What Connecticut Needs To Know – TRS

All public pension valuations severely understate liability values and contribution ‘requirements’ to cater to the government/client’s whims so when reviewing the actuarial reports for the Connecticut Teachers’ Retirement System (TRS) you have to ignore most of the numbers and concentrate on deposits and payouts to tell you the real story:

CTTRS
.
Back in 2000 the TRS reported having $11 billion in assets and, except for 2008 when it got $2 billion from a Pension Obligation Bond (POB) sale, there has always been a substantial net outflow (averaging about $500 million) annually.  You would expect assets to be close to depletion by now but as of  6/30/14  the TRS claims to have over $16 billion (including that POB money that still has to be paid back by taxpayers) in assets due to exceptional investment earnings.

Without changes to the nature of the plan you can expect benefit payouts and participant deposits to be steady over the years so, projecting forward, the TRS could still avoid bankruptcy assuming:

  1. continued miraculous investment growth, and
  2. Connecticut coming up with over four times more in deposits annually in 2027 than they are putting in now.

Neither appear likely.

 

 

22 responses to this post.

  1. Posted by Anonymous on November 16, 2015 at 12:21 pm

    Does the report also show what were those “miraculous investment earnings” as a %? If so, how does that compare to NJ’s return?

    Reply

  2. Posted by Anonymous on November 16, 2015 at 12:44 pm

    I can’t wait for the NJ DIVISION OF PENSION AND BENEFITS to release the pension liabilities report especially for NJABP. Based on past practice for retirement payouts, ” participants were encouraged to take a minimum of $10k. to begin lifetime health benefits”, many new retirees mistakenly thought this distribution was their full retirement benefit. The reality is they never annuitized their 401a and 403b accumulations to render their lifetime benefits, if this was a part of their retirement goal. The State of NJ being the policyholder for lifetime income insurance products has this annuitized accumulations on the books. The new pension liability rules will expose these practices. The state’s collect administrative fees for pension assets on their books because of their actions that the providers implemented. This is scandalous, I blame the unions for lack of oversight, this is elder abuse. This deserves an investigation and the victims need to be made whole. Greed and corruption is the real normal in NJ.

    Reply

    • Posted by Anonymous on November 16, 2015 at 12:56 pm

      Are you a participant or an insider? The reason I ask is because I was told that ABP provided a better payout than the DBP, at least before the “Great Recession”.

      Reply

  3. Posted by Anonymous on November 16, 2015 at 1:52 pm

    The State intervened in the NJABP process in 2011 as a part of pension reform. The big issue was retirement age and payout maximum. The decisions noted in the description is age 60 no mention of payout max. The $10k annuitization was eliminated, legislation reauthorize May 2015. Participants are stuck in interim payouts if their goal was lifetime income. Only a participant would understand the history and the process. The payout for lifetime income equals a defined benefit payout from insurers group plans. Just waiting for the report.

    Reply

  4. Posted by Anonymous on November 16, 2015 at 4:49 pm

    TL THE MORON HASNT CHIMMED IN YET, MUST STILL BE HUNGOVER FROM THE WEEKEND

    Reply

    • Posted by Tough Love on November 16, 2015 at 5:45 pm

      Don’t you mean …….TL, who isn’t intimidated by insatiably greedy Public Sector “takers” (such as yourself) …. and who strongly advocates for Public Sector compensation EQUAL TO, but NO GREATER than that of their Private Sector counterparts ?

      Reply

      • Posted by Anonymous on November 16, 2015 at 5:52 pm

        401k payouts are not measured by equality, the accumulations in the individual accounts are increased by many factors. The de accumulation is based on plan design and individual choices. so TL is in her own fantasy/delusion.

        Reply

        • Posted by Tough Love on November 16, 2015 at 7:57 pm

          401K Plans (as well as all DC Plans) are “measured” for comparability by the INGOING contribution percentage, NOT the annual amount that could come from annuitizing the 401K asset value upon retirement (because the latter depends on how well you invested those assets).

          Private Sector workers typically ONLY get 401K Plans with an employer “match” of 3%-4% of pay.

