Reporting proposals from the Actuarial Standards Board and Congress, as well as new proposed mortality tables from the Society of Actuaries could result in a higher valuation of pension obligations and lower funded levels for public pensions, according to Mike Moran with GSAM.
Tag: public defined benefit plans
The New York State Common Retirement Fund and the New York State Teachers Retirement System hold Exxon shares with a combined value of approximately $1.5 billion, and a lawsuit asks for damages, a disgorgement of all monies obtained in connection with the alleged fraud, and restitution.
OPERS said the move is expected to lower its funding level, but increase the time in which it can pay off liabilities.
“The increase in global equity values for the 12-month period ending June 30, 2017 was a primary driver of the improved funding levels,” says Ned McGuire, at Wilshire Consulting.
The SOA said it developed the new tables once it was determined that public pensions have differing levels of mortality than private pensions. It is soliciting comments on its proposal.
The California Supreme Court has asked an appellate court to review a proposal approved by voters in 2012 to place new hires in a defined contribution (DC) plan rather than the city’s defined benefit (DB) plan.
Alternative investments charge higher fees than traditional asset classes such as public equities and fixed income, and according to a study, these fees, in particular, may play a meaningful role in public plan underperformance.
“A cap-weighted strategy skews its way toward the largest stocks, but if plan sponsors own equities in a much more balanced way, it will help with stability,” says Bryan Belton, director, multi asset, at PanAgora Asset Management.
However, the Center for Retirement Research (CRR) at Boston College found portfolio allocation did account for about one-quarter of the total 16-year underperformance for bottom quartile plans.
The original lawsuit alleged negligence and professional malpractice by Willis Towers Watson in its actuarial work for the city; the settlement does not constitute an admission of wrongdoing.
State pensions have a history of “talking with their feet” in a show of activism against undesirable products or actions.
Under the proposed legislation, any employer or public official who willfully fails to make contributions to public pension plans can face a sentence as low as a $100 fine or as high as 10 years in prison.
The NIRS studied the case of Palm Beach, Florida, which it says offers “an important cautionary tale on the detrimental impacts of switching public employees from DB pensions to DC accounts.”