Archive for the ‘Actuarial Math’ Category

SFA Plans Requesting 80% of Unfunded Liabilities

Participants in multiemployer plans about to go bankrupt are fearing that the ARP bailout, based on the methodology that the PBGC has established to get the money, will not be enough. In comparing the requests of the first four plans for assistance to what those plans report as unfunded liabilities on their 5500 forms, the participants are right.

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NJEA SB Issue

The New Jersey Education Association (NJEA) is a billion-dollar enterprise that runs a good portion of the state backed by the union dues of its members who happen to be in the worst funded public pension system in the country. Yet the pensions of NJEA employees are both generous and well-funded.

However, in checking the plan’s 5500 filing for the year ended August 31, 2020, something unusual popped up on the Schedule SB. It looks like a filing error but who knows?

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GASB68 vs Politician Pension Numbers in NJ

Now that the 6/30/20 GASB68 valuations are out comparisons can be done with the official valuations for the New Jersey pension plans upon which recommended (and often ignored) contribution amounts are calculated.  Putting everything into a spreadsheet we find:

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Error or Craft?

For me, this is the interesting part of the story:

The calculation — 6.38% growth over the nine years ending last June 30 — was slightly above a 6.36% growth threshold, thus protecting retirement system members from seeing a higher risk-sharing contribution rate kick in next July 1.

This error has stoked righteous anger but not much light as to details so I will take a stab at it here.

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MoneyPalooza Monstrosity

That is how Mary Pat Campbell titled her review of the multiemployer bailout in the covid bill which summarizes the situation nicely. I would only add a reason and a couple of client/actuary conversations that may be going on right now.

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NJ OPEB Update – 2019

Per the NJDPB website:

12.14.20 The GASB 75 Reports for the Local Education Retired Fund are now posted.

1.11.21 The GASB 75 Reports for the State Retired Fund are now posted.

There are three separate reports for state, local government, and local education which throw a lot of distracting numbers at you but, when added up, show an amazing 1/3rd reduction in the total OPEB Liability (from $110 billion as of 6/30/16 to under $74 billion as of 6/30/19) that the state can brag about to the credit rating agencies. How did they do it? Benefit cuts? 

No. Just telling the people you hire to give you the numbers that you want to see. Here is how they did it:

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Houston, We Have a Problem

Not necessarily with the Houston Firefighters’ Relief and Retirement Fund itself but with the reporting on it.

While the fund’s board of trustees assumed a 7.25% rate of return for its actuarial valuation report in May 2017, the City Council subsequently passed a budget that used the Senate bill’s assumed 7% rate of return, a discrepancy that caused the fund to sue the city, Mr. Turner and other city officials.

…….

Pension reform has reduced the city of Houston’s obligation from $8.2 billion to $4.07 billion.

Maybe it’s sloppy journalism, or innumerate politicians, or 5500 fatigue on my part (65 to go) but if ever a pension article had power to flummox it would be the one quoted above.

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Covid-19 Impact on Pension Actuarial Assumptions

Perhaps we will be getting a plague component when AMT21 comes out but that is uncertain from the Issue Brief released by the American Academy of Actuaries. In fact, uncertainty is the theme of the paper which basically does not reach any conclusions though it offers some interesting insights and possibilities.

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Cost of a New Jersey Public Pension (2)

This week’s New Jersey Senate Budget and Appropriations hearing had senators looking to jew down the already ridiculously low payment into the New Jersey Retirement System for FY21 and in the process revealing their ignorance of how those payments are established.
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Cost of a New Jersey Public Pension

According to State Treasurer Elizabeth Maher Muoio at this week’s Senate Budget and Appropriations hearing:
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You might also think about the black hole of political payback that those missed tens of billions of dollars in contributions went into but let’s focus on that $750 million number placed on one year of benefit accruals for participants in the system for which the state is responsible.

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