          And THAT is all that taxpayers should contribute towards the retirements of their Public Sector workers.
          ——————

          EQUAL, but NOT better.

          Reply

      • Posted by Anonymous on November 16, 2015 at 7:03 pm

        OK come on now fellow bloggers, you haven’t said anything substantive in response to TL ad nausuem posts!!!

        BTW I’m helping Sean out, he’s busy kissing a*s to get his employer (no names but take a wild guess) to pay him a few shekels more. At last patrol the drone was in their docking station charging, PS you know who I mean.

        It’s like the night before Christmas, we’re just missing the rest of the private goon clan; on MJ on DD and let’s not forget LL not so cool. I’m way off topic and I know some might say I’m a (non)resident nutcase NOT BH.

        I was reading through the posts on John’s previous topic and I had to laugh. Now the publics and I guess SS are responsible for a labor shortage and lower wages, really??? Talk about ridiculous, well here it is (there was an ANNON post and a reply from LL):

        Anonymous on November 16, 2015 at 9:32 am

        Maybe somewhere in between. Regarding your other post to the preceding topic; Feds pension can begin at 62. I’m not singing the Feds praise but they’ve been less generous on their DBP and health benefits than NJ.

        Whatever action or inaction is taken there will be consequences. For instance, raising the eligible full SS retirement age will save the plan money but will retain workers longer thereby making it harder for those entering the workforce to get a job.

        Reply

        larrylittlefield on November 16, 2015 at 1:03 pm

        “Whatever action or inaction is taken there will be consequences. For instance, raising the eligible full SS retirement age will save the plan money but will retain workers longer thereby making it harder for those entering the workforce to get a job.”

        That will cease to be problem, if it hasn’t already. We are facing a labor shortage in which businesses will not raise wages because they cannot raise prices because their customers — poorer younger generations — are broke. They will downsize instead.

        The longer people work, the better off we will be.

        Reply

        Reply

  5. Posted by Anonymous on November 16, 2015 at 5:18 pm

    TL roots for 401k but I bear witness that the State of NJ interfered with vested funds owned solely by long-term participants in NJABP. There was no need or legal reason to do so. This must be addressed. The program wasn’t readopted until May, 2015 from 2011.

    Reply

    • Posted by Tough Love on November 16, 2015 at 5:52 pm

      If the NJABO “DC” Plans were mis-handled, indeed they should be fixed at no cost to the participants..

      However. that’s hardly a valid reason to discourage DC Plans when DB Plans have bee such an abject failure (from the taxpayers’ perspective) due to the unstoppable collusion and underhanded dealings between the Public Sector Unions and NJ’s self-interested Elected Officials.

      Reply

      • Posted by Anonymous on November 16, 2015 at 6:39 pm

        I support a dc hybrid plan. what I object to is the State interference with the rights of vested participants ie imposing a retirement age and imposing a unnecessary step in the payout process.

        Reply

        • Posted by Tough Love on November 16, 2015 at 8:04 pm

          I’m just taking a guess here, but the IRS doesn’t allow DC Plan assets to grow indefinitely and THAT issue may be behind the Plan’s requirement for imposing a retirement age and minimum payout.

          Think of it as akin to the IRS’s minimum withdrawal requirement for IRAs once the participant reaches age 70.5.

          Reply

  6. Posted by Anonymous on November 16, 2015 at 6:43 pm

    I blame the lack of oversight and foresight by the union executives past and present for the present crisis, everyone was paid bonus bucks to insure pension protection. Too cozy, inbred.

    Reply

    • Posted by Tough Love on November 16, 2015 at 8:06 pm

      Quoting ………….”I blame the lack of oversight and foresight by the union executives past and present”.

      In spades !

      Reply

  7. […] the time, after reviewing the situation with the SERS and TRS plans, I dismissed the report as a cynical disregard of reality to pander to political expediency. […]

    Reply

  8. […] my last review of the Connecticut Teachers Retirement System the June 30, 2016 actuarial valuation has come out so it seemed like a good day for an […]

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: