Pension Fund has proposed budget cuts, only to be denied by the Treasury Department.

CBS 58 has more on the topic:

The Central States Pension Fund has no new plan to avoid insolvency, fund director Thomas Nyhan said this week. Without government funding, the fund will run out of money in 10 years, he said.

At that time, pension benefits for about 407,000 people could be reduced to “virtually nothing,” he told workers and retirees in a letter sent Friday.

In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month,the Treasury Department rejected the plan because it found that it would not actually head off insolvency.

The fund could submit a new plan, but decided this week that there’s no other way to successfully save the fund and comply with the law. The cuts needed would be too severe.

Normally, when a multi-employer fund like Central States runs out of money, a government insurance fund called the Pension Benefit Guaranty Corporation (PBGC) kicks in so that retirees still receive some kind of benefit.

But that’s not a great solution in this case. For one thing, the amount is smaller than what pensioners would have received under the Central States reduction plan, and is based on the number of years a retiree worked. A retiree would receive a maximum $35.75 a month for each year worked, according to the fund’s website. (That amounts to $1,072.50 a month for retiree who worked 30 years.)

But there’s yet another problem. The PBGC itself is underfunded and isn’t expected to be able to cover all the retirees in the Central States Pension Fund.

Leaders of the Central States Pension Fund stress that only government money can save the situation now.