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Category Archives: Blog
A recent study published by the respected Chairman of J.P. Morgan’s Market and Investment Strategy, Michael Cembalest, evaluates the current pension-funding deficit across the U.S. State and local governments are trending towards inadequate funding for pensions obligations. However, this kick-the-can approach is running out of road and someone needs to pick up the tab. Pension fund forecasts are misguided by over realisticreturns that create a wide gap between assumption and reality leaving pensions and taxpayers to pay the burden of … Read More
Author and syndicated columnist Dr. Glenn Mollette recently opined on the state of the U.S. pension system where he accurately described the country’s mounting pension funding struggles. Without adequate pension fund returns, the instability of our pension system forces our nation’s retirees back into the workforce. Dr. Mollette described the aging workforce in entry-level positions to get a paycheck in order to make due. This sad reality for some seniors becomes commonplace when pension funds are not adequately funded. It … Read More
Pension plans are a guaranteed promise to retirees that dedicate to a career in public service. Many individuals and families depend on these pension plans as means for retirement. For theses thousands of individuals and families relying on the public service package, it is unsettling to find the majority of state pension plans are not adequately funded. In 2016, Kentucky funding ratio is at 30.9 percent with a total pension liability of $243.6 billion. The widening gap in pension … Read More
Millions of retired state employees have dedicated their lives working for the promised pension funds that come with a lifetime of public service. The Los Angeles Daily News Editorial Board recently wrote a piece on the harm of politicizing state pension funds. The article highlights the negative impacts that ideological investment decisions have on pension funds.
The California legislature passed the Public Divestiture of Thermal Coal Companies Act of 2015 that mandated California Public Employees’ (CalPERS) and California State Teachers’ … Read More
A hidden deficit exists in most state budgets. This large, and almost always, overlooked gap in our budget goes without much criticism from our local elected officials due to a lack of leadership in dealing with the bloating dilemma. The problem? Outstanding pension liabilities. Rather than fixing the problem, politicians prefer a “kick the can down the road” approach to dealing with the unfunded pension liabilities. It is past due that we forget this practice and begin to protect the … Read More
Pensions across the country are habitually underfunded. Recent reports released from the Center for State and Local Government Excellence show that state and local pension plans are only about 74% funded and have unfunded liabilities of about $1.4 trillion. They also found that 20% of pensions are under 60% funded. This is appalling when it is put into context that not only are the pensioners going without, but the extra costs falls on tax payers around the country.
Costs are … Read More
Decision for the Board Just Became Easier – Divesting Means More Costs for the City of San Francisco and No Reward
The San Francisco Employees’ Retirement System (SFERS) Board has an upcoming decision to make that will affect the lives of thousands of Californians. However, this decision just became a very easy one. A recent study from Compass Lexecon found that divesting from oil, natural gas, and coal securities would cost SFERS $11.5 million annually, the authors note in a recent San Francisco Examiner column. That equals to $149 billion loss over 50 years.
The study also found that the decision … Read More
The California Public Employees’ Retirement System (CalPERS), the biggest pension system in the country, reported some good news recently, when officials announced a stellar 11.2% return rate percent, a stark contrast to less than stellar returns from the past two years, when CalPERS recorded returns of .61% and 2.4%.
The good news comes at a time when pension funds all across the country are being pressured to stray away from their primary mission, securing the retirement of those retirees who … Read More
Good news came out of Seattle this week, as the Seattle City Employees’ Retirement System (SCERS) Board voted to reject a measure to divest the fund of energy holdings. Regarding the decision, the SCERS memo read:
While we are concerned with the profoundly negative impact that climate change is having on our environment, divesting … would negatively affect expected investment performance, even if pursued on a limited scale (e.g. only coal) or if pursued over many years.
Jason Malinowski, chief … Read More
It is a fact that good ideas get copied by others. The inverse, however, can also apply, and when it comes to the bad idea of divestment, those bad ideas come with real costs to pensioners.
With the city of Somerville, Massachusetts divesting their municipal pension fund of traditional energy assets, some divestment advocates are calling for this bad idea to be replicated elsewhere, such as in neighboring Cambridge. A recent letter to the editor written by a Cambridge resident … Read More