Atlanta poised to dump defined benfits pension system

I think we need to revamp ALL pensions etc. so that what gets put in is equal to or less than what gets taken out - and so that the money is THERE, not in a general fund, not able to be borrowed from, and not invested in anything that can lose value.

That can has been getting kicked down the road for a long time and the sky is now black with all the chickens coming home to roost.

frs is not in trouble, this is all political horse****....pure unadulterated horse**** powergrab during an economic downturn,

http://online.wsj.com/article/SB10001424052702304887904576399650162046260.html

Florida and Walton County District 5 residents should seriously consider making similar changes. (Scott proposed this for the FRS but hasn't been able to push it through yet, District 5 residents currently fund a defined benefits pension for their firefighters.) These system almost always run huge funding deficits which ultimately force taxpayers to bail the systems out when they get into trouble. Not solving the problem now causes the problem to grow and kicks the can down the road to future generations. Is this really what we want here in our state and our county?

While I don't necessarily disagree with the proposal of 401k systems to replace defined benefit systems, to lay the blame solely on the type of system is unfair. When I retired, the Okla. State employment system was not only in good shape, (over 80% funded) it was growing. Then came the the crash of 2007 due to many factors including hedge funds. Now, the Oklahoma employee retirement system, like so many others, is in dire straights. It is not necessarily mismanagement, its the economy.

Again 30A, less than 15 years ago the plan started out with 70,000 dollars and has grown to 17,000,000. There is currently 1 retiree collecting. According to the people that are paid to manage the plan we are doing well and forecasting growth. Yes we are below the 80% mark that everyone says we should be, but of note was that by changing one assumption from 7.5% to a 6% we went from 63% funded to 72% funded. Because the State has some oversight responsibilities there are only certain times change can be made, as I understand it, so for assumptions to be changed is a process. So unless you were at the last pension board meeting hearing straight from the horses mouth what was said I think you really haven't a clue. There were 2 WCTA representatives there and one left early and the other acted a little bit childish because he felt as though he was being excluded. Right Dan. By no stretch on the imagination am I telling you anymore than what I understood, and although my numbers may be off a little I think it is a fair representation of what was said. As Andy said the amrket caused a set back but there was no death blow, and it appears we are rebounding. Also Walton County District 5 has nothing to do with the South Walton Fire District other than being located in it. 2 seperate political entities.

Again 30A, less than 15 years ago the plan started out with 70,000 dollars and has grown to 17,000,000. There is currently 1 retiree collecting.

According the actuarial studies that number will grow to around 40 over the next 15 years.

According to the people that are paid to manage the plan we are doing well and forecasting growth. Yes we are below the 80% mark that everyone says we should be

With only one retiree collecting benefits...

but of note was that by changing one assumption from 7.5% to a 6% we went from 63% funded to 72% funded.

Don't you have that reversed? Also, the current study assumes 8%, where are you getting the 7.5% number? 6% sounds like an excellent base line to use. I'd love to see an actuarial study that uses that. Is the pension board planning on using that figure in the next annual study? (I'm going to take a wild guess and assume the answer is "hell no!")

Also Walton County District 5 has nothing to do with the South Walton Fire District other than being located in it. 2 seperate political entities.

Good point, I get the connection between the two confused. All of Walton County should be concerned about the unfunded liability currently growing in the Firefighter's pension fund. Which is why I propose we move off of a defined benefits pension and into a defined contribution plan. (Don't worry Bob, you'll be grandfathered into the old system when we do.)

Question - if only one retiree is drawing benefits shouldn't the system need to be closer to 100% funded?

Sounds like it only works if you keep getting investment growth at a certain rate and continuous contributions.

Question - if only one retiree is drawing benefits shouldn't the system need to be closer to 100% funded?

Sounds like it only works if you keep getting investment growth at a certain rate and continuous contributions.

The fund is 15 years old. In 2010 there were 89 members (414K) plus the state (589K) and the county taxpayers (1.73 million) paying into it, so annual payments should be in pretty good shape. We have no idea what the overall growth trend is though. That's something I'm working on getting a hold of.

Total member distributions last year were $45,000.00 w/one retiree plus a termination payment.

Scooter there are certain assumptions that are required by the state, and seriously if I knew them you would have them. But unless 30a has sat in the Retirement Board meeting and heard the actuary guy the fund manager and the fund investor they are in a much better position than me to answer the questions. There are some out here who think that we want nothing more than to squeeze the taxpayer for all they are worth. That can not be further from the truth. What does it benefit us to not see the fund always on solid finanical ground. But this is an investment, and possibly seeing how 30a appears to be a numbers/ money guy who invests and knows the ups and down of the market. As for the 7.5 and 6% assumption that was for the pay increases on average. When we negotiated with Les Hallman, Jack Abbit and Sean Hughes and put those numbers on the table they did not seem to have issue then. 30a lowering the pay raise assumption will increase the total funded rate to the 72-73% range, and as for them using the 6% number I believe Brian Flanagan expressed some concern as to the change but I am not sure the acutary did, and even then it has to be floated by the state for oversight approval.

30a as for me being grandfathered that is not my concern though I appreciate it. The question was asked of the Attorney for plan, and the way it was explained to me was that if for whatever the plan was terminated the taxpayers, you and I would still be on the hook for the portion of the plan that is unfunded, that I as a plan member will be no longer contributing to. As for me being grandfathered, I am a Union guy and want those that follow the opportunity to the same benefit.

