The Internet is a medium unique to the 21st century. It allows
communications which are virtually instantaneous and interactive. For current
teachers, the Internet is the primary or sole source of information. For some,
but certainly not all, retirees, the Internet is unfamiliar and unclear. Furthermore,
the rapidly changing landscape of the Internet challenges our adaptability and
should not be seen as a replacement for traditional media forms. Consequently,
the Internet has changed not only how we receive information but also changed
how we process that information, most especially how we trust what we see and
read – no matter its medium.The
primary focus of the C of 13 Blog must be to effectively address our two
constituent groups: the retirees who depend upon their pensions and are more
willing to work to secure it, and the active teachers and principals who are
contributing from their paychecks into the retirement fund.
The groups have different perspectives on the pension fund and the messages sent to
them should be aligned with those perspectives. Yet our messages must be
consistent across both groups; they must never contradict one another. They
must also be well founded on the value to each group of the strength and
stability of the pension fund. What we say must be trustworthy, reasonable and
backed-up by evidence.
This must be accomplished in an age when truth is not the source of many messages
but rather the perceived truth derived from messages repeated loudly and often.
Jay C. Ritterson, editor
It is an election year for Minnesota. Much is at stake.
Midterm elections don’t usually draw much voter turnout. When the state economy seems to be doing well, voters may think that not voting returns the status quo. These conditions favor the opposition, whose turnouts produce stunning defeats and are followed by dramatic reversals.
Minnesota stands out as a great place to live, for now. The governor’s efforts to hold off the forces of capital side pressure have preserved many gains for Minnesotans. That could come undone in November. There is a fragile and unreliable balance in power.
If the effects of an international trade war sharply depress the equity markets and the economy, pensions and other retirement savings could be similarly depressed and under renewed threat from the investment industry. Losses in farm exports could put further demands on our state’s resources. Meanwhile, prices for consumer goods as well as medical costs and inflation could rise. Social Security and Medicare are already under threat from blossoming Federal debt and the prevailing “everyone for her/himself” attitude in Washington.
We can anticipate debates around gun sentiment and actual education needs upping that piece of the next budget, while the 2017 budget standoff gets revisited attention. The #MeToo movement will rightly demand some actions. Meanwhile, other gender rights agendas lie right beneath the surface. And there will be water quality problems and climate change effects that are unpredictable but seemingly inevitable. Actions taken will have long-lasting outcomes.
Voting in November could not be any more important. Your everyday lives are far more impacted by state controlled factors than any other. Every candidate must be asked about all of the above points, and their answers must be clear and their positions firm. That’s how you must decide your votes.
If you’ve read this far, you were already committed to voting. Now commit to getting family and friends to do likewise. Find out where candidates are on the issues and get yourself and others to the polls in November. Every day you should think about what’s important in your life that the State of Minnesota affects in some way. Listen to what others are saying about these things and talk with them about why you feel as you do. Then every day, tell someone to vote in November.
The Legislative Commission on Pensions and Retirement (LCPR) on Tuesday heard a presentation on national public pension trends from Alex Brown, research manager at the National Association of State Retirement Administrators (NASRA), and testimony from State Demographer Susan Brower on trends and forecasts for public employment in Minnesota.
Brown called attention to differences between Minnesota and other areas of the United States in pension policy and spending. He noted that the employer-employee contribution rate in Minnesota is more evenly split than in other states (most often the employer contribution rate is higher than the employee’s share).
He said that nationally in fiscal year 2015, about 4.6 percent of state and local government spending went to pensions. In Minnesota, only about 2.3 percent of state and local government spending went to pensions. In addition, the normal retirement age in Minnesota, age 66, is higher than the national median of age 63. Minnesota public workers also fund a higher percentage of their benefits than the national median. Brown mentioned some of the reforms in the U.S. in recent years, including lowering benefits, raising contributions, conversion to hybrid plans, and the transfer of risk from employer to employee.
Brower presented data on Minnesota’s aging population, the resulting projected workforce changes, and the impact of growing diversity on the state labor force. The transition to an older Minnesota has begun, and the aging of the population will change demand for public services – especially health and human services and K-12 education, she said. As baby boomers continue to transition to retirement, labor force growth is projected to slow over the next decade, transforming the state workforce in the process.
Brower said that the state government workforce is heavily weighted toward older workers, which shows how defined-benefit pension plans do appear to help attract and retain workers. In Minnesota, trend lines show that workers tend to stay employed in state government for a long time.
