Pension Funds & Investment in Russia...

[Maroon Eagle]

What's even more interesting is that the top-3 institutional holders in that Russian bank are all from #Kentucky. pic.twitter.com/gr0Uwmu1jv— Market Sentiment (@mkt_sentiment) March 4, 2022
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Not a big part of the teachers' retirement fund; it won't bankrupt them. But states already have trouble meeting future retirement promises, so a rapid 8-figure loss doesn't help.As I said, it's a small example of how the war's effects reverberate widely.https://t.co/S6PbPEJGT5— Nicholas Grossman (@NGrossman81) March 4, 2022

 

[Leeshouldveflanked]

Allowing state employees to retire before they reach the age of 50 is probably a lot bigger stress on the system.

 

[GloryDawg]

Allowing state employees to retire before they reach the age of 50 is probably a lot bigger stress on the system.

In Miss the 13th check is what's puts the stress on the system. Not advocating taking it away from anyone in the system retired or working but should be changed for future employees.

 

[dorndawg]

In Miss the 13th check is what's puts the stress on the system. Not advocating taking it away from anyone in the system retired or working but should be changed for future employees.

Can you explain a little more about what this means? Or have a link on further reading?

 

[Maroon Eagle]

The 13th Check is a Cost of Living Adjustment.

 

[dorndawg]

The 13th Check is a Cost of Living Adjustment.

Is it being paid at the end of 1 year in advance of the next? Otherwise how does that put more stress than other COLA's?

 

[Shmuley]

The "13th check," as it is euphemistically referenced, is nothing more than a "lump sum distribution" at year end of the cost-of-living-adjustment provided to all retirees within the PERS system. Some retirees elect to receive their annual cost-of-living-adjustment in a lump sum at year end rather than receiving their cost-of-living-adjustment each month through the year.

The argument about the PERS COLA really should be whether a set 3% COLA (which is what PERS regs provide) is appropriate as opposed to a COLA tied directly to CPI or some other inflation-connected index. The argument about the 13th check is a non-sequitur. It's just a lump sum COLA.

 

[natchezdawg]

They don’t call him Moscow Mitch for nothing…

**

 

[StillTbonewannabe]

Well 3% probably doesn't even actually keep up with cost of living.

 

[dorndawg]

Well 3% probably doesn't even actually keep up with cost of living.

Right - some years that's pretty good, others (like this year) it's bad. If you're gonna have the same # every year, seems fair enough.

 

[Duke Humphrey]

True, but its much more than an active state employee is getting year over year

Well 3% probably doesn't even actually keep up with cost of living.

nm

 

[Duke Humphrey]

From the PERS Handbook.... The compounding is also another drag.

Cost-of-Living Adjustment (COLA)Retirees and beneficiaries who have been receivingbenefit payments for at least one full fiscal year areeligible to receive an annual Cost-of-Living Adjustment(COLA). Designed to help offset the effects of inflation,the COLA is equal to 3 percent of your annual basebenefit for each full fiscal year of retirement prior tothe year in which you reach age 55 (Retirement Tiers1 through 3) or 60 (Retirement Tier 4), plus 3 percentcompounded for each fiscal year thereafter, beginningwith the fiscal year in which you turn age 55 (RetirementTiers 1 through 3) or 60 (Retirement Tier 4). (See page29 to calculate your estimated COLA.)

https://www.pers.ms.gov/Content/Handbooks/Member_Handbook.pdf

 

[mstateglfr]

Well 3% probably doesn't even actually keep up with cost of living.

In the prior 12 years, COL was over 3% only 2 times. Heck, it was over 2% only 3 times in those 12 years.
This is based on SS COL adjustments.

 

[thatsbaseball]

I keep hearing concerns about funding PERS while I'm hearing about large state budget surpluses. Looks like...never mind....

 

[Shmuley]

Surplus? What surplus? **

 

[johnson86-1]

The "13th check," as it is euphemistically referenced, is nothing more than a "lump sum distribution" at year end of the cost-of-living-adjustment provided to all retirees within the PERS system. Some retirees elect to receive their annual cost-of-living-adjustment in a lump sum at year end rather than receiving their cost-of-living-adjustment each month through the year.