While I don't necessarily disagree with the proposal of 401k systems to replace defined benefit systems, to lay the blame solely on the type of system is unfair. When I retired, the Okla. State employment system was not only in good shape, (over 80% funded) it was growing. Then came the the crash of 2007 due to many factors including hedge funds. Now, the Oklahoma employee retirement system, like so many others, is in dire straights. It is not necessarily mismanagement, its the economy.

Andy so you got yours and now its time to change.

It is a combination of several factors - managers invested in risky investments and assumed that there would NEVER be a decrease in value, everyone assumed future contributions would continue to rise and offset people retiring, people get more out of the fund then they contribute because benefits are often determined by their end of career salary, not their overall input, and economic conditions have caused layoffs and forced retirements that further stress the funds.

Common sense and rainy day thinking were not taken into account - this is not the first time we have had a recession or the stock market has lost value, it's already happened several times in my lifetime. The problem is that potential negatives are often ignored.

Bob, and the rest. Benefits that have been earned by plan participants are covered now. If the plan were to end now they have over 100% of the money required to pay out the benefits earned to date. Check the study that was posted by Bob Hudson. The unfunded liability has to do with the projected benefits that are going to be earned in the future. As long as all parties can afford their yearly payments to the plan then it will not go bankrupt. Every year this number changes based on many things. These other states that are having problems are the states where they decided to not pay their portion of state retirements to save money NJ is a great example.

30a, the number Bob was talking about was the annual pay raise assumption, it was 7.5% assumed per year and the pension board lowered it. With that change it in turn changes the unfunded liability. Are they going to go with it? Hell Yes. The investment return assumption is 8%.

Thanks Henry, you know I am not the numbers guy, Jack Abbit was and still agreed to it, as I was on the negotiation team that year.

Just saw this CNBC article called Study: $1400 Tax Hike Needed to Fund US Pensions. The added emphasis is mine.

U.S. state and local governments will need to raise taxes by $1,398 per household every year for the next 30 years if they are to fully fund their pension systems, a study released on Wednesday said.

Everyone needs to figure out how to get pretty regular raises. Sending all of our manufacturing and higher end service jobs offshore while encouraging illegal immigrants to migrate here is probably not going to turn out to be a good way to do that.

Pension funding in U.S. cities and states has deteriorated in the wake of the 2007-2009 economic recession as investment earnings dropped, and some states, such as New Jersey and Illinois, skipped or reduced required payments.

Most companies in the private sector started dropping their defined benefit retirement programs back in the late 90's. First the medical benefits went away, then the pension plans as well. The government can't be far behind.

Yeah the airlines and some of the other corporations bailed on their employees and saddled the government with their underfund plans back in the days of President Bush 43.

Andy so you got yours and now its time to change.

Please re-read my post. I am not for change from a defined benefit program because there are too many participants drawing too much money. I stated very clearly that our system was made insolvent by the turn down of the economy even though its investments were in moderate to low risk securities as well as bonds. For many occupations there should be a "defined benefits" program, IMO. Fire fighting, law enforcement and the military come to mind. They are all high risk jobs.

30a as for me being grandfathered that is not my concern though I appreciate it. The question was asked of the Attorney for plan, and the way it was explained to me was that if for whatever the plan was terminated the taxpayers, you and I would still be on the hook for the portion of the plan that is unfunded, that I as a plan member will be no longer contributing to. As for me being grandfathered, I am a Union guy and want those that follow the opportunity to the same benefit.

Nope, that's what "grandfathered in" means - you and everyone else currently on the defined benefits plan would continue to pay into it. County taxpayers would still be on the hook for paying for it. But new hires would not enter the defined benefits system, they would enter into a 401K style plan. So over a period of around forty years or so the system would wind down and ultimately end.

Bob, and the rest. Benefits that have been earned by plan participants are covered now. If the plan were to end now they have over 100% of the money required to pay out the benefits earned to date. Check the study that was posted by Bob Hudson. The unfunded liability has to do with the projected benefits that are going to be earned in the future. As long as all parties can afford their yearly payments to the plan then it will not go bankrupt. Every year this number changes based on many things. These other states that are having problems are the states where they decided to not pay their portion of state retirements to save money NJ is a great example.

30a, the number Bob was talking about was the annual pay raise assumption, it was 7.5% assumed per year and the pension board lowered it. With that change it in turn changes the unfunded liability. Are they going to go with it? Hell Yes. The investment return assumption is 8%.

What was the average annual pay increase over the last five to seven years? I assume they based that change (which lowers the projected unfunded liability of the fund) on an accurate historical value.

Bob, and the rest. Benefits that have been earned by plan participants are covered now. If the plan were to end now they have over 100% of the money required to pay out the benefits earned to date. Check the study that was posted by Bob Hudson. The unfunded liability has to do with the projected benefits that are going to be earned in the future. As long as all parties can afford their yearly payments to the plan then it will not go bankrupt. Every year this number changes based on many things. These other states that are having problems are the states where they decided to not pay their portion of state retirements to save money NJ is a great example.

30a, the number Bob was talking about was the annual pay raise assumption, it was 7.5% assumed per year and the pension board lowered it. With that change it in turn changes the unfunded liability. Are they going to go with it? Hell Yes. The investment return assumption is 8%.

The state passed legislation requiring pension plans such as yours to submit actuarial studies based on a lower rate. (A reasonable thing to do since 8% is unrelaistic.) It'll be interesting to see those numbers. I'm guessing lowering the pay raise rate was in anticipation of this.