Archive for the ‘Actuarial Math’ Category

Help Wanted: Actuary for PFRSNJ

Cheiron has only been on the job for two valuation cycles yet the Police and Firemen’s Retirement System of New Jersey (PFRSNJ) has issued a Request for Qualifications and Request for Actuary Firm. Among the things they are looking for in a new actuary:

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Bad Data Determining Dates

The reason behind the federal government lying about an unemployment rate is obvious. They want to project any sort of good news knowing that most of the people who will be delivering their message in the media are either in on it with them, too lazy to look beyond the headline, or too innumerate to figure out the scam even if they are inclined to dig.

Similarly in New Jersey Governor Murphy is looking to reopen on his timeline (ie. soon after he gets $5 billion for his budget) with politically convenient exceptions and is throwing charts out there that nobody is questioning.

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Taking the L out of BLS

‘L’ as in legitimate which can’t be applied to the numbers released yesterday at 8:30 am in the unemployment report that started off with this paragraph:

Total nonfarm payrollemployment rose by 2.5 million in May, and the unemployment rate declined to 13.3 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade. By contrast, employment in government continued to decline sharply.

That’s about as far as most media look which allowed for this to go on two hours later:

Let’s look at page 6 of that 42 page report:

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NJ GASB Games – 2019

Service cost under GASB 67 rules for government plans is defined as the value of benefits earned during a reporting period. In a retirement system like New Jersey’s with a stable workforce and no changes in the terms of the plan you would expect this cost to be steadily increasing. However, in order to generate ‘good’ news on the funded status of the system, the actuaries took some liberties with the cost calculations that showed the system’s funded ratio rising from 38.41% to 39.73%. Here is how they did it.

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Public Pension Liquidity Crunch

A Valuewalk article refers to S&P Global Ratings use of the:


If the ratio is negative, it means the pension fund needs more money to continue operating and make all of its benefit payments. The more the ratio is below zero, the more assets will need to be converted to cash just to keep operating and paying benefits.

Some public pension funds could even be in danger of running out of money to make benefit payments, they warned. They identified several plans which they describe as “severely underfunded,” which are those that are less than 40% funded. These pension plans already had negative liquidity-to-assets ratios as of September. That means they are in extremely dire straits in this latest bout of volatility.

That list (along with my analysis of the plan at the top):
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PFRS 20-And-Out Proceeds – Blindly

S1017, a proposal that would allow New Jersey police officers and firefighters to retire with half pay after 20 years of service, cleared a Senate committee yesterday after union officials told lawmakers it should help prevent stress-induced burnout and even suicides.

As for the cost. Who knows?

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PFRS 20-And-Out on Docket

The New Jersey Senate Committee on State Government, Wagering, Tourism & Historic Preservation is meeting at this hour and one of the bills they are likely to recommend for passage is S1017.


This bill provides an additional category of service retirement for a member of the Police and Firemen’s Retirement System (PFRS). Under the bill, a member of the PFRS who is enrolled before or after the effective date of this bill may retire after the effective date, regardless of age, upon attaining 20 or more years of service credit and receive a retirement allowance equal to 50 percentof the member’s final compensation. Under current law, a member must be 55 years of age or older to retire on a service retirement allowance of 50 percent of final compensation upon attaining 20 years or more of service credit. In addition, a 1999 law permitted members, who were already enrolled in PFRS at that time, to retire at any age with 50 percent of final compensation upon attaining 20 or more years of service credit. This bill extends the annual retirement benefit of 50 percent of final compensation after 20 or more years of service to all PFRS members regardless of enrollment date and regardless of age at retirement.

Obviously some PFRS members hired after the 1999 law was passed noticed that they were being denied the 20-and-out retirement that their earlier-hired brethren availed themselves of.

However the problem costs have been calculated assuming the later retirement for those hired after January 17, 2000. Since I could not find any cost estimate I did one.

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‘It’s really over’ for most of us 4,061

USA Today had a story about corporate plans heading for extinction noting:

Most U.S. companies no longer offer defined-benefit pensions, which typically provided guaranteed monthly payments to workers when they retired….[A]ccording to Mercer’s 2020 Defined Benefit Outlook…63% of companies with defined-benefit pensions “are considering termination” of the plan within half a decade…. Alicia Munnell, director of the Center for Retirement Research at Boston College, said in a recent interview: “It’s really over in the private sector. The question is, just when does the last plan close down?” The number of pension plans offering defined benefits – which means the payouts are guaranteed – plummeted by about 73% from 1986 to 2016, according to the Department of Labor’s Employee Benefits Security Administration.

Which got me to thinking where my profession of Enrolled Actuary (EA), which exists solely to certify to the funding of Defined Benefit plans, is headed.

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IBEW 237 – Waiting to Die

Last April one of the worst funded multiemployer plans to file for benefit cuts under MPRA (I.B.E.W. Local Union No. 237 Pension Plan out of Niagara Falls, NY) withdrew their application. Last week they submitted their 5500 filing for 2018 (3 times):

  1. October 9, 2019 (72 pages)
  2. October 15, 2019 (74 pages)
  3. Later that day (81 pages)

What changed?

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Missing Links on NJ Pension

NJspotlight reported:

Although local-government pension bills will essentially hold flat in the current fiscal year, that good news has been tempered by the release of yet another report labeling the overall state pension system the worst-funded in the nation.

Without making the obvious link:

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