The argument about the PERS COLA really should be whether a set 3% COLA (which is what PERS regs provide) is appropriate as opposed to a COLA tied directly to CPI or some other inflation-connected index. The argument about the 13th check is a non-sequitur. It's just a lump sum COLA.

It's a lump sum cola that was never funded. Of course it's not the only thing that's unfunded. The PERS system was set up to fail. There were actuaries around when it was started and there were plenty of opportunities to move to an actuarially sound model. But the problems of failure were always going to be born by future politicians. Now that they could conceivably impact current politicians, the underfunding is too big for them to tackle. If they tried to make up the underfunding on any reasonable basis, they'd get clobbered in the next election if they tried to raise taxes and/or cut costs to close the shortfall over any meaningful time frame, and if they tried to rightsize the benefits compared to what was put in, they'd probably still lose in the next elecction while also having to deal with litigation from the PERS recipients.

 

[johnson86-1]

Well 3% probably doesn't even actually keep up with cost of living.

A 3% compounding COLA has been a really good deal for the last couple of decades. Not looking good going forward for at least the near future.

 

[johnson86-1]

I keep hearing concerns about funding PERS while I'm hearing about large state budget surpluses. Looks like...never mind....

You can get politicians to basically admit, at least privately, that PERS is just going to blow up eventually and it won't be dealt with before then. There was some brief discussion of taking all the BP money and using it to shore up PERS, but it was going to be a drop in the bucket compared to the $15B (at the time) shortfall (and even that $15B was calculated with an unrealistic discount rate). Would have needed to dump the BP money into, commit to extra funding for a decade (which one legislature can't really do) and get concessions from PERS recipients (which there isn't really a legal mechanism for). So the thought was there's no point in putting BP money towards PERS when it won't solve the problem.

Same thing when talking about having a surplus. They are just ignoring PERS because even if they took the surplus and paired it with the a tax increase that would get every legislator voting for it thrown out of office, they aren't making PERS solvent. And if it's going to blow up regardless, why let it dictate the fiscal policy of the state.

 

[johnson86-1]

In Miss the 13th check is what's puts the stress on the system. Not advocating taking it away from anyone in the system retired or working but should be changed for future employees.

This seems backwards to me, at least morally. Current employees are putting 25% (or at least, 25% is being put in for them; obviously not clear who is actually bearing that burden) of their income in and can't retire with less than 30 years of service. So you want to cut the COLA for them while maintaining it for the people that never bore the costs of it and also only had to have 25 years service? Obviously cutting existing benefits is legally problematic, but we're going to do it eventually. I'd rather make small cuts now and fight the legal battle. The only thing the courts can do is mandate that the state impose confiscatory property taxes. If they're going to do that, better to do it with a $18B underfunding than with a $40B underfunding.

 

[GloryDawg]

This seems backwards to me, at least morally. Current employees are putting 25% (or at least, 25% is being put in for them; obviously not clear who is actually bearing that burden) of their income in and can't retire with less than 30 years of service. So you want to cut the COLA for them while maintaining it for the people that never bore the costs of it and also only had to have 25 years service? Obviously cutting existing benefits is legally problematic, but we're going to do it eventually. I'd rather make small cuts now and fight the legal battle. The only thing the courts can do is mandate that the state impose confiscatory property taxes. If they're going to do that, better to do it with a $18B underfunding than with a $40B underfunding.

It could be worked out. The 40 billion will eventually come down as people die but the 18B is going to continue to go on. Find the money somewhere else until it does come down. My step dads 13th check is almost as much as his entire yearly retirement.

 

[horshack.sixpack]

Compared to all the %'s that PERS pays investment professionals to underperform most decent ETFs 3% is a pittance.

 

[Maroon Eagle]

Also true. COLA goes a long way towards the raises many state employees should have gotten before retirement.

 

[Mobile Bay]

Yeah, but they do it with one arm tied behind their back. There are a lot of investment opportunities they cannot take because of the type of organization they are.

