Central States – GAO Report Coming

The General Accountability Office (GAO) has a draft report to Congress out there on investment policy decisions and challenges facing the Central States Pension Fund (CSPF) that “has not been fully reviewed within GAO and is subject to revision” which is why I can’t share the report with you but I can give you my impressions after reading it.

The current investment policy (adopted in early 2017) is to move assets into fixed income investments to reduce the plan’s exposure to market risk prior to projected insolvency in 2024, which is around the time the Pension Benefit Guaranty Corporation (PBGC) multiemployer program would also go bankrupt.

About half the report is on the plan’s investment history and concludes that CSPF investment returns and expenses have been in line with what similar plans were getting and paying. CSPF’s main problems were the Motor Carrier Act of 1980 and a UPS payment of $6.1 billion to get their 30% of the people out of the plan in 2007 right before a market crash.

The GAO got much of its data from 5500 filings yet ignored one of the most significant reasons that the coming bailout of multiemployer plans is on the congressional radar. About half of the 346 pages in the latest 5500 filing are made up of attachment Schedule C which lists hundreds of Investment Advisors, Service Providers and Employees who were paid at least $5,000 out of the trust in 2016. It is these people who are pushing for a bailout.

As for the employees, there is scare language in the report saying that, when the PBGC multiemployer program becomes insolvent, most participants would receive less than $2,000 a year and in many cases, much less. The GAO report, otherwise teeming with footnotes, does not have one for this claim beyond attributing it to the PBGC.

 

 

22 responses to this post.

  1. Posted by skip3house on May 14, 2018 at 12:20 pm

    Reminded of that ‘political’ organization of the NJEA. All their pension plans are fully funded

    Reply

    • Posted by El gaupo on May 14, 2018 at 12:29 pm

      All good. Sports gaming to the rescue. Lol. Cola back in 24 months.

      Reply

      • Posted by Stanley on May 14, 2018 at 4:28 pm

        I would be surprised if our country hasn’t already seen peak gaming. There will be some who get into sports gaming, but with lotteries and casinos every where you look, I just doubt that there are enough suckers to fuel a growth in gambling. I’m afraid that there is no alternative to reducing public employee headcount and salaries. We have reached the point that we just can’t afford a bunch of blokes leaning on shovels anymore. Sitting in your police car at a job site and texting all day long is your leaning on a shovel.

        Reply

        • Posted by Tough Love on May 14, 2018 at 5:09 pm

          It’s actually worst. When the Police get out of their car they talk to the workers in and around the road work (often in a hole in the ground) …. distracting them from doing their job.

          Seeing this, many times I’ve wondered what those digging in the hole at perhaps $25 or $30/hr, would think if they knew if the Policeman is getting $125/hr. for mostly doing NOTHING.

          Reply

          • Posted by Stanley on May 14, 2018 at 5:43 pm

            I thought that the city or county gets the big bucks and the policeman gets his time and one half or whatever. I thought Senor Gaupo Uno said that the extra “earnings” bought an extra patrol car or some other improvement. Government has sunk to a scam and racket operation IMO. Anyway, we need to drastically reduce the leaning on shovels. JMO.

          • Posted by El gaupo on May 14, 2018 at 5:52 pm

            Now your really stretching…..

          • Posted by El gaupo on May 14, 2018 at 6:06 pm

            Your right Stanley. Towns do get pretty good coin off of those details. My town usually can by two cars a year if there are a lot of the details.

          • Posted by Tough Love on May 14, 2018 at 6:29 pm

            Yeah El gaupo, in this situation, instead of the TAXPAYERS being the SUCKERS, the town’s RATEPAYERS are the SUCKERS in the equation because the rates charged by the Utility include reimbursement (for what the pay the Town) at $125/hr.

            95% of the time, POLICE are NOT needed and a $15 or $20/hr flagman is MORE than sufficient.

            As I earlier pointed out, when the COUNTY DPW is doing the road repairs, there is NEVER a town Police Officer there ……….. because the County isn’t stupid enough to pay the Town for something that is UNNECESSARY.

          • Posted by El gaupo on May 14, 2018 at 8:15 pm

            Take it up with pseg. It is in there contract. Not mine. Safety first.

          • Posted by Tough Love on May 14, 2018 at 9:21 pm

            The “moochers” are the ones who benefit from this UNNECESSARY expense…. put in place (as a Law or Reg) assuredly at the request of your INSATIABLY GREEDY Unions.

          • Posted by El gaupo on May 15, 2018 at 12:21 am

            Again, a strech. As if the towns/pba has any bearing whatsoever on a pseg contract. Verizon’s is similiar. You’re reaching. Waters down your credibility when you may be right. No chance pba has any say at all when pseg and it’s employees bargain. Only thing we have is Title 40 of the administrative code that states that only a police officer may direct traffic at an intersection. Otherwise it’s in pseg contract. And I’m of course glad it is.
            But I digress, I must hit the sack now as I have one of these details tomorrow.

          • Posted by Tough Love on May 15, 2018 at 10:43 pm

            El gaupo,

            Better to refer to it as a bad JOKE on the Ratepayers, not as a DETAIL.

  2. Posted by MJ on May 14, 2018 at 2:45 pm

    Projected insolvency 2024??? Good God we are already half through 2018!!