Both presenters’ slides are available on the LCPR website: https://www.commissions.leg.state.mn.us/lcpr/meetings/agendas/2018/020618_agenda.htm.
Courtesy of TRA Communications
Let’s be clear: Pensions are important to people. 51% of American workers say it influences taking and keeping a job. Like Social Security, it is somewhat sheltered from predatory advisers and brokers. While not flashy, a pension is also not volatile as the equities market is.
The average couple in the U.S. will spend roughly $250,000 in medical expenses including Part B and supplementary health and prescription drug insurance but not including long term care, and those dollar figures will inflate. How will you cope? A secure pension looks much more attractive than working until you are forced out to live on an extreme poverty Social Security check and whatever investments the financial industry has left you, if the Market hasn’t scuttled them.
The billions of dollars in nation-wide retirement investments are surely attractive to advisers, brokers and financial firms, all of whom want a slice of your pie. And they may bend, twist or disguise the facts to convince you to depend on them. They work on the businesses and politicians to persuade them that they will take care of you while sparing the big money interests from having their profits converted into taxes. Yet those taxes support the very people who—toiling away in their offices and classrooms and in their snowplows and firehouses—work to make the country educated, safe and pleasantly livable.
Since others want to take some of our money, we must all be vigilant, informed and ready to speak up in defense of the Minnesota public employee pension plans. The health of all of them is vital to the health of each of them. Connect with and support those organizations that are working on your behalf. While the Minneapolis Committee of Thirteen will work tirelessly to secure the retirement future of Minneapolis Public School educators, they need you to do two things.
Your contributions over the next 12 months will make it possible to adequately support pension friendly candidates who will in turn support you if elected. You must also tell friends and co-workers to speak up and step up for legislative support for the Minnesota Teacher Retirement Association and all Minnesota public employee pension plans. The Legislature determines all the changes to our pensions.
Help people understand that tax dollars are the price we pay for a civilized society. Let them know that those who have enough money to buy education for their kids, security systems for their property and insurance for their out-sized homes are not exempt them from participating in society. They drive on the highways, they visit the parks, they enjoy the safety and security that surrounds them, and they even hire public school educated workers who help provide that privileged life-style.
Be informed and be engaged. Stay in touch with the work of the Minneapolis Committee of Thirteen here on comof13.org (the blog), http://www.facebook.com/committeeof13/, twitter.com/committeeof13, and coming soon to Google+, and make contributions, learn about events and connect to other resources to the main Website http://www.committeeof13.org.
For those of you in schools, in Minneapolis and across the state, have a great year. Teach the children well and know that teaching is the finest vocation on the planet. You deserve the respect of all Minnesotans, and the rewards you’re earning. What you do makes America; make it Great.
Serving Minneapolis Public Schools educators, active and retired in securing, maintaining and enhancing strong pensions for their retirement years
After 5 years, there is a hiatus and perhaps an end. Please continue to check in. We should know better the status of of social media arm.
March 22, 2017 – Last evening the Legislative Commission on Pensions and Retirement (LCPR) considered several pension bills and heard testimony from Kim Crockett with the Center of the American Experiment (CAE).
In a discussion about funding for the major pension bills, Rep. Paul Thissen (D-Minneapolis) asked LCPR Chair Sen. Julie Rosen (R-Vernon Center) whether the LCPR can act on the major pension bills this session since the recently-released House GOP and Senate GOP budget targets do not specify funding for pensions. Rosen responded that pensions are a priority and that “in the end, we will take care of pensions.”
Kim Crockett*, who is CAE’s Vice President, Senior Policy Fellow and General Counsel, made a presentation (available on LCPR website), “Keeping the Promise: Pensions 2017” and was accompanied by Ross Bowen, an actuary and Financial Advisor at Merrill Lynch Wealth Management, who helped CAE analyze the Minnesota pension system valuations. In her testimony, Crockett pointed out that there are 630,000 public pension retirees, survivors or active public employees in Minnesota who are counting on their public pensions. She said Minnesota has been making pension promises without paying for them and highlighted how the funding ratios of the systems have dropped from being fully funded in the early 2000s to being 77 percent funded by 2016, leaving a $17.8 billion shortfall. She indicated that “Anyone in a DB right now, I want to see it fully funded.”