 

[horshack.sixpack]

Right, but they don't have to hire a fleet of investment managers who charge an outrageous fortune to underperform. The only retirement account that benefits from those guys is the investment advisor's retirement account.

 

[johnson86-1]

It could be worked out. The 40 billion will eventually come down as people die but the 18B is going to continue to go on. Find the money somewhere else until it does come down. My step dads 13th check is almost as much as his entire yearly retirement.

Just to be clear, the $40B number is not going to go away. The $18B is roughly the shortfall (from a year ago), using a still probably unrealistic discount rate. That $18B has grown from $15B despite having good returns in the stock market and increasing the contribution amounts put in "for" working PERS participants. It's basically gotten so underfunded that we can't really catch up. It's like having credit card debt where you can't even keep up with the monthly interest. If you tighten your belt and put more money towards it and still can't cover the interest, you're not really accomplishing anything. We've had a lot of head winds and thrown more taxpayer money at it and it hasn't even really slowed down the growth of the underfunding. So unless something unexpected happens (such as consistent high inflation and nominal stock market returns while keeping the COLA the same or reducing it, plus not growing PERS eligible payroll maybe would be one possibility), it's going to keep ballooning until PERS has no money and we can't meet monthly pers obligations with the monthly contributions. At that point, it will be a joint legal/political problem. Legally, the contracts clause plus lack of a bankruptcy code for States means you can't just give a haircut to the recipients. But reality and math means the state can't just pay the benefits, and reality/politics means the state is probably not going to just confiscate huge portions of property in the state to hand over to PERS recipients. Going to be ugly.

 

[hydrodawg]

Don't worry about those folks in KY. They all miraculously decided to sell for a small loss on Feb 23. Managed to cash out with six hours to spare.

 

[Moses Steele]

Is there any discount code here? I'm looking for a discount code but don't know where to get the code. If anyone knows where there is a discount code, please let me know.

 

[paindonthurt]

Here’s a thought.

Stop hiring too many government employees.
Let them invest their money like everyone else and do away with the “pension”.
Make the retirement age a number and not years. Im ok with it being lower than 60/61 but retiring at 45 seems crazy if you want the money to last for everyone else.

Lastly, stop hiring too many government employees.

 

[greenbean.sixpack]

Not to hijack, but the State is going to have to raise wages for state employees. Many are woefully underpaid, a state employee who works for say Medicaid, makes less than $30k starting and a 4 year degree is required.

 

[Dawgtini]

The "13th check," as it is euphemistically referenced, is nothing more than a "lump sum distribution" at year end of the cost-of-living-adjustment provided to all retirees within the PERS system. Some retirees elect to receive their annual cost-of-living-adjustment in a lump sum at year end rather than receiving their cost-of-living-adjustment each month through the year.

The argument about the PERS COLA really should be whether a set 3% COLA (which is what PERS regs provide) is appropriate as opposed to a COLA tied directly to CPI or some other inflation-connected index. The argument about the 13th check is a non-sequitur. It's just a lump sum COLA.

And a fixed 3% is looking like a dang good deal for the state the last year+ and going forward.

 

[WilCoDawg]

If that’s true, it’s no wonder the state government is so…awful. The people we need working in the government want more so the people that shouldn’t even be flipping burgers are doing it.

 

[greenbean.sixpack]

If that’s true, it’s no wonder the state government is so…awful. The people we need working in the government want more so the people that shouldn’t even be flipping burgers are doing it.

I'm referring to entry level positions (that still require a degree). On the other hand, one of my best friends (without a degree) is a university employee (on the admin side, not academic), he makes over $100k and there is till upward mobility for him, but the rank and file employee is paid below fast food wages. It's an issue that will have to be addressed, but I doubt any current state leader is going to tackle it.

 

[Maroon Eagle]

Don’t forget that the state rarely raises the salaries of its current employees so for a lot of folks that might be closer to a 1.5 percent average yearly increase from the beginning of state employment through retirement.

By far the best way for many public employees to earn more money is to advance toward other, higher-paying PERS jobs.