Calculating What’s Expedient – Politically

Joshua Rauh, GASB, and Moody’s would all like to see public pension plans report the value of their liabilities using an interest assumption in the 4% range instead of the 8% most use but the cost of doing all this extra work has been cited as a barrier to providing that information.

Last week New Jersey announced what localities would need to pay into PERS and PFRS for 2014 per a DLGS email blast:

“Sore Loser” With “Limited Credibility”

That’s what a group of 70 Public Plan actuaries* at this month’s EA meeting view was of Moody’s and their revised rating methodology for US states as it relates to valuing unfunded pension liabilities:

The Sweetest Deal You’ll Ever Steal

Our system of government is broken primarily due to an electoral system fueled by money from special interests that ensconces the pliant in positions where they can repay their sponsors with taxpayer money while taking a taste for themselves all while the public is otherwise engaged.

Occasionally these traitors step over the line.  It happened in Bell, California and Passaic, NJ but I challenge anyone anywhere to match the employment contract that the Union County Democratic Chairperson wrote for herself with the Union County Improvement Authority.

New Jersey’s Retirement System Should Be Disqualified

To be qualified a government plan must meet some of the standards laid out in IRC section 401(a) including:

(25) Requirement that actuarial assumptions be specified.— A defined benefit plan shall not be treated as providing definitely determinable benefits unless, whenever the amount of any benefit is to be determined on the basis of actuarial assumptions, such assumptions are specified in the plan in a way which precludes employer discretion.

Because of the elimination of retiree Cost-of-living-adjustments (COLAs) New Jersey public employees should be paying taxes on the benefits being accrued for them.  Terry A.M. Mumford of the law firm Ice Miller LLP thinks otherwise but I am unpersuaded by her two arguments:

Can they do that to public employees?

That’s the issue to be addressed tomorrow morning in Session 703 at the EA meeting:

703 – Can They do That? Plan Design and Constitutional Issues

Credits: EA Core 0.75 EA Noncore 0.75 CPD 1.50

Many governmental plan boards and sponsors are asking their actuaries for advice on plan design and contribution changes to address issues of underfunding and sustainability. The speakers at this session provide a brief overview of the type of plan design changes that have occurred since 2008 and focus on the legal constraints on reducing benefits and increasing contributions for participants. The panelists also address other “change agents” affecting governmental plans, such as municipal bankruptcy and IRS policies.

My first question would be how many actuaries get asked for advice on plan design when none get asked* about the choice of actuarial assumptions.  My second question:

No Cure for Cancer in Actuarial Profession

It’s Enrolled Actuary meeting time again and I’m in Washington, DC until Wednesday getting CPE credits by listening to 20 hours of speakers reading their powerpoint slides.

Coincidentally the American Association for Cancer Research is also holding their convention this same week thus making finding a parking space near the Spy Museum* challenging.  My first non-politically-correct thought upon seeing the Cancer Research banner was to wonder how serious they really were about curing cancer when, if they were to ever come up with a pill, procedure, or lifestyle change that would eradicate this dread disease it would likely also eradicate their jobs.  Then I made a connection to my profession.

Ill-informed Judgment on Stockton Pensions in Bankruptcy

A judge ruled yesterday that the city of Stockton can go bankrupt.  Next up, what happens to the pensions of Stockton retirees and employees.  Some judge will decide that in the near future without, in all likelihood, possessing the two most pertinent pieces of information.