Crockett stated that current investment return assumptions are too high and understate the deficit. She provided estimates showing that the current $17.8 billion shortfall would be $31.6 billion if a 4.3 percent return is assumed and $44.2 billion if a 2 percent return is assumed. Unfunded liabilities are crowding out other spending priorities, she said, and referenced a quote from Warren Buffett that calls pension costs a “gigantic financial tapeworm.” Crockett pointed out that contributions for the plans have been rising but those contributions “are not getting us out of the hole” and she added that the “market crash did not cause the pension problem as the funds would have you believe.”
Crockett proposed solutions: “fully fund the defined benefit plan for retirees and current employees,” and then close the plans in order to stop adding new liabilities. Crockett recommended new employees be offered a defined contribution plan that she believes would be more appealing to younger employees. With respect to COLAs, she indicated that they “eat away at the asset base” and are not provided by private sector pensions. LCPR members had no follow-up questions of Crockett.
In action earlier in the hearing, LCPR approved a special individual bill (SF 1839) that would permit a Winona State University employee a second opportunity to elect TRA coverage with the costs of that coverage borne by the employee and Winona State.
The LCPR also heard legislation (SF 1864/HF 2390) affecting PERA-covered employees receiving workers compensation. Under current law, an employee may elect to purchase service credit for a period during which the member is receiving workers compensation, but in order to receive credit, the employee must pay both employee and employer contributions on the compensation. The bill would require employers to pay PERA contributions on workers compensation when the employee elects to pay contributions on such compensation. The bill limits the purchase to up to one year. The bill was laid over for possible consideration in the omnibus pension bill.
LCPR also considered a bill (HF 2236) that would grant a benefit increase to retirees and surviving spouses of certain local salaried police and fire relief associations that consolidated with PERA. The benefit increase would be funded by state aid to PERA. The bill was laid over for possible consideration in the omnibus pension bill.
Laurie Fiori Hacking, Executive Director
Minnesota Teachers Retirement Association
* C of 13 editor’s note: Kim Crockett has consistently provided an absolute worst case interpretation on publicly held pension systems. Some of these border on “alternative fact.” The CAE has a clear interest in moving billions of public employee pension funds from State Board of Investment control into the hand of private investment industry hands–hands that keep a bit of every transaction.
The Legislative Commission on Pensions and Retirement (LCPR) met Tuesday night to hear a staff presentation regarding possible benefit cut options in addition to the benefit reductions already proposed by the retirement systems.
Commission chair Julie Rosen, R-Vernon Center, explained that the hearing would be a listening session and encouraged LCPR members to ask questions. Rosen explained that LCPR would begin to build the pension bill at upcoming March meetings. The next LCPR meeting is scheduled for Tues., March 7, at 5:30 p.m.
LCPR staff, Susan Lenczewski and Rachel Barth, reviewed the proposals made by MSRS, TRA and SPTRFA and described the financial status of the plans. Staff explained that Rosen and Rep. Tim O’Driscoll, R-Sartell, had asked them to develop benefit cut options in addition to those proposed by the plans.
LCPR staff had originally developed a list of approximately 30 benefit cut options, but O’Driscoll and Rosen had narrowed down the list to about 14, which they described as being in a “research and report” mode. The benefit cut options that were described by staff included:
- Lowering the retiree cost-of-living adjustment to 1 percent permanently.
- Increasing early retirement penalties for members who retire before the normal retirement age of 66.
- Increasing the normal retirement age from 66 to 67.
- Increasing the minimum early retirement age from 55 to 57 or 62.
- Lowering TRA’s current benefit formula multiplier from 1.9 percent to 1.7 percent for each year of service.
- Delaying payment of the first full COLA until a retiree reaches the current normal retirement age of 66.
- Eliminating or reducing the benefit increase (augmentation) mechanism now available for members who terminate public service and elect to leave their contributions with the pension system and delay receiving a benefit.
Commission members asked several questions about changing demographics and growing number of retirees relative to active members. There were also several questions about the complex mechanics of the augmentation or deferral mechanism. Some commission members asked for more explanation about how early retirement penalties work. There were also questions regarding how retiree health care costs are accounted for in the CPI and whether COLAs had been frozen in prior years.
Regarding the proposal to lower TRA’s benefit formula multiplier, some commission members recalled that TRA employee contributions were increased in 2006 to pay for this formula improvement. Some LCPR members expressed a desire for more consistency among the provisions of the statewide plans. Concerns were also expressed about the need to avoid reducing benefits for members close to retirement so that benefit promises are kept. The importance of pensions in the recruitment and retention of public employees was also mentioned.
Some commission members cited their concern that the systems were asking for $400 million in financial assistance “in perpetuity.”
Courtesy of Minn TRA Communications