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Pension Omnibus Bill: Show Me the Money

The bill is an attempt to sober up (more realistic assumptions, paying more in contributions while lowering COLAs) but still sneaks the old sauce hoping no one will notice (big increases for taxpayers, modest increases for employees, without fully funding the base benefit). And then there’s that big balloon floating out there in 2047. ...

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Tweet This: Police Pensions Ought to Be Fully Funded

There is an old saying: don’t kill the messenger: I was invited to testify at the Pension Commission this week. In response, a few tweets went out from the Teamsters Local 320 Public & Law Enforcement that made it clear that we have a communication problem. So, this post is written to the rank and file out there, the thin blue line that looked fierce sitting behind me Tuesday night. There is another saying: don’t argue with math. ...

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Crockett and Actuary Testify at the Pension Commission: Keeping the Pension Promise

Kim called for all pensions to be fully funded, and testified that, “We have made promises without paying for them, shifting the costs on to young employees and our children.” She concluded that the Pension Commission should seriously begin to consider closing at least some of the plans to new employees to avoid further unfunded liabilities. She said, “When you are in a deep hole, it is a good idea to stop digging.” ...

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Why there is no budget surplus now– or in the foreseeable future

Governor Dayton’s team has projected a $1.87 billion-dollar surplus. Before anyone pats themselves on the back, recall that there is the not so small matter of a pension deficit. When you add in all funds, Minnesota is short by about $18 billion. And that is using the “happy talk” fiscal assumptions. Talk about fake news! ...

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Brexit, Uncertainty and Pension Losses: there is a lot of that going around

You have to wonder what Brexit will be blamed for next. Even The Wall Street Journal on Monday reported on the front page, “Pensions Pressed Further by Brexit.” The front-page article reported, “For officials who manage retirements of public and private-sector workers, Brexit exacerbated problems that have been roiling pensions around the world for years. The low-rate environment has pulled down returns, inflated funding gaps, encouraged larger investment risks and prompted plan officials to scale back future investment assumptions.” Now “this problem is snowballing,” said Colorado Treasurer Walker Stapleton. The article explained, “Pensions determine their assets and liabilities through formulas that depend...

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Public Union Chief defends Gov. Dayton’s veto of Pension Bill; Calls Wall Street “Crockett’s Hungry Fox”

Eliot Seide, the executive director for public union AFSCME 5, went on the counter-offensive (or maybe just offensive) this weekend in response to my recent Strib commentary on pensions (“The perfect defeats the good as Dayton vetoes pension bill,” Kim Crockett June 13). You may or may not want to read Mr. Seide’s ad hominem attack on me and the Center, and his defense of the underfunded pension system (“Counterpoint: On public pensions, the sky isn’t falling,” June 17). Just don’t skip the Comments. Most writers seem to be delightfully well educated on the problem of pension math and role that...

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Despite risky behavior, pension funds are coming up short

I have several good buddies who make sure I see I keep up with my pension math. So earlier this week, I got a number of friendly pings pointing to a Wall Street Journal article on how public pension funds are taking greater risks to achieve assumed rates of return this week (Pension Funds Pile on Risk, Wednesday June 1, 2016). The WSJ article was prompted the release of a new study by Callan Associates, Inc. an advisor to large investors like pension funds. The study noted “a more volatile mix of stocks, real estate and private equity needed to match prior...

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Crockett’s Quick Pension Update 2016: Minnesota’s Slow and Quiet Bailout

In brief, the pension omnibus bill contains some good policy changes such as a higher contribution rate for St. Paul Teachers and lower COLAs that are estimated to immediately save $81 million that otherwise would be lost forever—and much more in the future. Unfortunately it also reset the amortization date, pushing it out, yet again, another decade to 2046. Imagine if you did that with your mortgage? The Teachers Retirement Association, the most troubled fund of Minnesota’s Big Three (TRA, PERA and MSRS), is going to finally join all the other funds in reducing its assumed rate of return/discount rate from...

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