    …and in the meantime, the retirees keep piling up

    Reply

  3. Posted by A watcher on May 17, 2018 at 4:56 pm

    Seriously people? Dad is 78 year old. What? Would some of you suggest they round him and these other people who are too old to work, and throw them in gas chambers and just call it good? This isn’t a union issue for Dad, He served in the military, drove trucks all his life, gave up time that I am sure you are all lucky to have with your family at night, and weekends and worked double the hours most people did for 30 years of his life. Sorry, you think he is just being greedy when he doesn’t get nearly the pensions most that white collar workers get who diidn’t work half as much as he did, and that he sacrificed his life, on icy roads, in heat, because sorry kids he drove before their were no Air Conditioners. He hauled Gas transports in which a person slid on ice, and hit him head on. Thank God it didn’t explode, but too bad, because he is collecting a pension now, and that would have been one less participant to worry about, eh?
    Now, some here have been in traffic. Imagine hauling 53 foot of vehicle behind you as you manipulate around other people.
    Now he didn’t write the contracts, control the money, nor do anything but contribute, so please remember this could have been your own mom and dad, and knowing how hard Dad worked, I certainly think he deserves a little better from this country than it is giving him. Central States was under a federal consent decree,created by the Government, and that is part of the problem. The casinos and resorts were sold. Oh, if this fund only had some of that Real Estate now.
    So please, understand that the dynamics in place here, were created by others, not the participants. They are the victims in this, and it will be horrific if something isn’t done for them.
    And all you big shots who just gripe, let’s here your answer for this? Taxpayer money? Please! More taxpayer money is squandered outside of this country than in it. Maybe it’s time to change that.

    Reply

    • Posted by Tough Love on May 17, 2018 at 8:58 pm

      Well, was “Dad” like to other guy in a comment a few days ago complain of cuts when he “retired” after 30 years …………… at age 52?
      —————————————————————-
      Quoting ………………

      “Now he didn’t write the contracts, control the money, nor do anything but contribute, so please remember this could have been your own mom and dad, and knowing how hard Dad worked, I certainly think he deserves a little better from this country than it is giving him. ”

      His pension was a private contract between the Union and the Companies participating in the Plan. The Taxpayers were not then nor were they EVER a party to the contract. Why should Taxpayers bailout his Plan (i.e., his “retirement security”) unless they ALSO bailout all the non-Union Private Sector workers who lost 401K money (their “retirement security”) in the great recession?

      Reply

      • Posted by A watcher on May 18, 2018 at 4:18 pm

        Well, I can’t answer for all the other pensions, but unlike other pensions, the direction of Central States was indeed steered, by this wonderful Government. Now by the government this fund was to have 1, not 2, but 3 layers of oversight. A judge, and Independent Special Counsel, and the Department of Labor, who seem to think that they clearly had no more oversight to this fund after they took it out of the hands of the mob which was exactly what we were told by them last June when we went to see them last June. The attorney’s name is Wayne Berry, head attorney for EBSA, and Byron Anderson special counsel for Acosta.
        There is a law on the books. Called ERISA. Prudent men, Fiduciary Responsibility, and what is the utmost concern here, is having the appropriate education to deal with these things.
        I could spend 6 hours telling you the wrong on this fund that was overlooked by these 3 entities, but this is not my blog.
        Sorry but the Government that uses taxpayers money is indeed responsible for the failure of Central States. They could have put a halt to many things and did not. 1982, is the key year. Had they just left well enough alone, I wouldn’t argue with you, but sorry, there was government oversight, and it was ignored.

        Reply

        • Posted by skip3house on May 18, 2018 at 5:09 pm

          Sorry for those you know, but we know U.S.Gov. motto is ‘Tell them anything and try to sound sincere’.
          Have learned, want something done right, do it yourself……401K,…etc with your control/statements,……. regards.

          Reply

        • Posted by Tough Love on May 18, 2018 at 5:11 pm

          Well, if someone or some group can be proven to have mismanaged (or stolen from) the Fund, the Plan should sue THOSE RESPONSIBLE for the lost funds.

          But “THOSE RESPONSIBLE” are NOT the Taxpayers …. who as I pointed out earlier ……….. have NEVER had anything to do with these Plans.

          I understand that you feel that “SOMEONE” should make-whole people like your father (who individually did nothing “wrong”), but his pension (being his retirement security) is NO DIFFERENT than the 401Ks (that are the retirement security) of most Private Sector workers ……………. and nobody is offering to make THEM whole for their losses in the Dot-com bubble or the great recession.

          Reply

  4. Posted by A watcher on May 19, 2018 at 5:10 pm

    So you think these old people should sue their own government? Let’s see, AGI, Banks, Auto Companies. Fannie Mae, Freddie Mac. Sorry, but the Government picks and chooses who they help and who they don’t. We shall see.

    Reply

  5. […] ‘largest troubled plan’ is Central States. Here are the other things of […]

    Reply

  6. […] previewed an advance copy of the first report last month but now that everything is finalized here is the main takeaway that appears in both […]

    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 )

Google+ photo

You are commenting using your Google+ 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 )

Connecting to %s

%d bloggers like this: